Category Archives: Central Asia & South Caucasus News

Oil platform collapses in Azerbaijani sector of the Caspian Sea, 1 oil worker killed and 9 missing

DEC. 15 2016 (The Conway Bulletin) — Nine oil workers were missing after an oil rig partially collapsed during a storm in the Azerbaijani sector of the Caspian Sea that killed at least one person, Azerbaijan’s state energy company SOCAR said.

The collapse came almost exactly a year after a fire on two Azerbaijani oil platforms killed 30 oil workers in the worst offshore accident in the energy sector since 167 people died in the Piper Alpha fire in the North Sea in 1988.

The latest accident will embarrass SOCAR and Azerbaijan’s oil sector because it had promised to improve safety after the deaths in 2015.

Much of the infrastructure that SOCAR uses in the Caspian Sea is decades old and Azerbaijan has been heavily criticised for not updating and modernising its structures.

The oil industry is also vital to the Azerbaijani economy. It has been under pressure to maintain oil output despite the aging infrastructure and aging fields.

SOCAR officials said that emergency services are still looking for the nine missing oil workers.

ENDS

(News report from Issue No. 309, published on Dec. 16 2016)

Stock market: OPEC

DEC. 16 2016 (The Conway Bulletin) — The collapse in oil prices since 2014 has hit the economies of Central Asia and the South Caucasus. Every now and then, though, a new touted solution emerges, be it maximising oil output to earn as much as possible or freezing output and waiting for sunnier days.

Both Azerbaijan and Kazakhstan, the main producers in our region, have played with the idea of “freezing” oil production, although this is more a reflection of a drop in production at aging oil fields rather than a conscious choice. An agreement reached between members of OPEC and other producers seems to have solved the headache in the medium-term. The parties pledged to cut output, forcing prices up.

This measure, however, lasted just a few days.

After the US Federal Reserve raised interest rates for the first time in one year on Wednesday, the US dollar soared against all commodities, cancelling out the progress made after the OPEC-sponsored meeting.

ENDS

(News report from Issue No. 309, published on Dec. 16 2016)

Kazakhstan details mortgage plan

ALMATY, DEC. 12 2016 (The Conway Bulletin) — The Kazakh government plans to stimulate the housing market by subsidising mortgages under a programme dubbed Nurly Zher, which means the Bright Land in English.

At a government meeting, the economy ministry said that the plan would help build 1.5m new houses over the next 15 years. It said that the state would invest $5.3b into the scheme and that the private sector would invest $47b.

“To encourage private developers to take advantage of available credit resources the state will subsidize part of the interest rate on loans extended by banks,” the economy ministry said in its statement.

The plan is an ambitious attempt by the Kazakh government to stimulate its flatlining economy. GDP growth has been stagnan, pulled down by low oil prices and a recession in Russia. The tenge has lost around 50% of its value and ordinary Kazakhs are feeling the pinch. This year rare anti-government protests sprung up across the country.

The government has said that it will restructure old mortgages and has also said it will subsidise the interest rate on new mortgages by knocking 7 percentage points off the cost of borrowing. Commercial rates for mortgages in Kazakhstan are currently around 17%. Under the government’s plan, new mortgage holders will pay only 10%, with the government paying the equivalent of 7% of the mortgage.

Even so, people are sceptical.

“I’m scared of whole economic situation in the country,” said Bolat Mukashev, 25. “You don’t know what will happen tomorrow and there is no stability. Any moment tenge might collapse again and there is a high chance I could lose my job.”

ENDS

(News report from Issue No. 309, published on Dec. 16 2016)

Georgia’s economy to grow in 2017

DEC. 15 2016 (The Conway Bulletin) — In Georgia’s governmental budget presented to and passed by parliament, officials said that they targeted GDP growth of 4% next year. Despite the tough economic conditions, Georgia has managed to engineer some positive economic growth in 2016, unlike its neighbours, Armenia and Azerbaijan, who have been hard hit by the drop in oil prices and a recession in Russia.

ENDS

(News report from Issue No. 309, published on Dec. 16 2016)f

Turkmenistan’s Democratic party puts Berdy forward

DEC. 15 2016 (The Conway Bulletin) — Turkmenistan’s Democratic party formally put President Kurbangkuly Berdymukhamedov forward as its candidate in an election set for February. Mr Berdymukhamedov has been in power for a decade. He is likely to easily win the presidential election. No Western vote monitors have ever judged an election in Turkmenistan to be either free or fair.

