Category Archives: Uncategorised

Kazakh authorities slap $27.4m tax fine against Kcell

ALMATY, JULY 5 2017 (The Bulletin) — Kcell, the biggest Kazakh mobile operator, said that Kazakhstan’s tax authorities have handed it a 9b tenge fine ($27.4m) for unpaid taxes.

In response Kcell, majority owned by Swedish -Finnish operator Telia, said it would dispute the fine, setting up a potentially explosive court fight between a Western corporate and the Kazakh government.

“Following the audit (of our accounts for 2012-15), the tax authority has made a total claim of 9b tenge, of which 5.8b tenge is for unpaid taxes and 3.2b tenge represents fines and penalties for late payment. Kcell intends to dispute this claim through the available mechanisms, which includes court litigation,” Kcell said in a statement.

For both parties a lengthy court battle is poor timing. After a corruption scandal in Uzbekistan centred on paying the daughter of former Uzbek leader Islam Karimov for market access, Telia said it wants to exit the former Soviet Union. As well as its stake in Kcell, it plans to sell out of Uzbekistan Ucell, Azerbaijan’s Azercell, Moldova’s Moldcell and Georgia’s Geocell.

Kazakhstan wants to woo finance companies into setting up in Astana, where it is building an investment centre. Headlines highlighting rows will damage this drive.

ENDS

(News report from Issue No. 336, published on July 16 2017)

Stock market: KAZ Minerals, Georgia Healthcare

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JULY 16 2017 (The Bulletin) — In a rocky fortnight for stocks in Central Asia and the South Caucasus, only KAZ Minerals and Georgia Healthcare bucked the trend and returned growth. Both have had stellar years and are hitting all-time highs.

For KAZ Minerals, the Kazakhstan-focused copper producer formerly called Kazakhmys, production costs at its sites in north Kazakhstan have been lower than previously expected giving it greater margins. Copper prices have been fairly stable, trading in the $250 – $270 per lb corridor this year after a jump at the end of 2016.

For Georgia Healthcare, analysts have simply underestimated the profitability of the product that it was offering. This profitability may have been a motivating factor for London-listed BGEO Group, which owns a 57% stake in Georgia Healthcare, to tell investors that it was going to split into two companies. BGEO Group plans to hold the Georgia Healthcare stake, along with other assets, but it will spin off Bank of Georgia into its own London-listed company.

On the downside Nostrum was the biggest faller, shedding more than 15% of its price. It is now trading at below 430p for the first time since the end of March.

On Toronto’s stock exchange, Centerra Gold was down 6.3% to C$6.63, its lowest since the March.

ENDS

(News report from Issue No. 336, published on July 16 2017)

Kazakh-US deal extends military cooperation

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JULY 5 2017 (The Bulletin) — After a meeting in Washington DC, officials from Kazakhstan and the US signed a deal to extend military cooperation between the two countries until 2022. No details of the cooperation were released although Kazakh and US armies do hold joint exercises. Over the last few years, Kazakhstan has been improving its military deals with Russia.

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(News report from Issue No. 336, published on July 16 2017)

WB keeps lending to Azerbaijan

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JULY 6 2017 (The Bulletin) — The World Bank approved a plan to lend Azerbaijan just over $400m in 2017, Russia’s Interfax reported, to fund the construction of the Southern Gas Corridor that will pump gas to Europe from the Azerbaijani section of the Caspian Sea. Earlier this year, Azerbaijan quit the Oslo-based Extractive Industries Transparency Initiative (EITI), a move that some analysts had said may impact its ability to secure loans from major intergovernmental institutions.

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(News report from Issue No. 336, published on July 16 2017)

OPEC oil deal will break up in 2018, says Kazakh minister

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JULY 5 2017 (The Bulletin) — JULY 9 2017 (The Bulletin) — Kazakhstan effectively signalled its withdrawal from an OPEC deal to cut oil output in an attempt to drive up prices. Russia’s TASS news agency quoted energy minister Kanat Bozumbayev as saying at an energy conference in Istanbul that Kazakhstan wanted to rise output as soon as the current agreement expired in March 2018.

