06.Jul .2022 12:00

Fuel Became Expensive For The Gov’t

Fuel Became Expensive For The Gov’t
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The Government of Georgia, including the ministries and public agencies, buy fuel from the main oil companies operating in the country on the basis of a consolidated tender. According to the special formula, the purchase price is updated every month based on the agreement between the parties.

As of the contract, the price is determined at the beginning of the month based on the average prices of the previous month. In particular, the contract is based on the average price of one ton of gasoline recorded on the PLATTS EUROPEAN MARKET during the month, as well as the GEL exchange rate, excise and VAT taxes. Only two of these multipliers change every month, namely the Platts price and the exchange rate of GEL.

The Platts average price for June was USD1,361, which was 10.9% higher than May's price of USD 1,227.

However, there was no fuel price increase of 10.9%, because the exchange rate of GEL strengthened in June. In May, 1 USD was worth 2.95 GEL on average, which was 0.6% less than the April exchange rate.

Taking into account these two factors, the price of fuel for the government increased in July.

• Regular - June price for the government is GEL 3.91, July price is GEL 4.24, an increase of 8.44%;
• Premium - June price for the government is GEL 3.92, July price is GEL 4.25, an increase of 8.31%;
• Super - June price for the government is GEL 4.24, July price is GEL 4.57, an increase of 7.8%.

However, Platts price hike in June has not yet been fully reflected in the retail chains for ordinary consumers, and the price may increase in the coming weeks, although at the same time, a decrease in the price of crude oil is also noticeable. In the last one week, the price of crude oil has decreased from USD 108 to USD 100 per barrel, which in turn will reduce the price of Platts. In addition, Georgia has increased Russia's share of fuel imports in the last two months, because it is possible to buy cheaper oil from this country compared to EU countries.

Currently, the price of regular in retail chains is GEL 3.59-3.80, premium - GEL 3.99-4.15, and super - GEL 4.15-4.20.