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Tuesday, 25 October 2016


Price is no object for Georgian fuel

2011-12-14 14:02

Price is no object for Georgian fuel. 25717.jpeg

Georgia again compares itself to EU countries. The issue on the agenda is fuel, which costs the Georgians much more than the Europeans. Fuel overpricing is attributed to the monopoly on oil products import from Azerbaijan enjoyed by an affiliated company of the local SOCAR Energy Georgia - naturally, with the Georgian authorities' active help. But the quality of Azerbaijani fuel does not meet Euro standards, which means Mikhail Saakashvili does not only rob his people but also poisons the country's environment.

NGO "Solidarity in Fighting for National Interests" has conducted a curious research. In Georgia, considering excise duty and VAT, fuel is by 31 tetris more expensive compared to Germany, by 30 tetris compared to Finland, by 35 tetris compared to Sweden, by 23 tetris compared to Great Britain, by 24 tetris compared to France, by 23 tetris compared to Italy, by 21 tetris compared to Belgium and by 42 tetris compared to Poland. Thus, AI-95 fuel retail price is almost one and a half dollars, Tbilisi importing fuel from five countries: Azerbaijan, Italy, Bulgaria, Romania and Greece with the price being identical. Head of the organization Beka Kemularia asks a reasonable question: why does the fuel running from the Azerbaijani neighbor costs as much as oil products from Europe, which is farther?

The scheme of robbing the Georgians is very simple. Fuel is imported from Azerbaijan by the local SOCAR state corporation. It had opened an affiliated company in Georgia that partly belonged to SOCAR and partly to former Minister of Economy Vano Chkhartishvili. The latter had sold his share to Petro Trans company, which broke it in parts and sold to an unknown owner. As was found later, all the roads lead to SOCAR, which occupies about 80 percent of the Georgian market. Oligopoly evidently became the consequence of a cartel agreement between the major fuel player and five smaller companies when they initiated a common pricing policy, manipulating with fuel prices.

This April, fuel price again grew by five tetris, or by one ruble, while in August the prices came to a stable point. The Union of Oil Products Importers attributed it to the global oil price downturn, for the Georgian market is fully dependent on the international exchange fluctuation. However, the true reason was different: the intervention of the North-Atlantic Alliance's forces to Libya was over, having reduced the risk premiums down. The broken country that had been turned into a bleeding mess became the stabilizer allowing the European Union and the United States get fuel for nothing.

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