Tag Archives: IFI

World Bank denies Uzbek forced-labour accusations

JULY 8 2016 (The Conway Bulletin) — The World Bank denied allegations that it was fuelling forced labour in Uzbekistan after local human rights campaigners complained about the indirect consequences of a loan from the World Bank’s financial arm to an Uzbek-Indonesian textile joint venture.

The complaint targets a $40m loan approved in December 2015 by the International Finance Corporation (IFC) to Indorama Kokand Textile (IKT), the Uzbek subsidiary of Indorama TBK, a Jakarta-based textile company.

The IFC said that it gave the loan to IKT because it has verified the company’s labour practices.

“[IKT] can trace its cotton supply to ensure it sources only from areas covered by third-party monitoring against child and forced labor,” IFC spokeswoman Elizabeth Price told Reuters.

IKT also refuted the allegations.

“Indorama Corporation has a strict policy of zero tolerance on use of any form of forced labor,” IKT spokesman Prakash Kejriwal said.

The claimants are three local human rights campaigners and one Uzbek alleged victim of forced labour. They said that this loan would reinforce the system of forced labour in the country.

“The IFC loan to IKT and support to commercial banks in Uzbekistan risks perpetuating the forced labor system,” the claimants said in their statement filed with the IFC.

The loan was issued to finance the expansion of the company’s textile plant in Kokand, east Uzbekistan.

The claim highlights the reputational problems of doing business in Uzbekistan for foreign countries. It will likely direct international attention to the issue of forced labour in the country’s cotton picking industry. Uzpahtasanoateksport, the state owned company responsible for the collection and the sale of cotton, is IKT’s sole supplier.

Since 2009, the United States has banned imports of Uzbek cotton and in 2013 it blocked a shipment of IKT cotton at the port of Los Angeles.

Indorama TBK owns 89.26% of IKT, while Uzbekistan’s Central Bank owns the rest.

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(News report from Issue No. 289, published on July 15 2016)

Briefing: Tajikistan’s Rogun dam project

JULY 15 2016 (The Conway Bulletin) — >>Right. Let’s get started. The Rogun Dam. What is it and what is it all about?

>>For Tajikistan and President Rakhmon, the Rogun dam project is vitally important. If it is ever built, and the plans have been knocking around since the Soviet era, the Rogun dam will be the tallest dam in the world at up to 335 m. It will also double Tajikistan’s power generation capacity. The problem is that the dam has proved highly controversial, domestically and internationally, and is also expensive to build.

>>Hang on. Slow down. This is a lot take on. So, Rogun is massive but why is it controversial?

>>It’s controversial because human rights group have accused the government of forcibly moving thousands of people away from the Vakhsh River valley, the area that will be dammed and flooded. The government has also imposed a Rogun dam tax on people to pay for the project. This has gone down badly with human rights groups. Externally, Uzbekistan, Tajikistan’s neighbour, hates the idea of the Rogun dam. It worries that the dam will divert water from irrigating its cotton fields.

>>How serious are Uzbekistan’s concerns?

>>Central Asia is a fragile region. If Uzbekistan is making threatening noises
towards Tajikistan, people need to take notice. Analysts and diplomats have spoken of water wars in Central Asia. I’m not saying that the Rogun dam is going to trigger a war but it is another pressure point that people need to watch.

>>Got it. So with all these obstacles and problems why is Tajikistan pushing for problems?

>>It’s become Rakhmon’s pet project. He probably has another five or ten years left in office and it really feels like he wants and needs the Rogun dam to be his legacy. It’s also become vitally important for Tajikistan’s electricity generation sector. Electricity is becoming an important export commodity for Tajikistan as it has signed up to be the main power generator for the so-called CASA-1000 project.

>>CASA-1000? What is that?

>>It’s the World Bank-backed project to build a power transmission network from Tajikistan to Pakistan. It will cost around $1.2b, cross Afghanistan and be operational, if it all goes to plan, by 2019. The challenge is both security and power generation.CurrentlyTajikistan, and to a lesser extent Kyrgyzstan, doesn’t have the capacity to generate enough power to meet its CASA- 1000 commitments. That’s where Rogun comes in.

>>And the financing? This seems to be an expensive project just when the region is trying to deal with a financial crisis. Where is the finance coming from?

>>Good question. We’re not entirely clear. We’ve only been told that it is a mix of government funds and private investment. Who the private investors are and what their motives are is unknown.

>>I see. So what next?

>>Well, the Tajik government awarded a $3.9b contract to Italian builder Salini Impregilo to start construction work on the dam. We’re still waiting for work to begin but Salini Impregilo has said it will kick off soon. This has been a stop-start project so actually seeing the diggers go in and the workers start to build the dam is important. If this does happen, it’ll dominate news headlines for years to come.

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(News report from Issue No. 289, published on July 15 2016)

ADB agrees $750m loan to update Azeri power

JULY 12 2016 (The Conway Bulletin) — The Asian Development Bank (ADB) said it will lend $750m to Azerbaijan to co-fund improvements to the country’s outdated regional power distribution systems.

The project, worth around $1b, aims to refurbish the distribution network and the efficiency of Azerishiq (Azerlight), the state-owned power distribution company.

Azerbaijan’s government will invest the remaining $250m. The ADB said that it will send its $750m loan in three tranches of $250m.

“This ADB program will help address the bottleneck in electricity supply and provide round-the-clock and reliable electricity to households and entities in secondary cities and rural areas in Azerbaijan,” Sean O’Sullivan, director general in ADB’s Central Asia Department, said.

