Tag Archives: business

Kazakh carmaker revives production

NOV. 4 2016 (The Conway Bulletin) — Despite a 29% fall in revenues, Kazakhstan-based carmaker AziaAvto turned a profit of 3b tenge ($8m) in the first nine months of 2016, compared to a loss of 13.4b tenge in the same period last year. In a statement, the company said that despite the slump in the market, AziaAvto has managed to contain costs and revive production. AziaAvto’s plant in eastern Kazakhstan produces cars for Lada, Skoda, Chevrolet and KIA.

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(News report from Issue No. 304, published on Nov. 11 2016)

Azerbaijan increases its cotton harvest but analysts doubt ambitious target

NOV. 7 2016 (The Conway Bulletin) — Azerbaijan harvested 50,400 tonnes of raw cotton in 2016, a 66% increase on last year, its statistics committee said.

The rise is important to the Azerbaijani government because with oil prices low and the economy tipping into recession it has revived promises to develop cotton.

In the Soviet Union, before its second oil boom in the late 1990s and early 2000s, cotton had accounted for up to 25% of Azerbaijan’s income. Investment, though, dropped away once oil became the focus.

“Next year, cotton production will lead to the creation of more than 100,000 jobs. As we expand our acre- age, this figure will grow,” President Ilham Aliyev said during a cotton- development conference in Sabirabad, Azerbaijan, on Sept. 17.

Azerbaijani authorities want to expand the cotton fields within three years by 500%, from the current 50,000 hectares. Even if Azerbaijan hits this target it will still be a fraction of the size of the world’s major cotton producing countries. Uzbekistan has around 1.25b hectares of cotton fields.

Economists, though, are sceptical on whether white gold – as cotton is dubbed in Azerbaijan – can fill the gap left by the drop in energy prices. Last year, they pointed out, cotton produced earned just $29m.

Ziya Mammadbayli, a Baku-based analyst, said that Azerbaijan didn’t even have the capacity to pick a bigger cotton harvest without forced labour.

“With low average salaries and without new equipment the has government started to send primary school teachers and doctors to cotton fields to pick it,” he told The Bulletin.

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(News report from Issue No. 304, published on Nov. 11 2016)

Uzbek businessman complains to President

NOV. 8 2016 (The Conway Bulletin) — In a televised show, Olim Sulaimanov, director of a small trading company in Uzbekistan, explained how his company had been raided by Uzbek police, Eurasianet reported. Mr Sulaimanov, whose company exports fruits and vegetables to Russia, appealed to acting-President Shavkat Mirziyoyev to unfreeze his company’s assets.

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(News report from Issue No. 304, published on Nov. 11 2016)

Azerbaijan to supply oil to Egypt

NOV. 8 2016 (The Conway Bulletin) — A source in SOCAR, Azerbaijan’s state-owned energy company, said that the company will supply Egyptian refineries with 2m barrels of oil annually, the Amwal Al Ghad magazine reported. Last week, Egypt and Azerbaijan agreed on a supply contract after Saudi Aramco said it would halt shipments to Egypt indefinitely.

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(News report from Issue No. 304, published on Nov. 11 2016)

European Parliament set to approve Uzbek cotton deal

NOV. 10 2016 (The Conway Bulletin) — An influential European Parliament committee backed a textile trade deal with Uzbekistan that had been moth- balled in 2011 on concerns over the use of child labour.

The vote is a triumph for Uzbekistan and acting-president Shavkat Mirziyoyev as it bestows credibility on the Uzbek cotton sector after years of negative headlines and boycotts by international clothing companies.

The Committee on International Trade will now recommend at a full European Parliament vote in December that a trade deal is made with Uzbekistan.

Reuters quoted Maria Arena, one of the MPs on the committee, as saying that Uzbekistan had improved its labour rights over the past few years.

“The progress made by the Uzbek authorities allows us to move forward and include textiles in our partnership agreement. But we will remain extremely vigilant,” she was quoted as saying.

Last year the UN’s International Labour Organisation (ILO) monitored the Uzbek cotton harvest. It said in a report that there had been major improvements in the way labour was organised and although it was still commonplace for government workers to leave their jobs to pick cotton during the harvest, the use of child labour was far reduced.

Human rights groups, though, were adamant that the European Parliament needed to set an example and avoid a deal with Uzbekistan. In an open letter to the committee sent three days before its meeting, the New York-based Human Rights Watch said that it was because of the European Parliament’s rejection of a trade deal in 2011 that Uzbekistan agreed to open up to UN monitors. It also said that the scenario in Uzbekistan wasn’t as positive as the committee made out.