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(News report from Issue No. 336, published on July 16 2017)

International Bank of Azerbaijan wins support for restructuring

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JULY 12 2017 (The Bulletin) — International Bank of Azerbaijan (IBA) said that it had secured support for its debt restructuring plan from creditors holding 87% of the debt. It missed a loan repayment in May triggering plans to restructure $3.3b of debt, effectively wiping 20% off the value of its debt. Western investors have complained that the restructuring plan is biased against them and had vowed to block it from being put into action. IBA said it would announce the formal results of a vote on its restructuring plan on July 18.

ENDS

(News report from Issue No. 336, published on July 16 2017)

Georgia court paves way to deport ‘Gulenist’ teacher

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TBILISI, JULY 7 2017 (The Bulletin) — A court in the Georgian capital rejected an asylum application by detained Turkish school manager Mustafa Cabuk, paving the way for his extradition to Turkey where he is he is accused of supporting terrorism and being a member of the banned Gulen organisation.

The case has been controversial because it has appeared to confirm that Georgia has bowed to pressure from Turkey to detain and extradite Turks linked to the Gulen movement. Turkish President Recep Erdogan has accused exiled cleric Fethullah Gulen and his followers of organising a failed coup last year.

Turkey has been pressuring allies in the South Caucasus and Central Asia to hand over businessmen and education officials linked to Gulen but until recently only Azerbaijan, its arch-ally, and Turkmenistan have acquiesced.

Georgia, though, has been trying to boost relations with Turkey and Mr Cabuk’s supporters have said that he is just a pawn in a bigger geopolitical game and that he faces being tortured if he is sent back to Turkey where thousands of Gulenists have been arrested. Georgia has also revoked the licence of a school in Batumi linked to the Gulen network and detained a Turkish businessman.

To the frustration of his supporters, the court ruled Mr Cabuk didn’t meet the requirements needed to be given political asylum and that his life would not be in danger in Turkey.

Cabuk was detained in May. He has worked in Georgia since 2002. His most recent job was as a manager for Demirel College in Tbilisi.

ENDS

(News report from Issue No. 336, published on July 16 2017)

Kazakh Halyk Bank completes KazKom takeover

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ALMATY, JULY 12 2017 (The Bulletin) — Kazakhstan’s Halyk Bank, owned by the daughter of Kazakh Pres. Nursultan Nazarbayev and her husband, completed the takeover of Kazkommertsbank, a deal officials say is vital to protect the banking sector but critics say cements the First Family’s power.

The complex deal involved the state writing off $7.5b of Kazkommertsbank and Halyk Bank bad debt. Halyk Bank officially paid only 185b tenge ($560m) for its rival. The combined market share of the merged bank will be around 37%, roughly four times its next competitor.

While opponents of Mr Nazarbayev and his son-in-law, Timur Kulibayev, have said that the long-planned deal gives the elite too much influence, its proponents have said that it is essential.

Kazakhstan’s banking sector is under increased pressure from nonperforming loans which have been mounting over the past few years, since an oil price collapse in 2014 triggered a downturn and a halving of the value of the tenge.

The Central Bank has said that it has prepared a $1.5b fund to bail out its banks. Some banks in Kazakhstan have already folded.

ENDS

(News report from Issue No. 336, published on July 16 2017)

Kazakhstan reaffirms support for Qatar

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JULY 2 2017 (The Bulletin) — In an apparent show of support for Qatar, which is under a blockade lead by its for neighbour Saudi Arabia, the Kazakh foreign ministry released a note highlighting diplomatic relations between the two countries. The note also said that a planned visit to Kazakhstan by high-ranking Qatari officials was still set for later this year. Qatar has been building links with Central Asian states over the past few years. Central Asia wants access to the Gulf and Qatar has been looking for allies.

ENDS

(News report from Issue No. 336, published on July 16 2017)

Kazakh capital hosts fifth round of Syria talks

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JULY 6 2017 (The Bulletin) — Kazakhstan hosted the fifth round of Syria peace talks in Astana aimed at ending the violence in the civil war that has ravaged the country in the last six years. Russia, Iran and Turkey were the key drivers around the talks which diplomats said ended with an agreement to set up so-called de-escalation zones although analysts also said that there had been no major break through. No specific details of the deals agreed were released. Importantly, both the Syrian government and the Syrian rebels attended the talks.

ENDS

(News report from Issue No. 336, published on July 16 2017)