Paltry fuel price drop reveals monopolies in Georgia
02 October, 2014
Paltry fuel price drop reveals monopolies in Georgia
Five leading oil product importer and distributor companies make up 95 percent of Georgian market. These include the Azeri state-based Socar, Wissol importing Greek product, Rompetrol Georgia taking in Romanian oil products, Lukoil mainly importing Bulgarian and Russian product, and Gulf that is focused on European product, reduced their pump prices on petrol and diesel on September 25. By today the most demanded Regular branded petrol that makes 70 percent of consumption market is available for GEL 2.02-2.14 per liter.
The Super and Premium brands are priced within GEL 2.27 to 2.32 and GEL 2.19 to 2.25 respectively. The diesel price benchmark starts at GEL 2.10 and is capped by GEL 2.31.

According to Vano Mtvralashvili, Chairman of The Union of Oil Products Importers of Georgia, this is the second price cut after the first 3 tetri drop early in August. The overall drop makes roughly 6 tetri [around 3 cents] or maximum 2-3 percent while the international oil prices dropped by almost USD 18 or 16 percent since Mid-July after it reached its yearly peak USD 115 per barrel in Mid-June and slid below USD 97 on September 24-25.
Soso Archvadze, an economic analyst, believes the Georgian price drop is not reflective of global trends. According to him, Georgian currency was stable within the reported period and once international oil prices shrunk by 15-16 percent Georgian importers might have halved prices. Archvadze believes the reason for the insignificant shift in fuel prices in Georgia compared to the international trend is monopolization and unfair competition of the Georgian market.
“The market still faces signs of oligopoly and oil importers are no exception. When big players can partly influence prices as we witness in Georgia, it is incomplete competition or cartel agreements,” Archvadze said.
Analysts also indicate on endemic problem of Georgian fuel market: when prices grow internationally Georgian importers jack their prices up immediately while they delay price drops for weeks and even months when the global price trend slides down. In the last case the importers’ usual explanation is that their reserves of oil product procured at higher prices are not expired and prices will drop after new procurements are made at lower prices. For some reason all importers procurements coincide in time and differ very little in price.
“There was about a 15 percent drop at international market and once Georgian currency was stable. The recent price drop should have been 40-50 percent of the international drop figure. But we have around a 2-3 percent drop,” he said. “Balance is not fair. Providers are dominated while consumers’ rights are ignored and the only way out, to restore the balance, is to boost competition and let new players into the market.”
But competition with the already acting well-based operators requires at least 30 million GEL of start-up capital for infrastructure development and securing due procurement contracts with providers abroad. And as banks normally shun start-up businesses in Georgia there is a vicious cycle of keeping the existing oil product market protected from newcomers for nearly a decade.
Economics expert Demur Giorkhelidze believes new market players might show up if there was fair competition and if cheap credits were available. “But there is no political will to let someone else enter the fuel market, banks will never admit this. It is easier to control few companies,” he said.

Other Stories
Inovative and reliable online shop in Georgia -
Status of Georgia as a business and tourism interesting country is growing from year to year.
Tbilisi TV Broadcasting Tower – Better than the Eiffel Tower?
It is planned to renovate the Tbilisi TV Broadcasting Tower, one of the landmarks in the capital.
Georgian Fusion Menu by The Biltmore Hotel Tbilisi
5,895,914 international visitors have visited Georgia between January and August of 2018. Compared to the previous year the number has increased by 12.2 per cent.
Advertising of gambling and lucrative games may become banned in Georgia
Advertising of gambling and lucrative games may become banned in Georgia. Those who violate the new rule would be fined GEL 10 000.
Lebanese café-lounge Beirut opens in Tbilisi
What is necessary to organize an unforgettable event? – Fun, emotions, lots of surprises, good music and delicious menu.
Georgia second among the fastest growing tourist destinations in Europe
Georgia is among the fastest growing tourist destinations in Europe. The data is published by the UN World Tourism Organization.
Bitmain launches world digital mining summit in Tbilisi, Georgia
Bitmain CEO Jihan Wu and Roger Ver, CEO of Head Speaker List featuring Circle, and Genesis Mining when Digital Mining Leaders Convene In Tbilisi on September 21-23
TBC Bank and Gazelle Finance have teamed-up to support Medical City, a leading healthcare provider in the western region of Georgia to launch the Western Regional Center Of Modern Medical Technologies.
Equiavlent to buried treasure – resources that are underused in Georgia
For 2018 the IMF Commission has forecast an annual economic growth for the Georgian economy of about 5,5%.
