Government develops new mechanisms to stabilize food prices and fuel supply

Prime Minister of Kazakhstan Alikhan Smailov held a meeting on the containment of rising prices for socially important food products, as well as the provision of the domestic market with fuel and lubricants and coal.

The Deputy Prime Minister, Minister of Trade and Integration, Serik Zhumangarin, said that the Ministry has developed new approaches to stabilize and fix the prices of a number of socially important food products.

Thus, it is planned to finance a new mechanism of sugar supply, which will not only saturate the market, but also to develop the sugar industry as a whole, within the available working capital. Sugar factories will be able to purchase a three-month volume of raw sugar in the amount of 136 thousand tons and ensure the permanent processing during the year.

In turn, the factories will take clear counter commitments to fix the selling price of 460 tenge / kg for 1 year, the mandatory modernization of factories, increase storage capacity and clear implementation of the plan for the development of the sugar industry.

In order to fix potato and carrot prices agreements have been reached with major producers in Pavlodar, Karaganda, Kostanay and Zhambyl regions on provision of working capital of up to 4 billion tenge. This will provide the market with the necessary volume of vegetable products at a fixed price.

Also, new measures will be taken for dairy products, buckwheat groats, rice, sunflower oil, eggs, social bread, flour, salt, beef and chicken.

Prime Minister noted that the new approaches, proposed by the Ministry of Trade, are generally supported. However, according to him, state agencies and akimats previously allowed a number of shortcomings, due to which they failed to cope with the task of stabilizing the prices of food products.

He stressed that previously repeatedly instructed to ensure an increase in funding turnover scheme to 100 billion tenge, but 10 regions have not yet done that.

"We have the production capacity in the country. Producers are ready to contract, but 26.3 billion tenge are not involved and are in the accounts of social and business corporations. Akimats until the end of September need to provide funding turnover scheme to the specified indicator," the Prime Minister said.

Also, Alikhan Smailov drew attention to the formal nature of control over trade surcharges and inefficient work of regional commissions to investigate intermediary chains.

"The work to identify unproductive intermediaries is missed, which leads to their increase. As a result, we see a constant rise in prices," the Prime Minister stressed.

According to the results of the analysis the Ministry of Trade ranked akimats in terms of the effectiveness of work to curb prices. The last places in it occupy Turkestan and West Kazakhstan regions.

In these regions, according to Alikhan Smailov, both the retail trade and the wholesale market are poorly controlled, the work on direct deliveries of agricultural products is weak. At the same time, the noted facts are characteristic of other regions.

Prime Minister separately referred to the activities of the Ministry of Agriculture, including in the provision of the country with sugar.

"We can say that this work of the Ministry has been failed. It was not possible to stabilize the domestic market in time, because there was no proper organization. In addition, the duration of decision-making by the leadership of the department affected. As a result, the country faced a rush," Alikhan Smailov said.

Thus, according to him, the Ministry does not properly coordinate the akimats and organizations for timely contracting for the supply of these products, poorly conducted work and control over the timely replenishment of stabilization funds in the regions.

"In case of further non-compliance or such formal work we will take personnel decisions on the regions and ministries," Alikhan Smailov said.

During the discussion of fuel supply to the domestic market, Alikhan Smailov emphasized that the tense situation around fuels and lubricants is due to the lack of proper coordination between the center and the regions.

In particular, according to him, the Ministry of Energy and KazMunayGas have no clear synchronization on logistics, shipment from refineries, and the required volumes of petroleum products in the regions. In addition, Kazakhstan Temir Zholy failed to ensure timely delivery of tanks to refineries and failed to adjust rolling stock delivery schedules.

"Despite the ban, gasoline and diesel fuel were exported under the guise of other goods. For example, exports of heating oil increased 11-fold. This means that there is no proper control over this issue on the part of the Ministry of Energy," Alikhan Smailov said.

The Prime Minister also added that with the connivance of KazMunayGas private contractors, who are not subsoil users, carried out oil refining at refineries, which led to the sale of petroleum products at inflated prices.

Alikhan Smailov said that due to the absence of a clear mechanism for identifying operators of subsidized fuel and lubricants in the regions, conditions are created for selecting privileged companies. In addition, the Ministry of Energy has not set a limit value of the preferential fuel, so the price is formed at the discretion of the operator.

"All these facts led to an artificial shortage of diesel fuel in the regions and the rise in prices," said the Prime Minister, adding that the authorized persons of the Ministry of Energy, KMG, LLP Petrosun and Atyrau Oil Refinery were brought to strict disciplinary responsibility for the gaps in the work.

In order to exclude unproductive intermediaries, Alikhan Smailov ordered to regulate the issues of provision of agricultural producers with privileged fuel and lubricants with establishment of a marginal amount and a final cost.

"Priority should be given to companies having refueling stations in districts and remote settlements," Alikhan Smailov said.

In addition, the Prime Minister instructed to ensure rational logistics of fuel and lubricants, including for the needs of agriculture, from refineries to storage facilities and filling stations in the regions, to consider the issue of reducing railway tariffs for transportation of fuel and lubricants during the sowing and harvesting campaigns as well as to establish regional commissions to monitor oil depots and small filling stations in order to prevent unreasonable price increases and overflows of petroleum products.

As regards provision of the regions with coal, the Head of Government ordered to elaborate in advance the issue of preventing unjustified growth of retail prices on the ground and to take immediate measures to ensure a planned supply of solid fuel, especially in remote areas.

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