Turkmenistan hiked petrol prices by 50% on February 1, raising the price of the most popular fuel, octane 95, to 1.5 manat (€0.34 at the official rate, but the black market values the manat at just one third of its official value).

The price rise is seen as another step towards reducing generous welfare subsidies in the country due to declining government revenues. The natural gas-dependent Turkmen economy has for towards three years faced troubles caused by low world hydrocarbon prices. Failed energy deals have also been a problem in recent years. The economic difficulties have hurt the country’s budget, depleting government revenues.

Given the financial woes, the government has also ended the era of discounted gas, water and electricity prices for citizens in Turkmenistan. Reports say the changes forced households to pay 25 times more for tap water starting from November last year - 5 manats ($1.43) per 10 cubic meters of water, up from 0.2 manats ($0.06). The tightly controlled ex-Soviet country still supplies some free cooking gas and electricity to its citizens and sells anything in excess of the free subsidies at subsidised prices. The new price of tap water will also be charged in excess of free monthly allocations. The authorities plan to phase out all subsidies gradually.

Utilities subsidies in Turkmenistan used to be among the highest in the world, according to the International Energy Agency (IEA), and households have received free electricity, gas and water since 1993. While these generous subsidies are believed to have been a factor in reducing popular discontent with the authoritarian regime, since mid-2013 there have been growing signs the government is re-thinking that policy as it increases energy exports to international markets. The advent of low world oil prices only accelerated the government’s plans.