Rising petrol prices have been the number one subject in Turkmenistan for several days now. Abdulagamid has also written about it in one of his recent posts. To ordinary Turkmen people it is certainly a much more serious problem than the recently celebrated anniversary of Gurbanguly Berdymukhammedov’s presidency (on February 11).

The News Central Asia website edited by the Pakistanis has reported…

In an expanded session of the cabinet of ministers, President Gurbanguly Berdymuhamedov announced that every car owner would get 120 liters of gasoline free of cost every month and any volumes beyond that quota would be available at ‘market price’.

The ‘market price’ was not disclosed during the cabinet meeting but it can be assumed safely that it would be several times more than the current prices of regular and hi octane petrol. At present regular petrol is sold for 400 Manats per liter and hi octane for 600 Manats.

For obvious reasons most Turkmen are not happy about the partial introduction of market prices for petrol. This will not only increase costs of transport but also gradually raise prices of other goods.

The government, in fact, does not as much intend to get more money from the market as to introduce basic mechanisms of market economy and create suitable conditions for foreign investors. Berdymukhammedov has stressed very clearly:

This is only the start of radical diversification of economy, aimed at creation of atmosphere for comprehensive development, said Berdymuhamedov. Implementation of this strategy requires qualitative change in out investment policy and creation of conditions for smooth inflow of investment, he said.

Berdymuhamedov stressed that the parliament must hurry with legislations to encourage the private sector. Creation of favourable business environment, protected by sound legislation, is necessary for step by step transition toward market economy, he said.

The above quoted News Central Asia adds:

Besides creating the basic conditions for market economy, the government is obviously trying to nudge the population away from the entrenched habits of wasteful consumption of non-renewable hydrocarbon resources.

Partial introduction of market prices for fuel is certainly a step in the right direction. It is going to be painful for the people, but inevitable in order for the country to develop and stop being a backwater of Soviet economy.

I am not an economist, but it seems to me that in order for the reforms to bring actual results they must be accompanied by at least two other processes, i.e. the development of free economic activity (people should be given the chance to set up private companies, take loans, enter into cooperation with foreign partners, etc.) and successful crackdown on corruption which may kill any enterprise and impede the country’s further development.

I am afraid that the latter condition will be impossible to realise, because corruption among Turkmen officials is as common as sand in the desert. The government would probably have to introduce capital penalty in order to successfully fight this phenomenon.