These days Mahsumjon Abdullaev, a taxi driver in Uzbekistan’s eastern city of Ferghana, has to wake up early every morning to join a long line of drivers who must wait hours to fill up their vehicles at a government-operated gas station. A deepening fuel shortage is abetting corruption and spreading widespread frustration across the country, according to Abdullaev.
Signs of brewing trouble first appeared in the spring when a Tashkent court froze the assets of Zeromax Gmbh, a Swiss-registered conglomerate that operated a chain of gas stations in Uzbekistan. [For background see EurasiaNet’s archives].
By July, fuel shortages were being reported across the Central Asian nation, making long lines at gas stations a daily reality.
Apart from being one of the top 15 natural gas producers in the world, Uzbekistan also possesses substantial oil reserves. But Uzbekistan has inadequate infrastructure to pump and refine the crude. Observers say that Uzbekistan’s three major oil refineries operate only at a fraction of their capacity because they have not been upgraded since the Soviet era. Uzbekneftegaz, the state oil-and-gas entity, has been tasked with upgrading refineries, but inadequate government financing has reportedly undermined the company’s efforts to implement the task, observers say.
Officials in Tashkent have not commented on the fuel crisis, and local authorities in Ferghana refuse to acknowledge problems with supply. However, on July 1 authorities hiked gasoline prices by roughly 15 percent, offering a tacit admission that there is a problem. Then, on July 13, President Islam Karimov fired the two most senior officials responsible for the country’s energy sector. While no official reason was provided for the personnel reshuffle, observers who spoke to EurasiaNet.org on condition of anonymity linked it to the ongoing fuel shortages, suggesting the officials had been dismissed for failing to upgrade Uzbekneftegaz refineries.
In the absence of an official explanation, local residents are coming up with their own theories. One popular notion is that the shortages are connected to Uzbekistan’s clan politics, with several factions battling to gain control of Zeromax’s former assets, including its fuel supply business. Another hypothesis is linked to geopolitics: after Kazakhstan and Russia formed a Customs Union in early July, the two countries are somehow trying to manipulate supplies to gain leverage over Uzbekistan. [For background see EurasiaNet’s archive].
Supply and demand may also be a factor, several Tashkent-based businessmen told EurasiaNet.org. They say the state does not have enough capacity to produce enough gasoline to meet the needs of the country’s rapidly growing population, which is now over 26 million. At the same time, the entrepreneurs add, the government is reluctant to ease its rigid control over the industry.
“We need to import fuel from Russia and Kazakhstan. But our leaders are unwilling to do so because they think we have enough fuel and that we have to be self-sufficient. But the reality is that we don’t have enough to meet our needs,” said Narimjan, a local businessman who only provided his first name for fear of government retribution.
Regardless of the cause, the shortage is having a broad impact on society. According to Abdullaev in Ferghana, the gasoline shortage has created a thriving black market. The government decree on July 1 set gasoline prices at 1,200 sum (or 74 cents, according to the official exchange rate) per liter. But on the black market, petrol prices per liter range from 2,500 to 3,000 sum ($1.55 to $1.86 at the official rate). “This is ridiculous. An average salary in Ferghana is less than $50 dollars a month,” Abdullaev says.
The gasoline shortage is also fuelling corruption, with gas vendors selling subsidized petrol at the black market price and keeping the difference, according to Nodir, a Tashkent entrepreneur with links to petrol distributors.
“People and enterprises that are well-connected are still managing to buy their desired quantities of petrol at government prices. This naturally causes anger among those who don’t have such connections,” Nodir said.
Long lines at gas stations have also caused sporadic fights, the news website Uzmetronom.com reported in mid-July. Nodir said that complaints have even attracted the attention of the Uzbek National Security Service.
Though many are seething, they are not about to make their views public. “People are afraid of the government’s security forces,” Abdullaev said. Rather than protest, some Uzbeks are trying to find alternate solutions. A few are reportedly smuggling fuel from energy-rich neighboring countries, including Kazakhstan and Turkmenistan. In addition, a growing number of drivers are installing technology that allows car engines to run on natural gas rather than gasoline.
The switch may not provide much relief, however. “It cost me about $1,500 to switch to natural gas a few months ago. I heard recently that because of the high demand [for natural gas engines] the price has gone up to $2000,” said a man from Bukhara.
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