“We were pleased to note that as a result of international pressure since 2013 children have not been forced to pick cotton on a nationwide scale, and child labour has effectively declined. Yet, local officials reportedly still resort to forced child labour out of a need to fulfil their quotas,” HRW said in its letter.

“Since 2014 we have received steady reports of extortion linked to the cotton harvest.”

Cotton is one of Uzbekistan’s most important commodities. For Mr Mirziyoyev, the timing of the recommendation is also important. He faces a presidential election next month.

He is certain to win this election and become the second post-Soviet president of Uzbekistan after Islam Karimov who died in September, but he still needs to win over popular support. Backing from the European Parliament that child labour is reducing in Uzbekistan and a trade deal can now be made will strengthen his position.

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(News report from Issue No. 304, published on Nov. 11 2016)

Azerbaijan’s SOCAR to build chemical park in Turkey

NOV. 10 2016 (The Conway Bulletin) — SOCAR Turkey Enerji, the Turkish subsidiary of Azerbaijan’s state owned energy company, said it wants to build a new chemical industrial park in Turkey. SOCAR Turkey Enerji and SOCAR Turkey Petrokimiya already own a controlling stake in Petkim, a petrochemical complex in Izmir, western Turkey.

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(News report from Issue No. 304, published on Nov. 11 2016)

Grounded flights in Tajikistan, Kazakhstan, Azerbaijan

NOV. 11 2016 (The Conway Bulletin) — Air traffic in Central Asia and the South Caucasus continues to suffer from the regional economic slump, as major international carriers cut flights and leave the market to fickle domestic players.

Most notably this year, British Airways cut its London-Baku link, the last remaining destination for the British flag carrier in the region. The connection had lasted over 20 years, ever since BP started to negotiate the so-called Contract of the Century.

Demand for air transport, however, has shrunk, especially in the business market. Low

commodity prices have made many regional business unprofitable. This, added together with some damaging reputational issues, such as the delisting of Kazakhstan’s ENRC from the London Stock Exchange, have made many Western businesses wary of the region.

So it’s not surprising that Turkish Airlines dropped its connections with Osh and Khujand when it decided to downsize its global network because of a drop in demand. The second-largest cities in Kyrgyzstan and Tajikistan just cannot make the cut for commercially viable air links.

Turkmenistan’s new flights to Georgia were also postponed indefinitely this week, a sign that even diplomatically-motivated aviation routes need to be profitable.

On the positive, the Russian and Tajik aviation committees agreed a deal to end their short-lived dispute over routes. This is important, vitally important, for Tajikistan’s migrant workforce who rely so heavily on Russia for their income.

Air routes have become part of a modern-day annual commute for people in developing countries, needed to carry them to waiting jobs.

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(News report from Issue No. 304, published on Nov. 11 2016)

Kazakh oil company completes maintenance

NOV. 9 2016 (The Conway Bulletin) — Oil company PetroKazakhstan said it has completed planned maintenance and remodelling work at its Shymkent refinery three days ahead of schedule. Kazakhstan’s ministry of energy has repeatedly said that the country needs to upgrade its refineries and build a new one. London-traded KMG EP, a subsidiary of state-owned Kazmunaigas, owns a 33% stake in PetroKazakhstan, while China’s CNPC owns the rest.

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(News report from Issue No. 304, published on Nov. 11 2016)

Stock market: Centerra Gold

NOV. 11 2016 (The Conway Bulletin) — Encouraging production results at Kyrgyzstan’s largest gold mine, Kumtor, supported Centerra Gold shares in Toronto, although they were weighed down by a fall in the price of gold.

The company said that because a court in Bishkek has restricted its access to cash held by its Kumtor gold mine, it could not pay a quarterly dividend and may have to seek a cash injection to continue operations. It didn’t give any more details of this but it would be a departure from previous policy.

The spat with the Kyrgyz government, which has become increasingly heated in the past two years, seems to be constantly on the verge of breaking point.

In general, though, Centerra’s share price has followed the price of gold. However, should news from Kyrgyzstan continue to be negative, Centerra’s stock price might start diverging from this pattern.

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(News report from Issue No. 304, published on Nov. 11 2016)

Kazakhstan electricity distributor to sell its stakes

NOV. 7 2016 (The Conway Bulletin) — KEGOC, Kazakhstan’s electricity distributor, renewed its plans to sell off its stakes in Kazenergoprovod, a Semey-based company that sells AC cables. First in May, then in August, KEGOC had unsuccessfully tried to sell its 49.9% stake for 98.4m tenge ($290,000). Founded in 2012, Kazenergoprovod has posted losses for three consecutive years. Local East Industry Company owns 51.1% of Kazenergoprovod.

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(News report from Issue No. 304, published on Nov. 11 2016)