BAKU, Azerbaijan, January 10
By Nargiz Sadikhova - Trend:
Accelerating the construction of the KazGPZ plant should help ease potential LPG shortages in Kazakhstan, Andrew Neff, Associate Director, IHS Markit told Trend.
He noted that President Tokayev’s move to request the government’s resignation (and return to price controls) is meant to address social concerns and prevent the situation from escalating further.
“In the near term, this means Prime Minister Askar Mamin is out and replaced by First Deputy PM Smailov on an acting basis, and when a new government is formed, there likely will be a new PM. The return of price controls should also help to address the concerns of protestors, likely alleviating pressure on policymakers. Tokayev’s additional comments about accelerating the construction of the KazGPZ plant should help ease potential LPG shortages in the future (part of the reason for the sharp price increase originally was to bring prices more in line with market factors,” Neff said.
Neff explained that as a major oil-exporting country, with a surplus of oil production relative to consumption, Kazakhstan’s policy of exporting significant volumes of crude oil but failing to meet domestic oil demand is not politically sustainable in the aftermath of these protests).
“This is likely to be a longer-term impact – the government’s policy will have to reflect this reality, with a greater emphasis on ensuring that domestic oil product demand is satisfied (and likely at a subsidized price, given the low purchasing power of Kazakh citizens and the continuing surge of inflation), even if it means having to reduce the available crude oil supplies for export. Ensuring social peace at home is the number one priority for the government, and if it means having to reduce crude oil exports in order to satisfy domestic oil product demand (and provide supplies at a subsidized rate, where motorists can afford to pay), then so be it,” he said.