Category Archives: Central Asia & South Caucasus News

Kazakh state-owned company creates subsidiary

SEPT. 27 2016 (The Conway Bulletin) – Kazmunaigas, Kazakhstan’s state-owned energy company, created a new subsidiary, KMG-Eurasia to exploit a joint Kazakh-Russian project in the Caspian Sea. The Kazakh government said total investment in the Eurasia field could reach $1.5b over the next decade. Last year, Baltabek Kuandykov, the project manager, said Kazmunaigas was due to create a subsidiary for the project in the first few months of 2016.

ENDS

(News report from Issue No. 298, published on Sept. 30 2016)

Business comment: Kazakh banking

SEPT. 21 2016 (The Conway Bulletin) – Despite countless declarations on efforts to save its banking sector, Kazakh banks are not as healthy as they say.

Last year, President Nursultan Nazarbayev instructed the Central Bank to conduct stress test to avoid a spiraling of non-performing loans similar to the crisis that followed the 2007/8 global debacle.

He had just sacked Kairat Kelimbetov, Mr Devaluation, the Central Bank chief under whom the tenge currency lost around half its value in two years.

The result of the declarations has been a sharp drop in the share of

bad loans in banks’ total portfolio. Officially, this week Kazakhstan’s Central Bank chief Daniyar Akishev said that non-performing loans had shrunk from around 30% two years ago to just 8.4%.

This raised eyebrows among analysts.

How could a broken system, hit by currency depreciation and toxic assets, recover so quickly, without undergoing a serious makeover?

The answer is simple, according to some: The problems were swept under the rug.

“Kazakhstan’s banking sector is a legalised zombie park,” an anonymous economist told Forbes Kazakhstan.

“In reality, bad loans make up around 60% of the total loan portfolio. But through refinancing, on paper, banks have written most of them off of their accounts.”

Notably, the most frequent and well attended protests in Kazakhstan for the past few years are organised by groups of mortgage holders. They mainly hold US dollar debt.

If their overdue loans are neither being refinanced, nor being accounted for, where are banks hiding them?

ENDS

(News report from Issue No. 298, published on Sept. 30 2016)

Tajik officials target activist families

SEPT. 21 2016 (The Conway Bulletin) – US-based Human Rights Watch said that police in Tajikistan had detained around 50 family members of activists who staged a protest at a OSCE meeting this week. Around 20 activists from Tajikistan living in exile in Europe staged a silent protest against the government during an OSCE conference on human rights in Warsaw. Protesters wore T-shirts showing photos of jailed journalists and opposition members.

ENDS

(News report from Issue No. 297, published on Sept. 23 2016)

Kyrgyzstan’s Air Manas launches flight to China

SEPT. 19 2016 (The Conway Bulletin) – Kyrgyzstan’s Air Manas launched a route from Bishkek to Kashgar, in China’s Xinjiang region, strengthening regional links. Turkish low-cost airline Pegasus owns 49% of Air Manas. The air link to Kashgar will be synchronised with Istanbul-Bishkek connections. The Xinjiang region is synonymous with Uyhgurs. There is a large Uyhgur minotiry living in Bishkek.

ENDS

(News report from Issue No. 297, published on Sept. 23 2016)f

Kazakhstan’s Sunkar Air opens flight to Iran

SEPT. 20 2016 (The Conway Bulletin) – Kazakhstan’s Sunkar Air opened a new flight from the Caspian city of Aktau to Gorgan, in northern Iran. Sunkar is a small airline in Kazakhstan. Ties between Kazakhstan and Iran have improved since the lifting of international sanctions against Iran earlier this year.

ENDS

(News report from Issue No. 297, published on Sept. 23 2016)

Azerbaijan’s IBA signs promotional deal with Juventus football club

SEPT. 20 2016 (The Conway Bulletin) – The International Bank of Azerbaijan (IBA), majority owned by the government, signed a promotional deal with Italian football club Juventus, continuing Azerbaijan’s strategy of using sport to promote itself.

Juventus released a photo of its executives meeting IBA officials in Baku, posing with one of its famous black and white shirts.

Under the terms of the deal, the value of which has not been announced, IBA will be able to use Juventus logos and branding to promote its products. Juventus will also be committed to opening and running a football academy in Baku.

Juventus’ head of global partnerships and corporate revenues Giorgio Ricci said that the deal with IBA was the fifth regional sponsorship deal that the club had concluded in the last 16 months.

