Gas protests in western Kazakhstan that began after the New Year are threatening to escalate into a full-scale political crisis. The local conflict in the Mangistau region over the prices of liquefied gas has become another indicator of the general socio-economic trouble in the republic. The central authorities had to intervene in the situation, but the measures taken in a fire order did not suit the demonstrators, who demanded the resignation of the government.
This story was not without the use of forceful methods. Mass protests broke out on the morning of January 2 in Aktau, Zhanaozen and other settlements in the Mangistau region of Kazakhstan. Taking to the streets, motorists demanded to reduce the cost of liquefied gas, which has doubled since January 1 – from 60 to 120 tenge (from 10.2 to 20.5 Russian rubles) per liter.
In Aktau, fighters of the National Guard, holding hands, pushed back the protesters and took them into a cordon: this technique (kettling) means keeping the protesters in a ring without the opportunity to leave. Military transport aircraft also arrived at the scene.
Attempts by the local administration to calm the passions failed. In Zhanaozen, people drove out from the central square the representatives of the akimat (administration) of the Mangistau region who had come to the negotiations. Although they reported that they managed to negotiate with the owners of the gas station on the reduction of gas prices from 120 to 85-90 tenge per liter.
The President of Kazakhstan, Kassym-Zhomart Tokayev, also reacted to what was happening, who instructed the government “to urgently consider the situation in Zhanaozen, taking into account economic feasibility, in the legal field.”
In turn, the Cabinet of Ministers promised to implement a package of measures to regulate the price of liquefied gas. A price fixing investigation has been launched against the owners of the gas stations.
Liquefied gas is one of the most widespread types of vehicle fuel in the region. Since its cost is “hardwired” into the price structure of most consumer goods and services, the increase is automatically reflected throughout the supply chain. But the point here is, rather, in a psychological moment: the jump to 120 tenge per liter of this acutely social product was a shock for consumers.
Officials shrug their shoulders: they say, we get any kind of fuel at market prices. However, according to independent experts, the authorities have not learned how to smooth out surges, when it is necessary to include a controlled regime, to subsidize the price difference in order to avoid a surge of discontent and increased inflation. By the way, according to official data, in January-November 2021, inflation in Kazakhstan was at the level of 8.7%, reaching its maximum value since the end of 2016. And food products have risen in price over this period by up to 11%.
Energy Minister Magzum Mirzagaliyev, having convened an urgent briefing, referred to problems with the cost of fuel production at the Kazakh Gas Processing Plant (KazGPP) in Zhanaozen. When it is 100 thousand tenge per ton (this is more than the desired 50-60 thousand), “then we have two options: we will either sit in a constant deficit, and our factories will simply stop at some point, or will be accepted these may not be very popular measures, ”the head of the department explained.
The second reason for the current crisis is the growth in consumption of liquefied gas to 1.6 million tons in 2021, Mirzagaliyev noted. At the same time, production does not grow (there is no investment attractiveness for its expansion), and frequent repairs of worn-out gas processing plants periodically lead to a decrease in total fuel production. The deficit especially worsened last year, as the number of vehicles converted to liquefied gas has almost doubled over the past three years – from 139,990 units to 313,373 units. The minister also mentioned one more nuisance: in conditions when in neighboring states (Russia, Kyrgyzstan, Azerbaijan, Ukraine) the prices for liquefied gas are much higher than in Kazakhstan, market,
Kazakhstani economists and political analysts agree that gas will only get more expensive in the future, since pricing has been artificially restrained for too long. And from January 1, 2021, 100% of trading goes through commodity exchanges.
“In the conditions of exchange trading, demanding a refund of the price of 60 tenge per liter is at least strange,” says Andrey Chebotarev, an analyst with the international investment company Exante. “Apparently, the rest will pay for the cheap gas for the protesters.”
In the opinion of Aset Nauryzbayev, a professional power engineer, the rise in value is caused by too small quotas allocated by the government for the domestic market. The Department of Energy is responsible for calculating these quotas. And political scientist Dosym Satpayev warns: the price jump creates an additional factor of pressure on household budgets. Protest moods in different segments of Kazakhstani society are growing stronger, and at any moment, for any reason, a powerful social explosion can occur.