Tag Archives: Kazakhstan

McDonalds location starts row in Kazakhstan

SEPT. 19 2015, ALMATY (The Conway Bulletin) — City planners in Almaty confirmed that McDonald’s would open its first restaurant in the former Alatau cinema in the centre of the city next year, sparking debate over the US fast food chain’s entry into Kazakhstan.

The old Alatau cinema has been derelict for years but is loved by many people living in Almaty as an iconic part of the city’s architecture.

Karim Toktabayev, a businessman, is part of the campaign team trying to stop McDonald’s from moving into the cinema building.

“I am neutral towards opening of McDonald’s. I cannot say I am against it but I am very much against the demolition of the (former cinema) building,” he said. “Why do we need to demolish this building? Why can’t we save it? If we demolish all the old buildings we will not have any history left.”

Others, though, are more excited about McDonald’s opening. For many Kazakhs it has been a source of irritation that McDonalds, one of the most famous brands in the world never operated a restaurant in the country. Now that wrong can be put right.

“No matter where it opens, I am happy that it will open. We have plenty of cinemas in the city, why should it matter if we open it in one of these cinemas?” said Sholpan Alibekova, a student.

McDonalds has said it will probably open in the first quarter of 2016.

ENDS

(News report from Issue No. 249, published on Sept. 25 2015)

Kazmunaigas to boost petrol market

SEPT. 18 2015 (The Conway Bulletin) — Kazmunaigas Processing and Marketing (KMG P&M), a branch of the state-owned oil and gas company Kazmunaigas, said it wants to increase its brand’s share of the petrol retail market in Kazakhstan to around 33%. KMG P&M currently owns 324 petrol stations across the country representing 12% of the total. The company is selling 146 stations to private investors to reduce costs. The new owners will keep the Kazmunaigas brand. KMG P&M will then buy more stations to increase the number of petrol stations carrying its brand.

ENDS

(News report from Issue No. 249, published on Sept. 25 2015)

Currency: Kazakh tenge, Kyrgyz som

SEPT. 25 2015 (The Conway Bulletin) — Last week’s decision by the US Federal Reserve Bank not to modify interest rates was welcomed across Central Asia and the South Caucasus, where currencies performed well.

The Kazakh tenge, the Georgian lari and the Kyrgyz som all recouped 2% against the dollar and a timid 1% improvement was also noted in Armenia and Azerbaijan. Markets are still weak, however. Had it not been for Central Bank interventions for millions of dollars in Kazakhstan ($620m in one week), Georgia and Kyrgyzstan (around $30m each), their currencies would have kept falling.

By the end of the week, the Kazakh tenge was trading up 2.5% against the US dollar at 264/$1, the Kyrgyz som was up 2% at 69/$1 and the Georgian lari was up 2.4% at 2.39/$1.

Also, and this is interesting, a study from researchers at the International Monetary Fund found that the lack of confidence in domestic currencies and ingrained behaviours have hindered any policy of de-dollarisation across Central Asia and the South Caucasus.

ENDS

(News report from Issue No. 249, published on Sept. 25 2015)

Fire breaks out near Zhanaozen, Kazakhstan

SEPT. 18 2015 (The Conway Bulletin) – A fire broke out at an oil pit outside Zhanaozen in western Kazakhstan. High winds spread the fire over a 5 square km area. Media said the fire injured 2 people.

ENDS

(News report from Issue No. 249, published on Sept. 25 2015)

Samsung suspends building work at essential Kazakh power plant

ALMATY, SEPT. 23 2015 (The Conway Bulletin) — Korea-based Samsung Engineering said it was suspending construction work at a 1,320 megawatt coal-fired power plant near Lake Balkhash in Kazakhstan due to financing issues, throwing into doubt the feasibility of the $2.2b project that the Kazakh government has said is vital to meet growing demand for electricity.

Alluding to the impact of an economic downturn that has hit the economies and currencies of Central Asia, Samsung Engineering said it was worried that Kazakhstan couldn’t guarantee it would buy the power that the plant was due to generate.

“Samsung Engineering has been forced to temporarily halt the operation of the project because of an issue with the Kazakhstan government over the guaranteed purchase of the power to be produced from the project,” the company’s CEO Park Jung-heum told The Korea Times. He didn’t say when the project might resume.

The Kazakh government has not commented.

A consortium led by Samsung Engineering and Korean Electric Power Corp. won the project tender in 2009. The project was due to be completed in 2020 and would have supplied 9% of Kazakhstan’s total electricity demand.

