Thursday, October 23, 2014


Uzbekistan

Uzbek Motorists Running On Empty, Again

Long lines have been forming outside Uzbek gas stations amid a chronic energy shortage (file photo).
Long lines have been forming outside Uzbek gas stations amid a chronic energy shortage (file photo).
By Farruh Yusupov
Sometimes it seems there is no gasoline to be had in energy-rich Uzbekistan.

Now is just such a time. For weeks, motorists have been scouring the streets for filling stations that remain open. When they find one, they form a line of cars whose length has become a measure of the state-run energy sector's inability to provide for the country's fuel needs.

"I have just bought some gasoline and the queue was some 5 kilometers long," was how one Samarkand resident recently described the line at his local station. "There is virtually no gasoline in Samarkand. Look at this traffic, it's not moving. This is life! We're not living, just surviving."

Incredibly, he can count himself lucky. Across the country, so many gasoline stations have posted "out of fuel" signs that in many places the only option is the black market.

There, the price of gasoline is whatever desperate customers will pay.

A motorist in Kokand, in the Ferghana Valley, told RFE/RL's Uzbek Service that he recently bought one liter of gasoline for 8,000 soms, or $3.60. That is about four and-a-half times the normal state-set price for gasoline at filling stations.

The crisis is latest in a series of gasoline shortages that have hit the country each fall since 2010 and which analysts say reflect systemic problems throughout Uzbekistan's energy sector.

According to Sergei Yezhkov, an independent political analyst in Tashkent, Uzbekistan is producing too little oil and gas to adequately supply both its export and domestic markets.

"Uzbekneftegas [Uzbekistan's state-owned oil and gas company] is constantly reducing the production of gas and gas condensate," he says. "Oil production, gas production, is declining. So this is a problem in the whole system and Uzbekneftegas is showing no signs of reforming itself."

Aging Fields, Old Technology

Analysts say Uzbekistan's oil and gas production is declining because its Soviet-era fields are aging and Tashkent has failed to attract foreign investment to upgrade its extraction technology.

According to the 2013 "BP Statistical Review Of World Energy," Uzbekistan's oil production fell by 12 percent to 3.2 million metric tons in 2012. As much as a third of its oil production comes from gas condensate.

The amount of oil produced is well below what is needed to meet Uzbekistan's domestic consumption, which totaled 3.9 million metric tons in 2012.

The decline in oil production is felt all the way up the supply chain, particularly at Uzbekistan's two refineries in Ferghana and Bukhara.
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One employee of UzGazOil, the country's chain of state-supplied gas stations, told RFE/RL that both of Uzbekistan's refineries regularly operate below capacity. He requested anonymity for fear of reprisals for talking to the media.

Separately, an employee of the Ferghana oil refinery privately confirmed to RFE/RL that the facility currently "is not producing any gasoline at all."

One way to compensate for the country's declining oil production is to import oil or gasoline from neighboring Kazakhstan and Turkmenistan. But imports require spending hard currency, something Tashkent seems loath to do.

Yezhkov puts this down to a lack of funds.

"The country [Uzbekistan] does not have money to buy from abroad," he says. "The government is allocating as much as possible. From what I understand, we are borrowing gasoline from neighbors. We have debts to the Kazakhs, we have debts to the Turkmen. We are borrowing in order to mitigate the problem. If the government had any possibility to fill the market with energy resources, it would have done so because, for Uzbekistan, stability is a higher priority than anything, including saving up money. We just don't have the possibility."

But others suggest the problem is less a lack of funds than Tashkent's refusal to give up its monopoly of the energy sector and allow private businesses to compete in supplying the market.

"In official documents, like the Constitution, Uzbekistan is a market economy," says Saparbay Jubayev, a former official of the Uzbek Finance Ministry and now a professor at the Eurasian Institute of Economics in the Kazakh capital Astana. "In reality, however, Uzbekistan, unfortunately, still maintains a planned economy that is a holdover from Soviet times. But unlike in the former Soviet Union, where there was strict control, Uzbek authorities have long lost control of the situation, and that causes these kinds of crisis situations. The only way of avoiding this is to move to a real market economy. It is difficult to understand Uzbek officials' behavior, but it looks like they don't want to lose the means to make easy money."

Dangerous DIY Solutions

Uzbekistan's top-down, state-controlled system offers ample opportunities for corruption. As the country's most profitable industry, the oil and gas sector is tightly controlled by the inner circle around Uzbek President Islam Karimov.

Uzbek officials have long denied that inadequate supplies are more than a temporary problem. But with long lines seen at gas stations every autumn, representatives of Uzbekneftegaz have variously blamed motorists for hoarding gasoline ahead of expected price hikes, or blamed increased fuel consumption by farmers during the cotton-harvest season.

Faced with chronic gas shortages, some Uzbek motorists are trying to find their own solutions by converting their cars to run on compressed gas comprising a mixture of methane and propane.

The conversion offers some attractions: It can be done easily by mechanics, compressed gas costs half the price of gasoline, and there are no laws that forbid using the fuel.

But converting to compressed gas is also risky. If the tinkering is not done well, the unstable gas -- which is not liquefied -- can easily explode.

Press reports from Uzbekistan over the past month have mentioned at least 10 deaths from car explosions, including one in the central market of Tashkent that claimed three lives.


Written in Prague by RFE/RL correspondent Charles Recknagel, based on reporting by RFE/RL Uzbek Service correspondent Farruh Yusupov and other correspondents from RFE/RL's Uzbek Service

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