The New Reality Awaits Belarusian Drivers

Will gasoline in Belarus cost like in Poland and Lithuania?

Oil futures in the world markets have fallen in price by about 20% compared to the peak values of April. At the same time, the price of gasoline in Belarus has risen "by a kopeck" 15 times since the beginning of the year.

Why does our country fall behind the trend and the price of gasoline is rising, while oil is getting cheaper?

Tatstsiana Manienak, an economic observer, answers questions of Charter97.org:

- In its latest report, Belneftekhim mentioned a possible reduction of fuel prices if a long-term downward trend in oil prices in the world markets maintains...

- But we still do not see it, as well as last year, despite the different dynamics of world prices...

- Yes, because the concern still earns money from trading in oil products. There is a lag of 35-40 days for the revenue, and it is not able to react synchronously to the world price dynamics.

- Nevertheless, ordinary Belarusian drivers, judging by their opinions on social networks and comments on the Internet, do not believe in "goodwill" of Belneftekhim...

- One should keep in mind that Belarus buys oil for dollars and sells petroleum products for rubles. Therefore, a price increase is necessary to make a profit, even amid the world prices drop.

Currently, Belarusian consumers do not pay the full market price of gasoline. They are being psychologically prepared for drastic price growth of fuel in the domestic market after Russia's tax manoeuvre.

Early this year our excise taxes on fuel were reduced by 25% in order to reduce the tax burden on Belarusian refineries caused by the tax manoeuvre in Russia. The situation deteriorates because of modernization at the refineries and it requires huge amounts of money. It poses additional problems with a fixed gasoline price, which could not cause acute discontent among drivers.

- But low excise taxes could not be curbed...

- Yes, the plan was to lower excise taxes all year round and to let the refineries save about $100 million. In March, the government's very sharp step on the reduction of excise taxes on fuel was offset by their sharp growth. The authorities decided to play in their favour: the decree of Lukashenka raised excise taxes on gasoline by 9-29%.

As a result, the tax burden was shifted from the refineries to filling stations. It caused quite logical indignation among the management of filling stations. This business turned problematic and unprofitable. It is not a secret that today filling stations make money not on fuel, but on related products. The letter to the government and Belneftekhim asked for an opportunity to work cost-effectively.

Thus, the problem of gasoline price remains unresolved and shifts from one market participant to another.

The authorities are afraid to get a rise out of consumers, which is best observed as a constant kopeck price growth. A Belarusian driver is not accustomed to paying for fuel at the market price yet, but the tax manoeuvre in Russia may invite a new reality for Belarusians.

The authorities know that if Russia fails to agree on compensation, our country will face the world oil price. It will require a serious review of gasoline prices in the domestic market.

Now oil costs about 80% of the world price for Belarus. And who will cover additional costs when it equals the world price? The budget is unlikely to handle it. In this case, the world oil price is compensated by the drivers - the Belarusians may experience the same. In general, Belarusian drivers should ready for the growth of gasoline prices. To change the structure of fuel costs, to switch to gas, to other modes of transport and so on.

- Some experts assert that gasoline will cost like in neighbouring countries. In Lithuania, a litre of 95 RON costs $ 1.43, in Poland - $1.37. Can prices really reach this level?

- It's too early to talk about exact numbers. There are still some unknown factors: how Russia will behave during the negotiations on the tax manoeuvre, what position the Belarusian refineries will take, what the state taxes on fuel will be, how the budget will "feel". And another important question is the demand factor: will the Belarusians be able to buy gasoline at new prices?

As far as we can see, there will be a set of factors affecting gasoline prices growth.

One should also take into account the position of the refinery management. So far, they manage to earn something by selling oil products. But the situation may change after the oil price growth up to the world prices.

- The global automotive industry has doubled its investments in the production of electric cars over the past year. Capital investments in the production of cars with ICEs are being sharply reduced. Can it lead to the fact that investments in Belarusian refineries are a mistake?

- It's possible. Although for Belarus it's not as sharp as for Europe. After a while, it may become a serious problem. The management of refineries realizes it and adjusts the development strategy of both refineries. It is assumed that Mozyr plant will continue to operate in the fuel sector, while Naftan may switch to the petrochemical one - to process petrochemical products rather than motor fuel.

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