Sylvie Willis
In early January 2022, fuel prices in Kazakhstan rose sharply after the government lifted price controls on liquefied petroleum gas (LPG). This increase sparked protests across the country, particularly in the cities of Zhanaozen and Almaty, where demonstrators took to the streets to express their anger over the rising cost of fuel and the resulting surge in consumer goods prices. The protests, which began as a response to the economic policies, soon took on a more political tone, with calls for the country's long-time leader Nursultan Nazarbayev to step down. The government responded to the unrest by declaring a state of emergency and deploying security forces to restore order, resulting in casualties on both sides. The crisis also led to a change in leadership, with President Kassym-Jomart Tokayev replacing Nazarbayev as the head of the Security Council and appointing a new acting prime minister.
| Characteristics | Values |
|---|---|
| Reason for fuel price rise | The transition to electronic trading for LPG |
| Date of protests | January 2022 |
| Locations | Zhanaozen, Almaty, Mangystau, Mangistau, Nur-Sultan |
| Protester demands | Cheaper fuel, resignation of Nazarbayev |
| Outcome | The government stepped down |
| Current fuel prices | Gasoline: 205 tenge/litre; Diesel: 295 tenge/litre |
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What You'll Learn
Protests sparked by fuel price rises
In early January 2022, protests broke out in Kazakhstan over a sharp and sudden spike in fuel prices. The demonstrations began in the western city of Zhanaozen, where many residents use liquified petroleum gas (LPG) to power their cars. The government had lifted price caps on LPG, causing a surge in consumer goods and a rise in the cost of living. This was particularly felt in a region already suffering from poor roads, substandard public amenities, and high food costs.
The protests quickly spread across the country, with violent clashes between demonstrators and police. Angry Kazakhs forced their way into government offices, and police vehicles were captured and set on fire. The government responded by declaring a state of emergency in the cities of Almaty and Mangystau, and the president, Kassym-Jomart Tokayev, announced a decrease in LPG prices in Mangystau to ensure stability. However, the protests continued, with growing political demands from demonstrators.
The fuel price hike was a result of a transition to electronic trading for LPG, which began in 2019 and concluded in 2022. This policy ended the subsidization of prices for domestic fuel consumers, allowing the market to dictate prices. The energy minister, Magzum Mirzagaliyev, accused gas stations in the Mangystau region of price-fixing, with mark-ups on LPG sales of 25-50 percent.
The protests reflected a broader discontent among ordinary Kazakhs over rising income inequality, a lack of democracy, and the authoritarian government's violation of fundamental freedoms. The government's inability to address these issues effectively led to a deepening crisis, with the prime minister and his cabinet being dismissed, and the president, Tokayev, replacing his predecessor, Nursultan Nazarbayev, as the leader of the country's Security Council.
The fuel price hikes and subsequent protests had a significant impact on Kazakhstan, revealing underlying social and political tensions and highlighting the challenges of transitioning to a market-based economy. The government was forced to balance economic reforms with the need to maintain social stability and address the growing demands for political change.
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The transition to electronic trading
In 2019, the Kazakh government began a phased transition to electronic trading for liquified petroleum gas (LPG), which concluded in 2022. This transition lifted price caps for LPG, allowing the market to dictate prices instead of the state. As a result, LPG prices rose sharply, particularly affecting consumers in regions with high demand for this fuel, such as western Kazakhstan.
Prior to the transition, LPG was often sold at a loss for producers because state-regulated prices were set below the production cost. This led to LPG shortages and illegal trading, with black-market operators exporting the commodity to countries with higher prices. The government's goal in transitioning to electronic trading was to address these issues and make the LPG market more attractive to producers.
However, the sudden spike in LPG prices triggered widespread protests across Kazakhstan, as many people use LPG to power their cars. The protests, which began in the western city of Zhanaozen, spread across the country and turned violent. Angry Kazakhs took to the streets, demanding cheaper fuel and expressing discontent with rising income inequality and the lack of democracy.
The government insisted that the transition to electronic trading was not the sole factor in the price increases, blaming gas stations in the region for price-fixing. Despite these claims, the protests led to a political crisis, resulting in the dismissal of the country's prime minister and cabinet. The government was forced to reconsider its plans to switch to market rules in the face of escalating anger and protests.
In 2023, Kazakhstan again faced the challenge of increasing fuel prices, with the acting energy minister announcing an 11-20% rise in gasoline and diesel prices to align with neighbouring countries' rates. This decision was made despite the political risk, as the country aimed to address fuel shortages and make the refining industry more attractive to investors.
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Fuel price caps lifted
In January 2022, the Kazakh government's decision to lift price caps on liquefied petroleum gas (LPG) sparked protests across the country. LPG is a common fuel used in vehicles in Kazakhstan, and the price increase was particularly significant in the western province of Mangystau. The transition to electronic trading for LPG, which began in January 2019 and concluded in 2022, was a significant factor in the rise in fuel prices. This policy change led to a sharp increase in costs due to high demand for LPG.
The protests, which began in the town of Zhanaozen, spread across Kazakhstan and became the biggest wave of protests in the country's history. Angry Kazakhs took to the streets, demanding cheaper fuel and expressing discontent over rising income inequality and a lack of democracy. The protests turned violent, with dozens of protestors and law enforcement officials killed in the main city of Almaty. In response to the escalating anger, the government was forced to shelve its plans for switching to market rules and address the fuel sector's problems.
