DUSHANBE, December 28, 2012, Asia-Plus  -- The Tajik government has reportedly accepted the terms of an agreement on Russian fuel deliveries to Tajikistan, according to the Ministry of Energy and Industries (MoEI).

An official source at a MoEI says the Tajik government has already considered and endorsed a draft agreement prepared by Russia.  “The agreement will be sent for signing as soon as the government passes an appropriate resolution,” he noted.

According to him, the agreement provision regarding prohibition of re-export of Russia fuel to the third countries remains valid and enforceable.

The draft agreement consisting of eleven articles was sent to Tajik Deputy Minister of Energy and Industries, Zarobiddin Fayzulloyev, on November 13.

Under Article 3 of this draft agreement, the sides must consider the indicative fuel balance for the next calendar year (form October 1, 2012 to October 1, 2013) and sign the agreement taking into account Tajikistan’s economic growth.

Article 6 notes that oil products delivered from Russia to Tajikistan in the volumes not exceeding those agreed on indicative balance are not subject to re-export to the third countries.  This ban also applies to Russian oil products delivered to Tajikistan from other member nations of the Customs Union.

In the event of determining breach of the mentioned ban, the sides and their competent bodies carry out conciliation.  If the sides fail to reach mutually acceptable agreements within two months, the Russian side reserves the right to suspend duty-free fuel deliveries to Tajikistan.

We will recall that Tajikistan was exempted from paying Russian tariffs on oil and gas exports from 1995-2010 and Russia cancelled Tajikistan’s tax exemption on May 1, 2010 that resulted in gasoline prices rising in the country.  A sudden spike was reported in May 2011, when export duty for Russian gasoline rose 44 percent as compared with April.

On October 5 this year, the Ministry of Energy and Industries of Tajikistan and the Ministry of Energy of the Russian Federation signed a memorandum on the conditions of Russian oil product deliveries to Tajikistan.  The memorandum provides for signing of the government-to-government agreement on the tax-free delivery of Russian oil products to Tajikistan.

The Russian side is reportedly ready to deliver one million tons of oil products to Tajikistan free of tax per year.  According to some sources, the agreement is expected to be of indefinite duration and indicative fuel balance will be reviewed every year.

Russia demands that Tajikistan prevent re-export of imported Russian duty-free oil products to the third countries, for example to Afghanistan; otherwise, Russia may annul the agreement and impose export duty on its oil products for Tajikistan again and reduce fuel exports to Tajikistan.

Russia and Turkmenistan have provided the bulk of Tajikistan’s fuel imports this year.  A share of Russia in Tajikistan’s fuel imports is 62.3 percent and a share of Turkmenistan is 18.5 percent.

They are followed by Kyrgyzstan, whose share in Tajikistan’s fuel imports has increased from 0.5 percent in 2011 to 10.2 percent.  41,200 tons of oil products have been delivered from Kyrgyzstan to Tajikistan in January-November this year.  Gasoline accounts for 53 percent of Kyrgyz fuel shipments to Tajikistan and diesel fuel accounts for 45 percent.

As far as the overall volume of oil products imported into Tajikistan over the report period is concerned, gasoline accounted for 42.7 percent (141,400 tons) of Tajikistan’s oil product imports, diesel fuel accounted for 33 percent (112,900 tons) and aviation kerosene accounted for 17.9 percent (49,400 tons).