Kobakhidze: Halving Fuel Excise Not Planned

Prime Minister Irakli Kobakhidze spoke about the fuel excise and said that halving it is not planned. He linked the rise in fuel prices to conflicts in the Middle East and expressed hope that this problem would be resolved.

At the time of Kobakhidze's statement, the cheapest regular petrol at branded filling stations exceeded 4 lari, premium 4.30 lari, and super 4.60 lari. The price of diesel is over 5 lari.

Both petrol and diesel are excise goods. The excise on a tonne of petrol (1,340 litres) is 500 lari, which equals 37 tetri per litre. This rate doubled in 2017. A tonne of diesel (1,200 litres) is taxed at 400 lari, or 33 tetri per litre. In 2017, this rate increased from 150 to 400 lari. VAT is also added to the excise, so together with VAT it raises the price of one litre of petrol by 44 tetri and diesel by 39 tetri. Halving the excise would theoretically reduce the retail price per litre of fuel by 20-22 tetri.

In 2025, 375 million lari from the petrol excise and 275 million lari from the diesel excise, totalling 650 million lari, entered the state budget. Including VAT charged on the excise, this amount constitutes 767 million lari. The annual 700-770 million lari is about 2.5% of the budget's expenditure part; in the case of halving, this figure would be 1.25%.

Cheaper fuel would reduce inflationary pressure. The inflation rate has exceeded 5% since April, and in the near future, other conditions being equal, its decline is not expected. The National Bank is tightening lending from February 2027, which is likely caused by high inflation expectations.

The rising cost of energy carriers will also affect the prices of other products: the cost of both transportation and land cultivation is increasing. Agricultural machinery, including tractors and combines, mainly runs on diesel. Record diesel prices create a risk of food price increases. Imports cannot be a solution either, since fuel, especially diesel, is expensive throughout the world.