TURKMENISTAN: PRICES CONTINUE TO RISE - COST OF

UNCLAS ASHGABAT 000562 SIPDIS SENSITIVE SIPDIS STATE FOR SCA/CEN, EEB TREASURY FOR BAKER/LANIER ENERGY FOR EKIMOFF/THOMPSON E.O. 12958: N/A TAGS: PGOV ECON EPET SOCI TX SUBJECT: TURKMENISTAN: PRICES CONTINUE TO RISE - COST OF GASOLINE TO DOUBLE REF: ASHGABAT 551 ¶1. (U) Sensitive but unclassified. Not for public Internet. ¶2. (SBU) Just a day after Turkmenistan unified its dual currency exchange rate at 14,250 manats to the dollar (Ref A) -- a rate which many experts here thinks inflates the manat's real value against the dollar -- authorities seem primed once again to increase (by nearly double) the price of gasoline. A gas station attendant on May 2 confirmed that gasoline prices would rise 3000 manats per liter later that day, to approximately 6000 manats per liter. Clearly others had heard the news, and lines at the station were long. ¶3. (U) Turkmenistan Airlines has also told the Embassy that it is considering raising prices for both international and domestic air tickets. At present, the airline has raised the price of a roundtrip ticket to Istanbul from 4,630,000 to 5,302,000 manat and the price of a roundtrip ticket to Moscow from 4,005,000 to 4,520,000 manat. It reportedly is selling tickets only to Istanbul and Moscow as it considers other price increases. ¶4. (SBU) One local resident told us that there are plans to put in meters in every dwelling to measure natural gas usage, put a limit on gas usage for every family, and charge a competitive rate for gas above the limit. (NOTE: Currently, residents pay little or nothing for natural gas. END NOTE.) Other locals have told us that the price of food products continues to rise. The death of livestock over the unusually cold winter has depressed the supply of domestically produced fresh meat. One of the most affordable sources of meat are U.S. frozen chicken legs. According to residents, however, much imported food is either extremely expensive, sold passed its expiration date or both. We know of one family in Mary that rations food and has little protein in its diet. ¶5. (SBU) COMMENT: Economic changes in Turkmenistan, along with rising world food prices, are bound to keep inflation on the rise. An almost 800% increase in gas prices in February led to immediate, sharp increases in food prices at the markets, and we expect the same thing to happen again. While the gasoline cost increases are being pegged by many to a government effort to gradually phase out expensive subsidies -- something that many experts have advised -- it is taking its toll on Turkmenistan's people, many of whom are finding it increasingly difficult just to find the funds to get by. END COMMENT. CURRAN