Azerbaijan To Reduce Prices Of Euro-5 Gasoline, Boosting Local Production
(MENAFN- AzerNews)
Ulviyya Shahin
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From July 15, 2024, consumers in Azerbaijan can expect a
decrease in the price of domestically produced AI-95 gasoline,
which meets Euro-5 quality standards. The price is set to drop by
40 gapiks to 1.60 manat per litre, a move attributed to current
market dynamics as reported by SOCAR, the State Oil Company of the
Azerbaijan Republic.
SOCAR's ongoing efforts to modernise and upgrade the Heydar
Aliyev Oil Refinery (NEZ) are nearing completion. This initiative
aims to bring the refinery's production facilities up to Euro-5
standards, aligning with stringent environmental and quality
benchmarks. The construction of new diesel and gasoline production
units has concluded, along with the activation of essential plant
and technological infrastructure. Consequently, SOCAR's AI-92 and
AI-95 gasoline brands have already attained Euro-5 compliance.
Since 2014, Azerbaijan has been reliant on imported EU-95
gasoline, purchased at international prices to meet domestic
demand. With the completion of these upgrades, the country
anticipates a significant shift towards local production to satisfy
its fuel requirements.
Economist Rashad Hasanov, speaking to Azernews ,
highlighted the potential impacts of this local production
milestone on pricing strategies. Hasanov noted the current
imbalance between market demand and production capacity. In
response, a strategic proposal has been put forth to narrow the
price differential between AI-95 and AI-92 fuels. This involves
increasing the price of AI-92 while simultaneously reducing the
price of AI-95, a tactic aimed at stimulating demand for the
higher-quality AI-95 gasoline.
Hasanov emphasised the market's responsiveness to price changes,
particularly citing the higher price elasticity of AI-95 gasoline
compared to other fuel types. He cautioned that any future price
increases could redirect consumer preferences towards AI-95,
underscoring the need for a sustainable pricing policy.
"In the medium to long term, the government's goal to promote
consumption of superior-quality fuels and mitigate environmental
impact necessitates a stable pricing framework," Hasanov
concluded.
This strategic shift towards local production of Euro-5 gasoline
marks a significant step in Azerbaijan's energy independence and
environmental stewardship, aligning with global trends towards
cleaner fuels and sustainable development goals. As the nation
prepares for these changes, stakeholders are closely monitoring
market reactions and regulatory adjustments to ensure a balanced
and resilient energy sector for the future.
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