Category Archives: Central Asia & South Caucasus News

Revenues at Kazakh mobile operator collapse as mobile users feel economic chill

ALMATY, JAN. 27 2017 (The Conway Bulletin) — Kcell, Kazakhstan’s biggest mobile operator, felt the full force of the regional economic slowdown in 2016 with revenues falling 12.7% to 147b tenge ($444m), its lowest since 2009.

Kcell’s annual reports are important because they provide one of the few open and accurate insights into how Kazakh companies are handling a sharp economic slowdown triggered by falling oil prices and a recession in Russia.

The company, which is part- owned by the Kazakh government and part-owned by Sweden’s Telia, also said that a drop in profit margin had reduced its overall profit by 41% to just over 31b tenge ($94.5m).

In a statement, Kcell CEO, Arti Ots, admitted that 2016 had been tough.

“2016 was extremely challenging for Kcell, although at the end of the year we saw early signs of market stabilisation,” he said.

“As we move into 2017, there are positive signs of economic recovery in Kazakhstan, with an easing in consumer price inflation and indications of growth in the economy.”

A collapse in the value of the tenge, economic stagnation, job losses and a fall in vital remittance values all hit the Kazakh economy in 2016.

The specific improvements that Mr Ots referenced include a boost to revenues from demand for contract phones which has fed through into a third consecutive quarter of revenue increase.

“We are now seeing a positive interconnect balance with revenue exceeding costs and we expect this situation to continue in 2017,” he said.

The details of Kcell’s financial results also reflect the turbulence of the Kazakh economy, including rising inflation. Kcell said that costs had risen by 19.2% in 2016 to nearly 11b tenge ($33.5m). A spokesperson for the company said that some of this cost increase was triggered by a rise in staffing costs at new outlets.

ENDS

(News report from Issue No. 314, published on Jan. 27 2017)

Azerbaijan closes top university because of its links to Gulen Movement

JAN. 20 2017 (The Conway Bulletin) — The authorities in Azerbaijan have closed the Qafqaz University in Baku because of its links to the Gulen movement which key ally Turkey blames for a failed coup in 2016.

The closure of the high-profile university, considered one of the best in Azerbaijan, follows the shutting of 10 high schools linked to Gulen.

Azerbaijan has been the only country in the South Caucasus and Central Asia region to go out of its way to accommodate Turkey’s demands to close institutions linked to Fethullah Gulen, the Muslim cleric who is now living in exile in the United States.

In the 1990s, after the collapse of the USSR, Gulenists set up schools and universities in the region. They are now regarded as some of the best.

Gunel Hacıyeva, a recent graduate of the Qafqaz University, lamented its closure.

“Caucasus was the best university in Azerbaijan. So much experience, so many people, so many students have become victims of the interests of the authorities of both Turkey and Azerbaijan,” he told the Conway Bulletin.

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(News report from Issue No. 314, published on Jan. 27 2017)

Georgian president blocks parliamentary bill

JAN. 24 2017 (The Conway Bulletin) — Georgian president Giorgi Margvelashvili vetoed a bill passed through parliament, which is dominated by the Georgian Dream coalition that he represents, that he said would damage the independence of the courts. The proposed bill had focused on changing the process through which court judges are appointed. Mr Margvelashvili and the Georgian Dream have increasingly rowed over governance issues.

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(News report from Issue No. 314, published on Jan. 27 2017)f

Georgians line up to swap their US dollar loans for lari in government programme

TBILISI, JAN. 25 2017 (The Conway Bulletin) — Georgians have been lining up to convert their dollar denominated loans into lari under a so- called “larisation” programme aimed at easing debt burdens after the lari currency lost 21% of its value in six months.

The government will administer the programme jointly with the Central Bank starting from Jan. 17. It will run for two months.

Giorgi Tsutskiridze, the executive director of Association of Banks of Georgia, said that people had initially taken out bank loans in US dollars because they have a lower interest rate.

“Usually foreign currency loans have a relatively low annual interest rate, which is on average 3-4% less than loans in lari,” he told The Conway Bulletin.

Since the launch of the programme last week, 5,000 people have applied to switch their loans and around 250 have already made the switch. The majority of loans in Georgia are US dollar-dominated.

Georgian economy has been hit by a strengthening US dollar, a recession in Russia and weaknesses in its neighbouring economies.

Mr Tsutskiridze said the conversion of US dollar loans into lari was necessary to revive the economy.

“Dedollarisation is a vital strategy. Without rapid economic growth, we will end up in poverty,” he said.

In order to be eligible for the programme the loan must be linked to real estate received before Jan. 1, 2015.

Creditors will convert loans at 20 tetri less than the current rate with the government subsidising the difference.

Not everybody, though, is convince that the “larisation” plan is a good one.