The energy minister, Magzum Mirzagaliyev, accused gas stations in the region of price-fixing, with mark-ups on LPG sales higher than expected. The government's decision to lift price caps on LPG was a politically risky move, as LPG is a crucial fuel source for many Kazakhs. Despite being a major oil producer, Kazakhstan has faced fuel shortages due to price regulations that have made the refining industry unattractive to investors.
The spike in fuel prices triggered a national crisis, leading to the resignation of the government and the declaration of a state of emergency in Almaty and Mangystau. President Kassym-Jomart Tokayev replaced the country's long-time leader, Nursultan Nazarbayev, as the head of the Security Council, and appointed Alikhan Smailov as the acting prime minister. Tokayev also announced a decrease in LPG prices in Mangystau to ensure stability.
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Gas station price-fixing accusations
In January 2022, protests erupted in Kazakhstan over a sharp and sudden spike in fuel prices. The demonstrations, which began in the western town of Zhanaozen, quickly spread across the country and turned violent, resulting in the deaths of dozens of protestors and at least eight law enforcement officers. The anger was directed at the government's decision to lift price caps on liquefied petroleum gas (LPG), commonly used as fuel for vehicles.
The Kazakh government defended its transition to electronic trading for LPG, which began in January 2019 and concluded in 2022. This move aimed to end the subsidization of domestic fuel prices and let market forces determine the rates. However, this policy led to a significant increase in LPG costs, especially in high-demand areas. In response to the backlash, the government pointed to another factor contributing to the price surge: they accused gas stations in the Mangystau region of price-fixing.
Energy Minister Magzum Mirzagaliyev stated that the mark-up on LPG sales by these gas stations was between 25-50 percent, higher than expected. This unusually high mark-up led to suspicions of price speculation among the filling stations. The government's accusation of price-fixing suggests that gas stations may have coordinated to artificially inflate the prices of LPG, taking advantage of the transition to electronic trading.
The price-fixing accusations against gas stations in Kazakhstan highlight the complexities of the country's fuel sector reforms. While the transition to electronic trading and market-dictated prices was intended to benefit producers and attract investors, it also removed the price caps that protected consumers from sudden spikes. This resulted in a backlash from citizens who were already facing rising income inequality and discontent with the country's authoritarian rule.
The gas station price-fixing accusations in Kazakhstan underscore the challenges of implementing economic reforms in a volatile political environment. The government's efforts to liberalize the fuel market and attract investments by appearing politically stable clashed with the reality of rising public discontent over fuel prices, income inequality, and a lack of democracy. This situation ultimately contributed to a national crisis, leading to violent protests and a state of emergency in the country.
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Rising income inequality
In January 2022, Kazakhstan experienced a sharp and sudden spike in fuel prices, which led to civil unrest and violent protests across the country. The crisis was triggered by the government's decision to lift price caps on liquefied petroleum gas (LPG), causing fuel prices to double. This, in turn, led to a significant increase in food prices, exacerbating the deepening income inequality that has plagued the nation for decades.
The root of the protests can be traced back to the phased transition to electronic trading for LPG, which began in January 2019 and concluded on the first day of 2022. This policy change ended the subsidization of prices for domestic fuel consumers, allowing market forces to dictate prices. As a result, trade in LPG shifted predominantly to online trading platforms, with exceptions for sales to the petrochemical sector and a few other cases. The transition to electronic trading was not the sole factor contributing to the surge in fuel prices, as energy ministers pointed to potential price-fixing by gas stations in the region, with mark-ups on LPG sales higher than expected.
The protests, which began in the western Kazakhstan town of Zhanaozen, quickly spread across the country. Demonstrators demanded the resignation of the government and a lowering of LPG prices. The anger was directed towards former President Nursultan Nazarbayev, who was widely considered the country's ultimate ruler despite stepping down in 2019 and being replaced by his hand-picked successor, Kassym-Jomart Tokayev. In response to the escalating situation, President Tokayev declared a state of emergency and dismissed the country's prime minister and cabinet.
The rising income inequality in Kazakhstan has been a long-standing issue, worsened by the coronavirus pandemic and a lack of democracy. The country's authoritarian government has been criticized for violating fundamental freedoms, including reports of irregularities during the 2019 presidential elections. The discontent among ordinary Kazakhs runs deep, fueled by a growing discontent over political instability and a perception of widening economic disparities.
The fuel price hike served as a catalyst for the protests, symbolizing the broader grievances felt by the people. The sudden increase in fuel prices, which are closely linked to transportation and production costs, had a ripple effect on the overall cost of living, particularly in regions where food needs to be transported over large distances. This, in turn, disproportionately impacted lower-income households, exacerbating the existing income inequality and contributing to a sense of economic disenfranchisement among the populace.
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Frequently asked questions
Fuel prices doubled after the government lifted price caps for liquified petroleum gas (LPG).
The rise in fuel prices sparked violent protests, with demonstrators forcing their way into government offices and capturing police vehicles. The government subsequently stepped down.
The transition to electronic trading for LPG, which concluded on the first day of 2022, meant that the market dictated LPG prices. This policy led to a sharp rise in costs.
