13 December 2017, Wednesday, 21:54

Leanid Zaika: Lukashenka's People Feed on Petrol

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Leanid Zaika

After November prices for petrol will start to rise.

Yesterday the Russian government unexpectedly raised excise taxes on petrol. It has become a significant increase in excise taxes than is provided for in the tax code of the neighboring country.

At the same time, the Belarusian authorities, experts say, have been artificially keeping prices down for petrol for a long time. What will be the result of price increase for Russian petrol considering deep integration of Belarusian refineries into the energy of eastern neighbors? These question of Charter97.org was addressed to the head of the Strategy analytical center, economist Leanid Zaika:

- Today we observe the way two groups of competing oil lobbies - Belarusian and Russian - have come together. They do not want to establish a common fuel market which would act according to objective economic laws.

In dollar terms a liter of RON now costs 68 cents in Russia. In Belarus it is about 60 cents. That is, even now without raising prices following excises, the Belarusian oil lobby has the ground for higher price. Besides, Russian petrol will increase in price. From this point of view, in Belarus everything is aimed at price increase for petrol.

From the social and even moral point of view, considering lower income of Belarusians, I believe, that prices should remain the same.

- What point of view will the government prefer? What will be the passage of events?

- There is no ground for petrol price increase in Belarus this month. But there is one moment - petrol price increase is the profit increase of the oil lobby: managers of refineries, top exporters of oil goods and small enterprises under their "patronage". Lukashenka's people just feed on oil and petrol.

And if there are no economic grounds for petrol price increase, in practice many things depend on intra-clan decisions of the oil lobby. After all, half of the price of Belarusian petrol is taxes, VAT and the excise.

The ratio of the exchange rate of the Belarusian ruble to the Russian one will also count. If the Russian ruble is being strengthened, then there is no need to raise the price of petrol in Belarus. If world oil prices go down and the Russian ruble fluctuates, the Belarusian oil lobby will "jam" the rise in the cost of petrol.

It should be taken into account that the authorities of both countries now talk about "the inflation fight". Therefore, from the point of view of domestic economic policy, it is unprofitable for them to raise prices for petrol until November.

- And after November?

- After November-December, when they report for results of the year, a January shock in prices including fuel prices may occur.

Fuel prices have traditionally increased in Belarus. I recall the only case - summer of 2011 - when people's protests began. In other cases, prices for petrol only increase in both countries.

They periodically fall in the USA; they fall in Germany following the world oil price drop. Belarus has its own rules. Our country completely misses the market system, here we have the lobbyist approach.