Tajikistan does not have enough its own petroleum but we spend millions of dollars for construction an oil refinery.
Introduction of practically fitting-out oil refinery in the Danghara Free Economic Zone (FEZ) into operation is being postponed once again.
Representative of FEZ Danghara attribute the postponement to “some unsolved problems,” while experts say it is not expedient to build such an oil refinery in Tajikistan, which does not have enough its own petroleum.
The Government of Tajikistan and Limited Liability Co. HELI of China signed an agreement to construct an oil refinery in the Danghara Free Economic Zone in 2014.
The construction cost was estimated to be $80 million for the first stage of the project and between $300 million and $500 million for the second stage of the project.
The production capacity of the oil refinery was expected to be 500 t/yr, and the refinery would employ 200 people. In the second stage of the project, the capacity of the refinery would increase to 1.2 Mt, and the refinery would employ 500 people.
The share of the Chinese side in the project amounts to 90 percent and the share of Tajikistan amounts to 10 percent.
The first line of the oil refinery was expected to be operational in late 2015. Later, the sides decided to introduce it into operation by September 2016 but introduction of the refinery into operation was postponed again at first until March 2017 and then until July 2017. However, the refinery has not yet been introduced into operation.
Representatives from the FEZ Danghara administration say “there are some issues requiring solution.” They refrained from giving further details.
It makes no sense
Experts consider that the introduction of the refinery into operation has been postponed most likely because of complexities of providing the refinery with relatively cheap raw materials.
“In order to introduce an oil refinery into operation it is necessary to stock up a certain amount of crude petroleum. Tajikistan does not have large reserves of crude oil, while layout of oil pipeline from other countries requires heavy expenses. Therefore, we will have to deliver crude oil to the country by transport that will make oil processing in Tajikistan inexpedient,” says economist Zafar Ayubov.
It is to be noted that in the Russian Federation, the export duty on crude oil is more than three times higher than the export duty on light oil products (gasoline, diesel fuel, jet fuel and so forth).
According to data from the Russian Ministry of Finance, Russia's oil export duty is expected to rise to US$111.4 per ton in January 2018 from US$105 per ton this month. The rate is calculated by the Finance Ministry and is based on the monitoring of seaborne Urals URL-E URL-NWE-E crude oil prices.
Meanwhile, the export duty on Russian light oil products is expected to rise to US$33.4 per ton in January next year from US$31.5 in December.
Millions wasted
Talks of construction of oil refineries in Tajikistan began in 2010 after the Russian Federation cancelled Tajikistan’s tax exemption.
Tajikistan was exempted from paying Russian tariffs on oil and gas exports from 1995-2010 and Russia cancelled Tajikistan’s tax exemption on May 1, 2010 that resulted in gasoline prices rising in the country.
Construction of small and medium-sized oil refineries began in various regions of the country. However, those enterprises have not been introduced into operation, while domestic production of oil products decreased from nearly 4,000 tons in 2010 to little more than 2,800 tons in 2015. Current domestic production of oil products covers only 04 percent of Tajikistan’s requirements in oil products (700,000 tons).
In 2013, Tajikistan and Russia signed a government-to-government agreement on fuel supply cooperation.
Under this agreement, the sides consider and endorse the indicative fuel balance for the next calendar before October 1 of each year. Fuels delivered in addition to the indicative fuel balance will be liable to export duty.
The agreement prohibits re-export of Russian duty-free oil products to the third countries.
The indicative fuel balance for 2014 provided for supplying up to 1 million tons of duty-free oil products to Tajikistan. Tajikistan, however, managed to import only 576,000 tons of oil products
In 2015, Tajikistan imported only 560,000 tons of duty-free oil products from Russia though the indicative fuel balance for 2015 provided for supplying 830,000 tons of duty-free oil products to the country.
Current Tajikistan’s annual requirements in oil products are estimated at 1.5 million tons.
