Tag Archives: business

Business comment: Flying TSE – ULN

MAY 20 2016 (The Conway Bulletin) — The two coldest capital cities in the world will not be connected after all.

Air Astana postponed indefinitely the launch of a new link with Ulaanbaatar because of an ongoing spat between the Kazakh flagship carrier and the Mongolian civil aviation agency.

This can be easily dismissed as a hiccup in the business process, but there might be more to it.

Publicly, Air Astana said: “We had permission to start flights in March 2016. In April the CAAM [the Mongolian agency] unilaterally withdrew it without any valid grounds.”

Responding to a question from the Bulletin posted on Twitter, Air Astana said that the spat with Mongolia has nothing to do with the problems with Russia’s aviation agency, which left a Top Gear crew stranded in Moscow last year while a handful of flights were cancelled.

“It isn’t linked to Russia CAA,” the Air Astana tweet read.

But it’s hard to believe that the two incidents are not connected, since both happened in the same week and were cross-referenced by the Kazakh government when it addressed the issue. This might well be a case of international politics interfering with the business world in Central Asia.

But let’s take Air Astana’s version at face value. In this case, the spat with the Russian and Mongolian civil aviation agencies and the recent announcement that the launch of a connection to Tehran would be a triple setback for the company owned by the sovereign wealth fund Samruk- Kazyna (51%) and British BAE Systems (49%).

Maybe the bullish attitude of the previous months, boasting new routes and international agreements, is unjustified?

ENDS

(News report from Issue No. 281, published on May 20 2016)

Georgia Healthcare Group posts strong Q1 results

MAY 17 2016 (The Conway Bulletin) — Georgia’s largest healthcare company, Georgia Healthcare Group (GHG), posted a 33% rise in revenue in the first quarter of 2016, highlighting rising demand from Georgians for private medical services.

Revenues increased to 71.7m lari (around $33m) in the first quarter of 2016, a jump of a third from 2015. The company attributed the positive results to its ability to grab market share in the healthcare sector.

And this is set to grow, according to GHG, which bought Georgian pharmaceutical retailer and wholesaler GPC earlier in May.

“We are clearly on track to deliver our target of more than doubling 2015 healthcare services revenues by 2018,” CEO Nikoloz Gamkrelidze said in a statement.

GHG also positively reviewed the recent tax reforms that the Georgian government put in place for next year. Under the new rules, undistributed profits will no longer be subject to a 15% profit tax. The government has said that the new tax rules are designed to encourage companies to invest, giving the economy a boost. In the short-term, though, the new tax code will reduce government income.

“We expect this amendment to take effect for our healthcare services earnings on 1 January 2017, and this is expected to significantly reduce the Group’s effective tax rate from 2017 onwards,” Mr Gamkrelidze said.

The healthcare sector in Georgia has proven resilient during the current economic downturn. This economic slowdown, which has hit the entire Central Asia and South Caucasus region, forced Georgia’s lari currency to fall by 30% in the past 18 months and has slowed GDP growth.

Last November, GHG listed its shares on the London Stock Exchange.

BGEO Group, a London-based holding company that owns Bank of Georgia, owns a 65.07% stake in GHG.

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(News report from Issue No. 281, published on May 20 2016)

Uzbek and Bulgarian oil companies open recycling plant

MAY 17 2016 (The Conway Bulletin) — Bulgarian oil company Prista and Uzbekistan’s Uzneftprodukt opened a new oil recycling plant in Angren, eastern Uzbekistan. The new plant will process 43,000 tonnes of used oil and produce 30,000 tonnes of fuel per year. The venture spent around $15m building the plant. Bulgarian PM Boyko Borisov travelled to Tashkent to take part in the inauguration ceremony.

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(News report from Issue No. 281, published on May 20 2016)

Afghan protest shows sensitivity of power line routes from Turkmenistan

MAY 15 2016 (The Conway Bulletin) — Thousands of Hazara, a minority group in Afghanistan, marched through Kabul to protest against the re-routing of a section of a power line that will transmit electricity from Turkmenistan to Afghanistan and Pakistan.

The protests shows just how sensitive the issue of routing various power lines and pipelines through Afghanistan has become as they generate income for communities. As well as this power line, Afghanistan will also host a power line dubbed

CASA-1000 which will send power to Pakistan from Tajikistan and the TAPI pipeline which will pump Turkmen gas to India

The government has said a route change for the Turkmenistan-Pakistan power line would cut costs.

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(News report from Issue No. 281, published on May 20 2016)

Total wants to sell stake in Azerbaijani project

MAY 16 2016 (The Conway Bulletin) — French energy company Total asked for help from the Azerbaijani government with selling its share of gas from the Absheron field in the Caspian Sea, a source close to the deal told Natural Gas Europe. Total has not commented. Total said it will start production at the Absheron field in 2021 and has yet to sign export contracts for its gas.

