According to the decision of the Cabinet of Ministers, from today until the end of 2024, AI-92 gasoline and diesel fuel imported into the country are exempt from excise tax.
So how will the exemption of imported gasoline and diesel fuel from excise tax affect the price of fuel sold on the domestic market?
Economist expert Allahverdi Aydin, who gave a statement on this matter to the Yeniavaz.com, said that the exemption of imported fuel from excise tax will not affect the price of gasoline sold on the domestic market:
“As we know, the Cabinet of Ministers made similar decisions in previous years. The demand for AI-92 gasoline and diesel fuel in Azerbaijan is covered mainly by domestic production. The share of imported fuel in domestic demand is small. For this reason, the exemption of imported fuel from excise tax cannot affect prices in the domestic market. For example, last year Azerbaijan produced 1 million 464 tons of AI-92 gasoline. At the same time, 65 thousand tons of AI-92 gasoline were imported. Based on the figures, imported gasoline accounted for about 4% of domestic production.”
Allahverdi Aydin
The expert economist believes that the price of gasoline sold on the domestic market is quite high:
“We usually compare fuel prices with other countries. However, such a comparison is incorrect from an economic point of view. The domestic price of any product, including fuel, includes its cost, taxes, transportation costs, etc. The fact that gasoline is expensive in Europe does not directly affect the price of gasoline in Azerbaijan.”
According to the economist, the cost of AI-92 gasoline produced in Azerbaijan is not disclosed, only the price of the gasoline producer is disclosed:
“According to the latest data, the selling price of AI-92 gasoline from the enterprise is 52 kopecks per liter. It is clear that the cost of gasoline is lower than this price. Even if we take the manufacturer’s price of gasoline as the cost price, it is clearly seen that there is at least a 2-fold difference between the retail price and the cost price. Currently, about 40 kopecks of tax is added to the manufacturer’s price for each liter of gasoline, which is inadequate to the level of income of the population.”
Allahverdi Aydin claims that the difference in price is greater than the price of imported AI-95 gasoline:
“Since Azerbaijan does not produce AI-95 gasoline, it completely imports it from abroad. Last year, 86 thousand tons of AI-95 gasoline were imported into the country. The import price of gasoline, that is, the customs value, was 1 manat 20 kopecks per 1 liter. However, we know that the retail price of AI-95 gasoline in the country is 2 manats. As you can see, the difference is almost 2 times. In 2022, when the price of AI-95 gasoline was raised from 1 manat to 60 kopecks to 2 manats, the reason for this was the rise in price of imported gasoline. However, it is interesting that compared to 2022, the price of AI-95 gasoline imported in 2023 decreased by approximately 18%. However, we do not see such a reduction in prices on the domestic market.”
According to the expert, SOCAR controls both the production and import of gasoline in the country:
“SOCAR’s statements always say that any person or any company can freely import gasoline from abroad, and no one is prohibited from doing so. But despite this statement, the current situation shows that for many years SOCAR has been in a monopoly position in the production, import and wholesale trade of gasoline. Therefore, the main reason for selling AI-95 gasoline for 2 manats, the customs value of which is 1 manat 20 kopecks, should be considered SOCAR.”
Elnur Ali
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