Coal prices at railway dead ends and retail sales points to decrease by 15-20% — Zhenis Kassymbek

At the Government meeting chaired by the Prime Minister Bakytzhan Sagintayev, Minister for Investments and Development Zhenis Kassymbek reported on the implementation of the Head of State’s instructions to reduce costs and ensure the transparency of the tariff formation system, as well as on the work on coal supply and price reduction in the regions.

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26.11.2018 5341

“According to the data provided by akimats, the work on the formation of coal reserves for household needs and for the population for the period from May 1 to Nov. 23 have been generally performed in the planned mode,” reported Kassymbek.

According to the general needs plan, in ten regions and cities of Almaty and Shymkent, coal reserves are more than 85%. According to local executive bodies, the price of household coal averages 15,000 tenge, depending on the quality and the distance to the consumer.

In order to reduce tariffs and prices for municipal coal, the Ministry for Investments and Development and the Association of Mining and Metallurgical Enterprises developed a draft memorandum between local authorities and distributors of municipal coal at railway dead ends. Local executive bodies concluded memorandums with owners of dead ends located in some regions, signing is underway in the rest of the regions. This work, according to the ministry, is scheduled to be completed within two days.

Kassymbek noted that according to the results of this signing, it is planned to reduce selling prices from dead ends and retail sales points. On average, the decline will occur by 15-20% or 2,500-3,000 tenge.

On the example of Astana, the minister explained how coal prices will be formed at dead ends. The price on the section does not change — on Shubarkul it is 5000 tenge. The trader reduces the price by 60-70%, the premium from 2,985 tenge is reduced to 885 tenge. The difference is 1900-2100 tenge. The cost of rail transportation from the Shubarkul Mine to Astana is 1,715 tenge. On transportation from the station to the overpass 1,242 tenge are spent (delivery of cars from the station to the border of the impasse, to the trestle for unloading, traveling along the owner's branch, unloading the cars).

“We believe that there are reserves to reduce, so we would ask the antimonopoly authority to study the situation. The markup of the implementer from the deadlock was 2,000 tenge, they reduce by 25-30% to 1,500–1,700 tenge. After the measures taken, the price of coal in Astana within two weeks should decrease by 18% — from 13,600-14,500 tenge to 11,200 tenge. The difference on average is 2,400 tenge,” said the minister.

In addition, the Ministry for Investments and Development conducted an analysis of coal pricing in Astana with the supply to the nearby settlements. Analysis of the delivery of coal from the dead ends to the final consumer by road transport (service) shows how the coal price is formed. For example, the delivery of coal by road from Astana to the village of Talapker costs 15,000 tenge. The price of delivery for 1 ton of coal is 2,142 tenge. As a result, the price of coal per ton with delivery to the consumer will be 15,642 tenge. After the adoption of the planned measures, the price will be 13,242 tenge.

Kassymbek stressed that due to the measures taken, wholesale and retail prices should decrease.

  • It is planned that in Akmola region the price of coal will decrease by 16%.
  • In Makinsk, Zharova Individual Enterprise cuts prices from 14,000 to 11,700 tenge.
  • In Shchuchinsk, Akhunbayev IE reduces prices from 13,300 to 11,450 tenge.
  • In Kokshetau, Kosygin IE reduces prices from 13,740 to 11,500 tenge.

In the Almaty region, the price cutting will be 18%:

  • Panfilov district, Bakart IE reduces from 16,000 tenge to 12,900 tenge.
  • Karassay district, Ugolek IE reduces from 14,500 tenge to 11,400 tenge.
  • Ushtobe, Insan IE reduces from 13,400 tenge to 11,900 tenge.

In the North Kazakhstan region, the price of coal should decrease by 17%:

  • Tainshin district, Musayev IE reduces from 13,500 tenge to 11,250 tenge.
  • Petropavlovsk, Turdy-ogly IE reduces from 14,100 tenge to 11,950 tenge.
  • Ualikhanov district, Makhatov IE reduces from 13,500 tenge to 11,555 tenge.

In Shymkent, the price cuts will amount to 14% from 14,700 tenge to 12,150 tenge.

Kassymbek noted that after the signing memorandums, the cost reduction of Shubarkol coal at the republic’s railway dead ends will average 15-20%. Also they are ready to reduce the prices for coal of Maykuben West and Karazhyra LLP. In conclusion, the minister said that akimats need to complete all work on this memorandum within two weeks.

Following the report hearings, Prime Minister Sagintayev noted that the Government, for its part, had completed all the work to reduce coal prices, now the main work is for akimats. In this regard, regional akims are instructed to take control of the coal delivery to the final consumer, as well as against the background of a 15-20% decline in coal prices at dead ends, to prevent unreasonable price increases.

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