Does the quality of Georgian wine increase and how the export affects it
If we look at the data collected about modern Georgian wine, we will find out that the Georgian wines produced between 2015-2017 are much better in terms of their quality and Oenologic features rather than the wines produced between 2009-2011.
Japan simplifies the visa requirements for Georgian citizens
Diplomatic and economic relations between Georgia and Japan are now moving to a new phase. Recently Japan has decided to simplify the visa requirements for Georgian citizens.
M&S (Marks and Spencer) and H&M collections to be produced in Georgia
Garments manufacturer MGMTEX will start production of the M&S and H&M trendy collections from this September.
The World Digital Mining Summit to be held in Georgia
The summit is scheduled to take place between 21st-23rd September in the Hualing Hotel, Tbilisi, Georgia.
Galt and Taggart - Tourism Boom Continues in Georgia
Tourism has become one of the key drivers for the Georgian economy. Galt and Taggart has recently published research about the Georgian tourism sector in the first half of 2018.
"The worst dream for Putin is that Russians want to live in Georgia"
This year, visitors to the Adjara region would notice that there is a boom in construction in and around Batumi.
Underground gas storage facility to be built in Georgia
KfW, a German government-owned development bank signed a EUR 150 million promotional loan with the state-owned Georgian Oil and Gas Corporation (GOGC) for the construction of the first underground gas storage facility in Georgia.
New gambling rules for Georgia
Georgian lawmakers are preparing a new draft law relating to online-casinos and gambling that will seek to curb gambling addiction in Georgia.
How expensive is it to visit Georgia?
The Georgian Lari (GEL) is the official currency of Georgia and is the only legal means of payment in the entire territory of Georgia.
Trade with the EU and the Commonwealth of Independent States (CIS) has grown significantly
Trade with the EU and the CIS has grown by 26% and 33.5 % respectively, says GeoStat, the Georgian National Statistics Office.
The unemployment rate decreases in Georgia
The unemployment rate decreased in Georgia by 1,9% and amounted to 12.1% in the 2nd quarter of 2018 compared with the previous quarter,
Memorandum of Understanding to be signed between Georgia and Malaysia
According to the Georgian Ambassador to Malaysia Nikoloz Apkhazava, Georgia plans to sign a Memorandum of Understanding (MoU) with Malaysia.
“Blauenstein Georgia” due to expand in Georgia
“Blauenstein Georgia” is planning to open more shops in Georgia. It is an agriculture company that sells meat products, meat and convenience food.
The amount of Direct Foreign Investment rises in Georgia
According to the information of the National Statistics Office of Georgia, the amount of direct foreign investment in Georgia has risen
It’s going to get  harder for foreigners to get residence permit in Georgia
It’s going to get harder for foreigners to get permit of residence in Georgia.
Mziuri Park in Tbilisi to be renovated soon
It was the dream of prominent Georgian writer Nodar Dumbadze that when the original Mziuri park was constructed and opened in 1892 that it should be a park for children,
Exchange Rates
GEL Exchange Rate
Other Stories
Recently Toyota rolled out Global Campaign under this slogan that reflects the Olympic and Paralympic Spirit of Encouragement,
A couple from Switzerland combines Swiss tradition and technology with Georgian products. Their cheese is made in the Georgian mountains and sold in local stores and hotels.
It has been more than five years since the residents of Lilo village, near Tbilisi, cannot open their windows.
63 000 GEL was received by the Georgian Agro Export Group which is just a small part of the European Neighbourhood Programme for Agricultural and Rural development.
Georgian entrepreneur Guka Tavberidze, who runs his own business in the UK and does it quite well, has been invited by BBC
The grand opening of 7-star The Biltmore Hotel Tbilisi took place in Georgia’s capital on July 31.
DUSHETI, Georgia – The Georgian government and the World Bank will allocate USD 5.6 million (12 million GEL) to fund
A new Georgian clothing brand named Person has emerged in Georgian market.
Georgia is in the midst of an economic maelstrom, Euronews reports.
Situation at Georgia’s mineral water market is interesting: over the last year, the volume of export has grown by 56 percent. According to “GeoStat”, over $114 million worth of mineral water was sold
GEL Exchange
November 2018
Mon Tue Wed Thu Fri Sat Sun
1 2 3 4
5 6 7 8 9 10 11
12 13 14 15 16 17 18
19 20 21 22 23 24 25
26 27 28 29 30