“We are proud to be working in a country of great potential such as Azerbaijan, and to collaborate with an organisation as prestigious as the International Bank of Azerbaijan,” he said.

For IBA, the timing is less auspicious. Azerbaijan’s economy has been under pressure because of a sharp fall in oil prices and analysts have said it will fall into a recession for the first time since 2009.

Banks have in particular come under pressure because of their previous loose lending arrangements which have now generated mountains of bad debt. This bad debt portfolio was exacerbated by a 50% fall in the value of the manat last year.

In July, a court in Azerbaijan also convicted IBA’s former CEO, Jahangir Hajiyev, of money laundering.

Sport, though, has become an important outlet for Azerbaijan to market itself. Azerbaijan had sponsored Spanish team Atletico Madrid and Baku is one of the 13 host cities for Euro 2020 football tournament.

The Azerbaijani government owns a 55% stake in IBA. IBA accounts for around 60% of all lending in Azerbaijan.

ENDS

(News report from Issue No. 297, published on Sept. 23 2016)

Turkmenistan pays fine to Russia

SEPT. 16 2016 (The Conway Bulletin) – The Russian Air Transport Agency said that Turkmenistan Airlines had settled its debt of $220,000 and that it will lift the flight ban on the Central Asian carrier. Two days earlier, the Russian agency had banned Turkmenistan Airlines from flying over Russian airspace and landing at Russian airports until it settled its debt.

ENDS

(News report from Issue No. 297, published on Sept. 23 2016)

Kazakh authorities refuse protest

SEPT. 16 2016 (The Conway Bulletin) – The Atyrau city government denied a petition by Mothers in White Headscarves, a women’s protest group in Kazakhstan, which sought to hold a rally on Sept. 17. Public protests against worsening economic conditions in Kazakhstan have been becoming more frequent in Kazakhstan. Around 1,000 Atyrau citizens demonstrated against a proposed land reform in April, the largest protest in Kazakhstan for the past few years.

ENDS

(News report from Issue No. 297, published on Sept. 23 2016)

Kyrgyzstan receives tax back from Chinese refinery company

SEPT. 20 2016 (The Conway Bulletin) – Kyrgyz MP Yekmat Baibakpayev said that the state budget received just over 1b som ($15m) from the China-run Junda refinery, which faced closure this year for evading taxes. Mr Baibakpayev said that the oil refinery, located in the north of the country, owes the government five times as much. The Junda refinery was built by the China Petrol Company for $430m and opened in 2014.

ENDS

(News report from Issue No. 297, published on Sept. 23 2016)

Tethys accuses Kazakhstan’s Olisol of dragging on deal

ALMATY, SEPT. 16 2016 (The Conway Bulletin) — Guernsey-based oil company Tethys Petroleum is still waiting for its Kazakh partner, Olisol, to pay in its pledged investment, it said in a press release, a financial injection considered vital to keeping the company running.

Tethys, which has oil and gas assets in Kazakhstan, Tajikistan and Georgia, said it had only received a portion of the 9.8m Canadian dollars ($7.4m) that Kazakh oil company Olisol pledged to prop up the operations of the London and Toronto- listed company earlier this year.

“On Sept. 9, Olisol provided $2.94m working capital funds to (us) in addition to the previously announced $452,000,” Tethys said in a statement in a strong-armed tactic to force Olisol to pay more quickly.

Earlier in September, Tethys had used more belligerent language.

“[Tethys] considers Olisol to be in breach of the Investment Agreement,” it said in a note on Sept. 2.

Olisol has played down the late payment and said that it will finance the rest of the deal by pardoning part of a loan it previously gave out to Tethys.

Tethys itself said that Olisol currently owns just under 15% of the company and will own 42% once the full payment has been made.

Olisol emerged last year as a white knight for Tethys which has been in trouble since oil prices collapsed in 2014. The real beneficiaries of Olisol have not been made public but they are believed to be members of the Kazakh elite.

Tethys is also involved in legal cases that have hurt its reputation. Its stock price, though, on Thursday was up 20% at 1.5p for the week.

A court in Kazakhstan has restricted the company’s bank accounts in Kazakhstan over an unexplained case, until an appeal later this month.

In Tajikistan, where it jointly owns the Bokhtar oil field with France’s Total and China’s CNPC, Tethys is entangled in an arbitration with its partners over missed cash calls in 2015.

In August, CNPC and Total had submitted a claim for over $9m. Days later, Tethys submitted a counterclaim for $10m.

ENDS

(News report from Issue No. 297, published on Sept. 23 2016)