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Kazak Oil Capital Runs Short of Petrol

Western Kazakstan’s oil wealth does not translate into cheap petrol for the locals.
By Saya Issa

Atyrau, on the shores of the Caspian Sea in western Kazakstan, is the country’s oil capital, so it comes as a surprise that petrol has become such a rare commodity that city taxi drivers staged a protest over spiralling prices earlier this month.


About 100 drivers of minibus taxis - which pick up and drop passengers along a set route - held a strike on November 1 to demand permission to increase fares so as to keep up with fuel costs.


About 80 per cent of the crude processed at the Atyrau refinery, one of the largest in Kazakstan and a major domestic and foreign supplier, comes from the giant state-owned oil company KazMunaiGaz.


One suggestion is that the refinery is running short of crude oil, but it is unclear why it would be unable to produce enough petrol to keep at least local drivers happy.


The public prosecutor for Atyrau region has accused KazMunaiGaz of undersupplying the Atyrau so as to shift more crude oil to international markets where prices soared to more than 50 US dollars a barrel this year. Prosecutors concluded that the refinery was operating at half its proper capacity, causing shortages and consequent price rises.


Only the more expensive grade of petrol is currently available in Atyrau, at around 50 US cents per litre - 10 or 15 cents more than in early October. The lower octane varieties used by most drivers have disappeared. In the countryside, the very low grades used only by some Russian-made cars and trucks are still available, but prices have jumped even higher to 1.20 dollars a litre.


Askar Kujagaliev, a member of Kazakstan’s parliament, has said he plans to raise the issue in the assembly.


“It is currently profitable for Kazakstan companies to supply oil to the international market. So they disrupt all the supply schedules to local refining plants,” he alleged.


Kujagaliev said he had received an assurance from Prime Minister Danial Akhmetov that if any firm was found to be selling crude abroad when it should have been supplying the domestic market, its government license would be rescinded.


The anti-monopoly commission in Atyrau has denied allegations that the Atyrau plant has been undersupplied. Instead, commission officials blamed the high price of refined petroleum products on the world market for affecting the local market.


The drivers who protested on November 1 say that if petrol costs stay high, they must be allowed to raise the prices they charge passengers by about 50 per cent.


Price hikes are a contentious and highly politicised issue in a city where minibuses - carrying up to 12 passengers each along a set route - are the only form of public transport for a population of 300,000. Three years ago, the local authorities did away with normal bus and trolleybus services across the city. Ordinary taxis cost twice as much as in the capital Astana and are too expensive for most locals to use regularly.


Minibus taxi routes have been farmed out to private businessmen, but it is the drivers working for them – who supply their own vehicles and buy the fuel – who are feeling the pinch.


Because the taxi business effectively operates as a local government-franchised public service, the drivers are not allowed to raise fares unless they apply for permission from the local anti-monopoly committee.


City administrators have met with the taxi firm owners and are considering their demands, but are thought to be unlikely to allow any price hikes because this would be so unpopular.


“We are currently studying the problem. I can say one thing for certain: before we raise fares, the public transport owners will have to justify every penny,” said deputy mayor Vyacheslav Jumurov. “If the price is justifiable, then we will have to agree with the protestors’ arguments.”


Caught between rising running costs and an official desire to avoid fare increases, the taxi drivers are finding it hard to stay in business.


Vehicle owners pay about 100 dollars a day to the owner of the particular route they operate on, and then have to cover maintenance as well as petrol.


“Many of us bought the minibuses on loan. How can we pay our creditors?” asked one taxi driver, a young woman who refused to give her name. “All the money we get goes to the [government] official who owns the route. There is not even enough to pay the drivers, buy petrol and repair the vehicles. There’s nothing but expenses. This business does not pay off.”


Kumis Tabyldieva, a conductor who collects fares for a minibus driver, said vehicle owners feel they have no choice but to mount a protest.


“How else can we protect our rights?” she said. “No one takes into account that we transport almost the entire city’s population. How much longer can we keep silent and put up with this abuse?”


Saya Issa is an independent journalist in Atyrau.