BAKU -- Azerbaijan's government has announced a sharp increase in the state-regulated price ceiling for gasoline.
The Tariff Council in Baku -- the state board that sets the maximum prices that firms can charge for certain commodities and services -- announced the decision at 10 p.m. on December 2.
With the rule going into effect at midnight, drivers across Azerbaijan effectively awoke on December 3 to gasoline price hikes ranging from 27 to 33 percent.
The council also increased the price of natural gas for industrial facilities, raising it from 42 manats ($53.50) per 1,000 cubic meters to 80 manats ($102).
No explanation was given by the Azerbaijani authorities.
But economist Rovshan Agayev, the deputy head of the Baku-based nongovernmental organization Public Union to Assist Economic Initiatives, says he thinks the decision may be related to an expected fall in state revenues due to decreasing oil production.
"Oil production is falling. The government's revenues from the oil sector will drop by 2 billion manats [about $2.43 billion] in 2014 compared to what it was this year," he said. "Apparently, the government wants to compensate for this lost revenue by raising prices."
The new price of gasoline now varies between 0.7 manats ($0.89) and 0.8 manats ($1.02) per liter, depending on the type of fuel. The previous price had been 0.55 to 0.60 manats.
A liter of diesel fuel is now 0.60 manats ($0.76), up from 0.45 manats.
Adil Amirov, a city bus driver in Baku, says that because of the system used by transit authorities to collect money from drivers each day, the gasoline price hike may force him to quit his job.
"If they don't decrease the amount of money we have to pay back [to the transit authority] at the end of the day, it won't be worth working anymore. Because of this price hike, we have to pay an extra 15 manats out of our daily earnings. [Before this price hike], we were only left with about 25 manats [about $30] per day," he says.
"I won't work for just 10 manats [$12] a day. Today, I am quitting unless they decrease the amount of money we must return. When gasoline prices go up, the cost of everything increases."
Some lawmakers in Baku are also objecting to the decision, saying the move will result in higher prices for many other goods and services.
Economist Agayev says he agrees that other price increases are likely.
"According to our analysis of next year's draft budget, the government plans to raise communal and fuel prices twice. That means prices for water, electricity, and natural gas also will rise," he says. "The government may achieve this according to a certain schedule -- not immediately."
The Tariff Council last announced a gasoline price increase in January 2007, raising the price ceiling by 50 percent.
That decision was announced before the end of the business day, resulting in a panic rush and long lines at gasoline stations as drivers tried to top off their fuel tanks.
The Tariff Council in Baku -- the state board that sets the maximum prices that firms can charge for certain commodities and services -- announced the decision at 10 p.m. on December 2.
With the rule going into effect at midnight, drivers across Azerbaijan effectively awoke on December 3 to gasoline price hikes ranging from 27 to 33 percent.
The council also increased the price of natural gas for industrial facilities, raising it from 42 manats ($53.50) per 1,000 cubic meters to 80 manats ($102).
No explanation was given by the Azerbaijani authorities.
But economist Rovshan Agayev, the deputy head of the Baku-based nongovernmental organization Public Union to Assist Economic Initiatives, says he thinks the decision may be related to an expected fall in state revenues due to decreasing oil production.
"Oil production is falling. The government's revenues from the oil sector will drop by 2 billion manats [about $2.43 billion] in 2014 compared to what it was this year," he said. "Apparently, the government wants to compensate for this lost revenue by raising prices."
The new price of gasoline now varies between 0.7 manats ($0.89) and 0.8 manats ($1.02) per liter, depending on the type of fuel. The previous price had been 0.55 to 0.60 manats.
A liter of diesel fuel is now 0.60 manats ($0.76), up from 0.45 manats.
Adil Amirov, a city bus driver in Baku, says that because of the system used by transit authorities to collect money from drivers each day, the gasoline price hike may force him to quit his job.
"If they don't decrease the amount of money we have to pay back [to the transit authority] at the end of the day, it won't be worth working anymore. Because of this price hike, we have to pay an extra 15 manats out of our daily earnings. [Before this price hike], we were only left with about 25 manats [about $30] per day," he says.
"I won't work for just 10 manats [$12] a day. Today, I am quitting unless they decrease the amount of money we must return. When gasoline prices go up, the cost of everything increases."
Some lawmakers in Baku are also objecting to the decision, saying the move will result in higher prices for many other goods and services.
Economist Agayev says he agrees that other price increases are likely.
"According to our analysis of next year's draft budget, the government plans to raise communal and fuel prices twice. That means prices for water, electricity, and natural gas also will rise," he says. "The government may achieve this according to a certain schedule -- not immediately."
The Tariff Council last announced a gasoline price increase in January 2007, raising the price ceiling by 50 percent.
That decision was announced before the end of the business day, resulting in a panic rush and long lines at gasoline stations as drivers tried to top off their fuel tanks.