“The lari is so devalued now against the dollar that even with the favourable exchange rate that the government offers, I would end up paying much more anyway,” said Merab, a Tbilisi resident who works in a local grocery store.

“I’d rather just wait and hope for the lari to stabilise.”

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(News report from Issue No. 314, published on Jan. 27 2017)

Kazakh capital hosts Syrian peace talks

JAN. 24 2017 (The Conway Bulletin) — Talks in Astana between the forces of Syrian president Bashar al-Assad and rebels broke up after two days with both sides promising to consolidate a ceasefire. The deal, overseen by Turkey, Russia and Iran, will be seen as a diplomatic success for Kazakhstan which hosted the talks. Kazakh president Nursultan Nazarbayev wants to build up a reputation for Kazakhstan as an agent for peace.

ENDS

(News report from Issue No. 314, published on Jan. 27 2017)

Turkmenistan-led TAPI project is delayed, says Pakistan

JAN. 26 2017 (The Conway Bulletin) — Completion of the $10b Turkmenistan-lead TAPI gas pipeline that will pump gas from eastern Turkmenistan to Pakistan and India via Afghanistan has been delayed by a year to 2020, Pakistani media said quoting ministry officials. They said that the delay had been caused because it had taken longer than expected to pull together the finance for the project.

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(News report from Issue No. 314, published on Jan. 27 2017)

Tajikistan increases cement exports

JAN. 25 2017 (The Conway Bulletin) — Tajikistan quadrupled its cement production in 2016 to 2m tonnes and opened up export routes to its neighbours, media reported quoting the ministry of industry. Chinese investment has built three new cement-making factories, adding a vital export to Tajikistan’s economy. Previously Tajikistan had only exported to Afghanistan and Kyrgyzstan. Now it also exports to Uzbekistan.

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(News report from Issue No. 314, published on Jan. 27 2017)

Georgia’s difficult gas deal with Russia

JAN. 27 2017 (The Conway Bulletin) — >> Why are people getting so upset about this new gas deal between Georgia and Russia?

>> After a couple of rounds of negotiations in Geneva, Georgian energy minister Kakha Kaladze returned to Tbilisi heralding a new gas deal which he said he had negotiated with Russia that was better than the previous arrangement. The new arrangement returned to a monetised price that Georgia would pay Russia for gas rather than, under the old deal, take a 10% cut of the volume that Russia sends to Armenia.

>> Right. But why would Georgia want to start paying for gas rather than just take a slice of the transit volumes?

>> That’s exactly the point. Kaladze returned from Geneva heralding the new deal as a victory for Georgia over Russia but it could be more of an own goal. Certainly Margvelashvili was immediately critical of the deal. He may have been playing politics, he has fallen out with his former colleagues in the Georgian Dream coalition and often sounds like an independent politician, but his concerns have been parroted by others too.

>> Go on. What are the details?

>> Kaladze was coy with the details of the deal and exactly how much Georgia would now have to pay Russia for gas but a think-tank called World Experience for Georgia (WEG) said that it would now have to pay $185 per 1,000 cubic metres of gas which is more than Armenia and Germany pay for their gas.

>> So what have the Georgian energy ministry and Kaladze said?

>> Surprisingly little, other than back Kaladze’s statement that the price negotiated was a good one. And this secrecy could be part of the problem. They have said that the actual price negotiated is a commercial secret, a statement that hasn’t gone down well.

>> But there must be some upside put forward by the government other than the price.

>> The deal does give Georgia more flexibility about where it sources its gas. It is likely that Azerbaijan’s Socar will be the big winner here with more gas being sourced from them.

>> And Kaladze? What has he said?

>> He’s come out fighting as he knows that his political reputation is on the line. Without being any more specific on the pricing structure agreed with Russia, he accused Pres. Margvelashvili of being unpatriotic. This row is likely to run and run and may have more far reaching political implications.

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(News report from Issue No. 314, published on Jan. 27 2017)

Fluor wins Kazakh oil field contract

JAN. 24 2017 (The Conway Bulletin) — The Britain-based subsidiary of the US’ Fluor said that it had won a two-year engineering services deal with the North Caspian Operating Company (NCOC), the consortium of companies exploiting the giant Kashagan oil field in the Kazakh sector of the Caspian Sea. No value was put on the contract but it will be a boost to Fluor which has developed a strong regional strand of work.

ENDS

(News report from Issue No. 314, published on Jan. 27 2017)

Kazakh ministry confirms bird flu

JAN. 20 2017 (The Conway Bulletin) — Kazakhstan’s agriculture ministry confirmed that the H5 flu virus had been found in wild swans in the west of the country. A few days earlier two dead swans had been found in Atyrau. The H5 strain of bird flu can be passed onto people although it is not as infectious or as deadly as the more well-known H5N1 virus.

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(News report from Issue No. 314, published on Jan. 27 2017)