BAKU, Azerbaijan, February 7
By Nargiz Sadikhova - Trend:
Kazakhstan has the potential to produce more natural gas to meet a strong increase in demand, particularly for liquid petroleum gas (LPG), for which domestic demand between 2015 to 2020 tripled, while production only increased about 25 percent, an official at the World Bank (WB) told Trend.
“Keeping LPG price artificially low for too long will encourage consumption but can discourage expansion in production and distribution. The opportunity loss from underinvestment implies more public funding needed to subsidize producers,” the WB official said.
But on the other hand, the official noted, a sudden and sharp increase in gas price hurt consumers, including the poor and vulnerable, and add to inflationary pressure.
“The authorities may want to design a policy package to allow price gradually align with market price, and once this transition is done, a strong independent regulatory mechanism to enforce market discipline and prevent unwarranted price spikes,” the official said. "This will have to be complemented by targeted social protection measures to limit the impacts on the budgets of poor and vulnerable families."
“Likewise, keeping natural gas price low to supply heating and electricity production can also have a similar adverse impact, and similar support packages will likely be needed to ensure proper development in these sectors,” the official said.