ENDS

(News report from Issue No. 309, published on Dec. 16 2016)f

China dominates Tajik economy

DEC. 13 2016 (The Conway Bulletin) — Tajik media quoted an unnamed source in the state’s statistics committee as saying that foreign direct investment had risen sharply in the third quarter of the year, mainly due to heavy infrastructure investments by China. The source said that China made up around two thirds of the investments, highlighting just how influential it has become over Tajikistan.

ENDS

(News report from Issue No. 309, published on Dec. 16 2016)

Power production rises in Kyrgyzstan

DEC. 14 2016 (The Conway Bulletin) — Electricity production in Kyrgyzstan was 2.5% higher in the first 10 months of the year compared to 2015, media quoted the statistics committee as saying. This is important for Kyrgyzstan because electricity, generated by its extensive hydropower system, is its main export. It is investing in the so-called CASA-1000 project to send electricity to Pakistan via Afghanistan.

ENDS

(News report from Issue No. 309, published on Dec. 16 2016)f

Kyrgyzstan to relax registration rules

DEC. 14 2016 (The Conway Bulletin) — Kyrgyzstan is due to relax a rule introduced last month that had required foreign tourists to register at a local OVIR, an interior ministry unit, if they planned to stay in the country for more than five days, the Eurasianet website reported. It said that the Kyrgyz government would publish on Dec. 19 a list of 90 countries whose citizens needed to register within 30 days of arriving in the country. Tourist companies had complained that the rules introduced in November would be unworkable.

ENDS

(News report from Issue No. 309, published on Dec. 16 2016)

Tajik Banks

DEC. 16 2016 (The Conway Bulletin) — News that Tojiksodirotbank had resumed banking activities might have been a relief for its many customers, but it’s still keeping the Central Bank’s officials on the edge of their seats.

Injecting around $500m, as it did to save Tojiksodirotbank from going bankrupt, into the banking system was not a joke for the Tajik government. It is struggling to keep its somoni currency afloat against a strengthening US dollar and has faced a severe downturn in remittances from migrant workers, an important part of Tajikistan’s economy.

Tajikistan is one of the world’s most remittance-dependent countries. Transfers from workers abroad accounted for around half of the country’s GDP a few years ago.

Now, the picture might be different. The Central Bank has blamed the liquidity crisis in the banking sector on the shrinking remittances, projected to decrease again this year. In two years, between 2014-2015, remittances had fallen by 47% from $3.9b.

The combination of these events put increasingly pressure on the banking sector, which risked default earlier this year. The government intervention seems to have plugged the main hole, but the crisis is far from over.

With the bailout, the government inherited the banks’ shaky credit portfolio. For regular people, the pressure on the economy has made it increasingly difficult to pay back their debt. In addition, several state-owned companies that had borrowed heavily in previous years have started to show signs of insolvency.

The government knows well enough that it is simply not in a position to bail out its entire economy.

ENDS

(News report from Issue No. 309, published on Dec. 16 2016)f

Mirziyoyev swears in as Uzbekistan’s second post-Soviet president

DEC. 14 2016 (The Conway Bulletin) — Shavkat Mirizoyev was formally sworn in as Uzbekistan’s second post- Soviet president.

At his swearing-in ceremony, Mr Mirizyoyev promised to continue along the path that had been set by his predecessor Islam Karimov.

“Today, as I assume the post of the President of the Republic of Uzbekistan, I comprehensively and deeply feel and realise as a head of state the very enormous responsibility on my shoulders,” he said according to his press office. “And (I promise) to continue the work of the great state and political figure, our dear teacher Islam Karimov.”

Although he has pledged to follow a course set by Karimov, Mr Mirizoyev has already worked to open up the country, making peace deals with neighbours, granting visa-free entrance to foreign nationals and promising to liberalise Uzbekistan’s strict currency rules.

Mr Mirziyoyev also announced key positions in his cabinet including promoting Abdulla Aripov, his ally, as PM and demoting Rustam Azimov who had been finance minister. Mr Azimov’s demotion took analysts by surprise as he had been seen as one of the key ministers now running the country. By contrast, Mr Aripov had been sacked by Karimov in 2012 and only reinstated to the cabinet after he died in September.

ENDS

(News report from Issue No. 309, published on Dec. 16 2016)