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The leader of the Democratic Movement – United Georgia party, Nino Burjanadze, discussed the existing economic situation in the country as a guest of the talk show, Archevani,

and blamed the Government of Georgia for its inactivity whilst citing the issue of petrol prices. According to Ms Burjanadze’s assessment, despite the record drop in oil prices worldwide, Georgia was the only country where petrol prices did not decrease with the Government of Georgia not having reacted upon this whatsoever.

FactCheck

took interest in the accuracy of Nino Burjanadze’s statement.

FactCheck has written about petrol prices in an earlier article.

According to Platt’s, the prices of petroleum products started to decrease on the international market beginning in the second half of July 2014 and continued until January 2015. In July 2014, the price for Regular type petrol in Georgia was GEL 2.14. The price for one tonne of oil was approximately USD 1,036 on the world market. In the period between July 2014 and January 2015, together with the decrease in oil prices on the international market, the price for Regular type petrol dropped by GEL 0.55.

Petrol prices have been falling on the local Georgian market in parallel with the decreasing oil prices on the world market. Of note is that the lowest price for one tonne of petrol at Platt’s was registered on 13 January 2015 when it equalled USD 446. To compare, the average price for Regular type petrol at the end of January 2015 was GEL 1.59-1.75 in Georgia. According to Platt’s in January 2015, oil prices have been fluctuating but they have never gone below USD 446. Since the second half of January 2015, oil prices have started to rise. The trend continued in February 2015 as well. The price for one tonne of petrol was USD 586 at the beginning of the month whilst it reached USD 621 at the end of the month.

The prices for Regular type petrol did not increase on the local market in February 2015. The rising oil prices at Platt’s had their impact on local Georgian market prices only in March 2015. According to the data of March 15-18, the price for Regular type petrol increased by GEL 0.04 on the local market. Accordingly, the price for Regular type petrol has been fluctuating within the margins of GEL 1.63-1.75 at Georgian petrol stations. Starting from April, the average price for Regular type petrol has changed twice. At the beginning of April, the price rose to GEL 1.68-1.82 and at the end of the month it reached GEL 1.73-1.89.

In addition to world market prices, petrol prices are determined by some other no less important factors such as Value Added Tax (VAT), excise tax, transportation costs, distribution among local branches and currency exchange rates, among others. Beginning from November 2014, GEL started to depreciate against USD and this trend continued in this year as well. In March, GEL depreciated against USD by 2.8% and by 3.6% in April which resulted in increased petrol prices on the local market. It must be noted that since December 2014, GEL has depreciated by almost 20%. If the GEL exchange rate had kept at the December 2014 level, the retail price for Regular type petrol would have been GEL 1.73 which is GEL 0.1 less as compared to the prices of most of the local petrol stations. Therefore, the price for petrol could have been 6% cheaper as compared to what it is today. Against the background of the depreciation of GEL and rising oil prices on the world market, petrol prices on the local Georgian market are expected to increase.

According to the General Director of the Wissol Group, Vasil Khorava, the substantial rise of oil prices on the international market was the cause behind the surging prices for petrol in Georgia. Mr Khorava said that the price for one tonne of petrol was USD 450 at the beginning of 2015 whilst nowadays the price has reached USD 700. In addition, GEL has been depreciated although the crucial factor herein is the rising oil prices on the world market. Mr Khorava also underlined that his company modifies prices based on Platt’s and the currency exchange rate. Prices increased both in February and March although local prices at Wissol petrol stations did not increase during this period owing to the existing petrol reserves. He did indicate, however, that his company started to increase prices at the beginning of April.

Of mention is that the Prime Minister of Georgia, Irakli Gharibashvili, has taken interest in oil prices several times and even ordered the Competition Agency to conduct research in this regard. The Prime Minister received the interim results of that research on 5 January 2015 although they have not yet been publicised. At his meeting with the Parliamentary Minority, the Prime Minister stated that the research process was still ongoing and it was impossible to conclude the work in a month or two owing to its complex nature.

Conclusion

According to Platt’s, oil prices on the world market have been going down since the second half of July 2014. In the same period, petrol prices also dropped on the local market. It must be noted that the lowest petrol price was registered on 13 January 2015 when the price for one tonne of petrol was USD 446. In total, the price for Regular type petrol decreased by GEL 0.55 on the local Georgia market in the period between July 2014 and January 2015.

However, against the background of a later oil price increase at Platt’s and the depreciation of GEL, local petrol prices have also increased and perhaps this trend will continue in the future as well.

It must also be noted that the Government of Georgia has already taken interest in the changes in local petrol prices in Georgia and has asked the Competition Agency to study this issue.

FactCheck concludes that Nino Burjanadze’s statement is a LIE.
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