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(News report from Issue No. 289, published on July 15 2016)

EBRD loans $100m to Georgia’s telecom

JULY 14 2016 (The Conway Bulletin) — The EBRD said it had loaned $100m to MagtiCom, Georgia’s largest telecoms operator, to buy Caucasus Online, a Georgian internet service provider that also works in Armenia and Azerbaijan. MagtiCom, whose main shareholders are two American telecoms companies, has almost 2m subscribers.

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(News report from Issue No. 289, published on July 15 2016)

EBRD funds Georgia’s fertiliser maker

JULY 4 2016 (The Conway Bulletin) — The EBRD said it is about to unlock a $155m loan to Georgia’s fertiliser producer Rustavi Azot. The loan will be part of a $175m funding programme to modernise its production line and reduce the factory’s emissions. RustaviAzot, located 25km south of Tbilisi, employs around 2,000 workers and has an output capacity of up to 220,000 tonnes of ammonia per year. In March, the plant faced closure for failing to pay its gas bill.

ENDS

(News report from Issue No. 288, published on July 8 2016)

China wants to build bank in Georgia

JULY 5 2016 (The Conway Bulletin) — The Chinese holding company Hualing wants to build the third largest bank in Georgia by merging Basisbank, of which it owns 90%, and Bank Republic, which it is looking to buy. France’s Societe Generale owns a 93.6% stake in Bank Republic and the EBRD owns the rest. If the agreement with Hualing goes through, Societe Generale will own an 8% stake in the merged bank and the EBRD will own a 3.9%. In recent months,Hualing has also heavily invested in Georgia’s construction sector.

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(News report from Issue No. 288, published on July 8 2016)

Tajik banking crisis spreads

DUSHANBE, JULY 4 2016 (The Conway Bulletin) — Tajikistan’s Central Bank said it had placed Tajprombank under its administration because it had nearly run out of cash and also that it had asked the EBRD to step in to advise it on how to support the country’s ailing banking sector.

A banking crisis in Tajikistan, triggered by a recession in Russia and a slowdown in domestic economic activity, has spread.

Tajik media reported that the Central Bank had asked the EBRD directly for technical support and advice to help it smooth out problems in its banking sector. The EBRD has already said it is looking at bailing out Tojiksodirotbank.

It has said that is is considering more support, although it us unclear if this is just advice or also funds.

So far Tojiksodirotbank and now Tajprombank have been placed under the Central Bank’s administration.

A source at the Tajik Central Bank said it had placed Tajprombank under its administration on May 3.

“This decision was taken because Tajprombank had repeatedly violated banking legislation and other regulatory acts laid out by the Central Bank, weakening its financial position and disappointing its creditors,” the source said.

It is unclear why it took the Central Bank two months to acknowledge this.

Agroinvestbank has also been looking increasingly shaky. Last month, customers said they were finding it difficult to withdraw cash from Agroinvestbank’s ATMs.

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(News report from Issue No. 288, published on July 8 2016)

Auchan opens hypermarket in Tajik capital, its first in Central Asia

DUSHANBE, JUNE 21 2016 (The Conway Bulletin) — French hypermarket brand Auchan opened its first store in Tajikistan to local acclaim with crowds of residents thronging to the shop, which has been built on the side of a new shopping mall.

The hypermarket, one of 3,000 Auchan shops around the world and the first in Central Asia, was built by France’s Schiever Group.

The European Bank for Reconstruction and Development (EBRD) also invested 5m euros. According to the EBRD, Tajik people buy products from small shops and at high prices, and building a new hypermarket offers them a new alternative.

The opening of Auchan is also a boost for President Emomali Rakhmon who is under increasing pressure because of the country’s poor economic performance over the past few months.

The currency has dropped in value, inflation has risen and jobs have disappeared.

The four-storey Dushanbe Mall, home to the new Auchan store, has been built next to the headquarters of Tojiksodirotbank, one of the country’s biggest banks. This year, Tojiksodirotbank went into administration.

And Tajiks were excited at the prospect of shopping at the hypermarket. “Everything was good. Some products were cheaper than at street shops,” said Malika, 45.

Others were more skeptical.

“Many say that people do not have any money but look at how crowded this place has become,” said Sharif, a 38-years-old NGO worker.

“As time passes, though, less and less people will come.”

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(News report from Issue No. 286, published on June 24 2016)

IMF approves loans for Kyrgyzstan and Armenia

JUNE 16/17 2016 (The Conway Bulletin) – The IMF approved two loans to Armenia and Kyrgyzstan, part of a three-year plan to support macroeconomic reforms. It loaned $22m to Armenia, where it supported a controversial tax reform that received a first parliamentary approval on June 15. The IMF also gave a $13m loan to Kyrgyzstan and lauded the government’s measures to boost tax revenues and cut spending.

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(News report from Issue No. 286, published on June 24 2016)

Uzbekistan to launch tunnel

JUNE 20 2016 (The Conway Bulletin) – The Uzbek government said it will launch the Angren-Pap railway service from July, opening the longest tunnel in Central Asia. The project, completed in the past few months, cost $1.6b and was partly funded by Chinese and World Bank loans. Uzbek President Islam Karimov and his Chinese counterpart Xi Jinping inaugurated the new tunnel during a ceremony in Tashkent.

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(News report from Issue No. 286, published on June 24 2016)