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Prices for Oil Products not Reduced in Georgia

Prices of Oil Products Still Not Reduced in Georgia

The global trend of reducing prices on petroleum products has not had any impact on Georgia. Against the background of a collapse in world oil prices, the cost of fuel in Georgia remains unchanged for several months now.

Since January, the international price of oil fell to 31 dollars per barrel, but the Georgian market does not react to this –  oil products have not become cheaper in 2016. Expert Beka Kemularia explains this by a cartel deal between five largest oil companies operating in Georgia.

The existence of such a collusion was confirmed by the Competition Agency that fined five largest players by GEL 55 million after publishing a study of Georgia’s fuel markets at the end of 2015. The companies have categorically refused to plead monopoly and sued The Agency, protesting against the fines.

Currently, the case is being studied in Court. The private sector, in the expert’s words, continues to act in concert.

“Are we dealing with an instance of agreed price on fuel? A difference in fuel prices between the five largest companies and the smaller players can be considered as the definite answer to this question. Large companies who own large infrastructure, sometimes even the refineries, sell 30-40 tetri more expensive fuel than smaller companies that sell imported fuel,” Beka Kemularia notes.

Vano Mtvralashvili, Chairman of the Union of Oil Products Importers, has a different opinion. According to him, the decline in international oil prices will necessarily be reflected on Georgia, and the prices at the time will definitely drop.

“In December, fuel prices fell by 25 tetri, in  2016 prices have no dropped yet, but in the past year as a whole price of petroleum products fell by 40 tetri. If not the devaluation of the national currency, prices would have been considerably lower. As for the future, against the background of falling world oil prices, we should expect lower prices for oil products in Georgia too. For this  the exchange rate should be  stable and  the decline in prices in Georgia will be adequate to the world prices drop,” he believes.