The Ministry of Energy of Kazakhstan plans to adjust the price of liquefied petroleum gas (LPG) in the country starting from July 1. One third of Tajikistan's LPG imports come from Kazakhstan. The ministry has determined that the price of LPG is significantly lower than its production cost.
The production cost reportedly ranges from 60,000 to 70,000 tenge (US$133.36 – US$155.59 at today's exchange rate) per ton, while the current maximum wholesale price for producers is 40,320 tenge (US$89.62) per ton. Thus, the gas processing plants incur losses of 20,000-30,000 tenge (US$44.45 – $66.68) per ton produced.
Another reason for revising LPG prices is the increase in consumption and the unprofitability of its production due to low prices, which has led to reduced production and a certain deficit in regions. Currently, the deficit level of this type of gas in Kazakhstan reaches about 20-25%.
If LPG prices continue to be restrained, Kazakhstani producers will be unable to increase production volumes to meet domestic demand. Consequently, due to unprofitability, the gas processing plants are losing interest in production, shifting to more profitable products. Similarly, investors are reluctant to invest in the sector for the same reasons.
The Ministry of Energy of Kazakhstan believes that the country has some of the lowest LPG prices, ranging from 54 to 86 tenge (US$0.12). To prevent these risks, from July 1, 2024, it is planned to adjust LPG prices. The maximum wholesale price per ton of LPG will be 45,158 tenge (US$98.15 instead of US$89.62 previously). At the same time, the maximum retail price will increase slightly by 5.00 to 8.00 tenge per liter depending on the region. The draft order is currently undergoing public discussion.
How will this affect Tajikistan?
Last year, Tajikistan imported over 411,000 tons of liquefied gas, of which 76 percent came from Kazakhstan, about 20 percent from Russia, and about 4.0 percent from Uzbekistan. Currently, Kazakhstan has imposed a restriction on the export of liquefied petroleum gas (LPG). However, the export ban does not apply to companies supplying LPG to Tajikistan based on interstate agreements.
Meanwhile, in Tajikistan itself, the price of LPG has decreased by 20 dirams. Today, the cost of one liter of this type of fuel in Khujand is 5.90-6.00 somonis, and in Dushanbe 6.10-6.20 somonis. A week earlier, the prices were 6.0 and 6.40 somonis, respectively.
