Border fuel prices up by 38 USD per ton

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The price of AI-92 fuel supplied to Mongolia at the border reached 733 USD (2.09 million MNT) per ton, rising by 38 USD (108,300 MNT) from the previous month.

The real cost of a liter of AI-92, the most commonly used type of petrol in Mongolia, amounted to 2,125 MNT.

In July, the border price of AI-92 stood at 695 USD (1.98 million MNT) per ton, according to the Ministry of Mining and Heavy Industry. In addition to the border price, the following costs are added to estimate real cost of a ton of petrol:

• 5 percent customs duty – 109,089 MNT

• Excise tax on petrol and diesel – 25,700 MNT

• Railway transport cost – 16,400 MNT

• In-country transport cost (from the border to Tolgoit Station) – 4,200 MNT

• Operating costs of importers – 332,000 MNT

• VAT – 245,955 MNT

• Loan interest cost – 40,583 MNT per month

Global prices directly affect local prices as Mongolia is entirely dependent on fuel import. Oil prices jumped by 45 percent in the first half of 2021, pushing near 80 USD per barrel. However, this price hike didn’t affect the Mongolian market immediately as the authorities intervened to keep retail prices at rates lower than their real cost, incurring losses to local distributors. Unable to withstand further losses, petrol distributors raised fuel prices twice, by 300 MNT per liter each time, last July. Now, AI-92 costs 2,050 MNT per liter, which is 75 MNT less than its real cost.

Border prices are determined based on prices of the Singapore Exchange.

Dulguun Bayarsaikhan

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