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(News report from Issue No. 281, published on May 20 2016)

Polymetal production grows from deposits in Kazakhstan and Armenia

MAY 18 2016 (The Conway Bulletin) — Russian miner Polymetal increased its production guidance for the next three years to reflect the gold deposits it has bought in Armenia and Kazakhstan this year. By the year 2020, the Kapan and Komarovskoye mines will add 12.5% to Polymetal’s total production. Polymetal bought Kapan, located in southern Armenia, in March and Komarovskoye, in north-east Kazakhstan, in April.

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(News report from Issue No. 281, published on May 20 2016)

Azerbaijan’s oil fund avoids VTB offer

MAY 16 2016 (The Conway Bulletin) — SOFAZ, Azerbaijan’s sovereign oil fund, said it has no intention of increasing its 2.95% share in Russia’s VTB Bank, a sign, perhaps, that the economic downturn has bitten into Azerbaijan’s ability to buy assets abroad. SOFAZ has previously been increasing the size of equity stakes it owns in various companies. Earlier in May, the Russian government said it was looking for buyers to reduce its stake in VTB. VTB is the second largest bank in Russia and owns subsidiaries across the South Caucasus and Central Asia.

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(News report from Issue No. 281, published on May 20 2016)

Azerbaijani energy company nears deal to buy Greek gas network

MAY 17 2016 (The Conway Bulletin) — SOCAR, Azerbaijan’s state-owned energy company, could be close to securing a deal with Italy’s Snam to unlock its stalled purchase of the Greek gas distributor DESFA.

Greece’s state development fund said that Snam, the Italian gas distribution company, will buy a 17% stake in DESFA, a deal that would allow SOCAR to own 49% of the Greek distributor.

“We expect completion of the process of the sale of a stake in DESFA to Azerbaijan’s SOCAR. 17% out of the SOCAR package will be acquired by Snam,” Stergios Pitsiorlas, head of the Hellenic Republic Asset Development Fund (HRADF) told Greek media.

Snam did not comment.

Media also said Rahman Mustafayev, Azerbaijan’s ambassador to Greece, said Snam will partner with SOCAR. In March, Belgium’s Fluxys pulled out of a deal to partner with SOCAR to buy a 66% stake in DESFA.

It’s been a long-running affair. In 2013, SOCAR won a tender to buy 66% of DESFA for €400m ($450m), but the deal was frozen by the European Commission, which said that, according to a 2009 regulation, SOCAR could only buy a 49% stake.

DESFA is important to Azerbaijan because Greece will play a major role hosting part of a pipeline network that will pump gas from the Caspian Sea to Europe. The EU considers this an important new gas project

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(News report from Issue No. 281, published on May 20 2016)

Lubricant plant opens in Kazakhstan

MAY 19 2016 (The Conway Bulletin) — Russian energy company Lukoil said it had started construction work on a new lubricant manufacturing plant in Kazakhstan. Lubricants Central Asia, Lukoil’s subsidiary which will operate the plant, plans to open the plant in 2018. Kazakhstan and China will be the main markets for the plant, which will have a capacity of 100,000 tonnes/year. Kazakhstan wants to develop industries beyond oil and gas production and mining.

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(News report from Issue No. 281, published on May 20 2016)

Tajik government steps in to save bank from going bust

DUSHANBE, MAY 18 2016 (The Conway Bulletin) — Tajikistan’s Central Bank placed Tojiksodirotbank (TSB) under its administration after the bank said it was on the brink of going bankrupt, the first major banking casualty of the current economic downturn.

TSB is the second-largest lender in the country and manages around a third of all loans in Tajikistan. Its collapse has shaken policymakers.

A senior official at the Central Bank, Mirzokhayota Yodgorov, replaced the bank’s chairman, Tojid- din Pirzoda. Sources in the banking sector also told local media that the EBRD could step in and inject vital cash into TSB.

“The question as to whether the EBRD will enter TSB’s capital will be resolved in June,” the source, quoted by Asia Plus, said.

According to the latest, unconfirmed, updates, the EBRD plans to buy a majority stake in the bank for $165m. The Tajik government could also step in and buy a 25% stake.

Earlier in May, TSB had said it was in talks to sell half of its shares to the EBRD.

Neither the EBRD nor the Tajik Central Bank commented but Tojiksodirotbank did release a fairly oblique statement confirming it had been placed under administration.

“The National Bank of Tajikistan Board in accordance with Articles 48, 49 and 50 of its Laws, to improve the financial situation of Tojiksodirotbank and protect the rights of its depositors and creditors on 18th May 2016 appointed a temporary administration in the bank for three months,” it said in a statement.

The banking sector in Tajikistan, hit by a deep economic downturn, has accumulated overdue loans and is faced with cash shortages. An IMF delegation earlier this year said that some of Tajikistan’s biggest banks were on the brink of default.

Tajikistan’s financial sector is under stress because the value of remittances from migrant workers has shrunk significantly over the past two years, undermining the economy and, crucially, hitting customers’ ability to pay back their loans.

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(News report from Issue No. 281, published on May 20 2016)