Price of “the people’s gasoline” spikes in Uzbekistan as tax break expires

The price of the most-in-demand gasoline in Uzbekistan, AI-80, or “the people’s gasoline”, has spiked since January 1 following the scrapping of zeroed excise duty.

The price at some fuel stations surged to around UZS 8,800 ($0.71) per litre, whereas before the New Year celebrations it was around UZS 6,500. Gasoline stations owned by Uzbekneftegaz (UNG) were, as of January 4, selling AI-80 for UZS 6,800, the same level that was seen in December 2022.

The temporary relief provided by zeroed excise duty on both local and imported AI-80 was introduced in that month amid supply shortages faced by fuel stations selling methane. This fuel is sometimes in short supply during peak consumption periods, particularly during cold weather when demand for methane to provide heating rises.

UNG said that the company was aware of the increase in AI-80 prices and the end of the tax break that came about with the conclusion of 2023.

Initially, the zeroed status of the tax was supposed to be in effect only until the end of February. However, it was subsequently extended until the end of the year. The relief is said to have cost the government up to $100mn in revenues.

Meanwhile, on January 4, the energy ministry announced plans to phase out AI-80 gasoline to “keep up with global trends and regional practices”. AI-80 is already banned in many countries, including Kyrgyzstan and Tajikistan, which import all their required petroleum products. Currently, only Uzbekistan and Afghanistan use AI-80 in wider Central Asia.

The government has announced AI-80 production at Fergana oil refinery will be suspended by 2025. By a year later, Bukhara oil refinery is to be entirely transferred over to the production of higher-quality fuels. Both Fergana and Bukhara will only produce the Euro-5 and Euro-6 fuels after the changeover is complete.

Uzbekistan’s capital Tashkent has in recent days featured on the list of the world’s most polluted cities, according to IQAir. Officials, bloggers and environmental activists have all blamed the bad quality of AI-80 as one factor in the dire air pollution.