Astana has increased the cap on wholesale LPG prices in order to narrow losses for producers supplying the Kazakhstan market
The Kazakh government has increased the cap on wholesale LPG prices by 12pc to 45,158 tenge/t ($100.40/t) excluding value-added tax (VAT) from 1 July in order to reduce losses for producers selling on the domestic market.
Maximum retail autogas prices have also risen to 59–94 tenge/litre ($0.13–0.21/l) depending on the region. "We are talking about [a slight increase] of 5-8 tenge. Given that companies now have very limited opportunities for cross-subsidising this area of business at the expense of other activities, this is a necessary measure," energy minister Almasadam Satkaliyev said on 12 June.
The regulated price ceiling is much lower than the cost of LPG production so plants incur losses of 20,000-30,000 tenge/t and producers are reluctant to raise output, the energy ministry says. LPG demand rose by 400,000t, or 28pc, in Kazakhstan last year, driven by higher feedstock use at petrochemical firm KPI's 550,000 t/yr Atyrau propane dehydrogenation (PDH) plant and growing autogas sales. The government partially banned LPG exports in November 2023 for six months to prevent a domestic shortage, which was extended in May for a further six months.
Domestic LPG supplies are now largely sufficient, with shortages only occurring in west Kazakhstan recently after a flood washed away a section of the Uralsk-Atyrau highway that is used for deliveries from the Atyrau refinery, local market participants say. Kazakh LPG output rose by 50,000t on the year to 1.28mn t in January-May, while exports fell by 58,400t to 318,700t.
The government had planned to raise regulated wholesale prices by 10pc and retail prices by 12pc from 1 January. It also intended to gradually raise prices every six months until they reached 70,000 tenge/t excluding VAT — where they would achieve breakeven levels for producers. The wholesale price in Kazakhstan stood at 40,320 tenge/t excluding VAT as of 1 July. Regulated fuel prices were introduced on 6 January 2022 after the deregulation of autogas prices led to rates doubling in west Kazakhstan, prompting violent protests and the resignation of the government.