The power plant was due to cost $2.2b to build. Korean Eximbank and Korea Trade Insurance Corp. pledged additional loans of around $3.5b.

In August, Samsung also said it was worried about the strength of Kazakhstan’s banking sector which is saddled with a large amount of bad debt, a legacy of the 2008/9 Global Financial Crisis.

Kazakhstan needs to increase its electricity generation capacity to power its export-oriented industrial sector and to feed its increasingly energy hungry population or face the prospect of black-outs. World Bank data showed that in 2014, Kazakhstan consumed around 88b kilowatt hours of electricity. In 2000, it consumed 48b kilowatt hours, figures that highlight the growth in demand.

Samsung’s decision to halt its big project at Balkhash is a serious setback for Kazakhstan’s energy plans.

It is also a litmus test for Kazakhstan’s ability to follow through with major infrastructure projects it planned during a period of high oil prices and steady export revenues.

ENDS

(News report from Issue No. 249, published on Sept. 25 2015)

Kazakh CBank intervenes again

SEPT. 21 2015 (The Conway Bulletin) – Kazakhstan’s Central Bank bought $200m-worth of tenge to protect its currency after it broke through the psychologically important 300/$1 barrier. Despite pledging not to intervene in the value of the tenge, the Kazakh Central Bank has spent over $700m this month on its defence.

ENDS

(News report from Issue No. 249, published on Sept. 25 2015)

Markets: ADB’s growth outlook for the South Caucasus and Central Asia

SEPT. 22 2015 (The Conway Bulletin) — The Asian Development Bank published an updated Outlook for the economies of Central Asia and the South Caucasus, downgrading growth prospects across the region.

The ADB set growth for 2015 at 3.3%, down from an earlier forecast of 3.5% and the organisation says inflation will hit 8.1% this year, triggered by the latest devaluing of the Kazakh tenge and the Kyrgyz som. In Kazakhstan, in particular, “the new exchange rate is expected to dampen consumption and investment further,” the ADB said. A worrying outlook.

The trend for lower capital investments across the region, however, could be reversed in 2016-17, according to the ADB. The governments will play a major role as drivers of future growth as the main source of investments for years to come.

ENDS

(News report from Issue No. 249, published on Sept. 25 2015)

Business comment: Kazakhstan & The Oil Markets

SEPT. 23 2015 (The Conway Bulletin) — Low oil prices hit Kazakhstan again, as it revised downwards oil production numbers.

Iran’s re-emergence into the global markets will keep prices low according to a spokesperson from the Ministry of Energy in Astana and this means the Kazakhstan will lower production.

“Oil output is expected to reach 79.5m tonnes in 2015,” the spokesperson told Reuters. This is

1m tonnes less than earlier predicted and almost 2% less than in 2014. And it could get worse, as the government has not ruled out a further reduction in production, should prices continue to fall.

This has an adverse effect on Kazakhstan’s economy.

First, foreign investors reduce their financial positions because their assets lose value, either because of low oil prices or due to the devaluation of the local currency. Foreign investors have already started to leave Kazakhstan,

as TeliaSonera, Samsung, Honda, have shown in the past fortnight.

Second, the country’s financial position weakens further. It has to spend foreign reserves to protect its currency from falling further.

Third, the domestic oil sector marks some projects, which have been labelled uneconomic, as on- hold until oil prices rise. This, in turn, means lower revenues.

When it comes to oil, Kazakhstan is a price-taker. Its fate will depend on how it manages to survive what could be a long period of cheap oil.

ENDS

(News report from Issue No. 249, published on Sept. 25 2015)

Stock market: KAZ Minerals, Nostrum Oil & Gas

SEPT. 18-24 2015 (The Conway Bulletin) — KAZ Minerals shares, now trading at 101 pence, lost over 30% in one week, a fall sharper than the one it suffered last January, when it dropped by more than 25% in one day. Questions on China’s demand

for copper worried investors. Credit Suisse and BNP Paribas downgraded KAZ Minerals and reviewed downwards its target price. Goldman Sachs said there could be a potential upside on Friday and next week.

Nostrum Oil & Gas dropped a further 4% to 481 pence (Sept. 25), although an agreement with Tethys Petroleum seems closer after a company statement said the latest Nostrum offer priced each Tethys share at 0.147 Canadian dollars (Sept. 23).

Azerbaijan-based miner Anglo- Asian Mining gained 13% to 5.38 pence this week, after it published a promising H1 2015 report.

Kazakhstan-focused Roxi Petroleum continued its oil price linked slump, dropping by 4.3% to 8.5 pence this week in London.

In the GDR markets, Kazmunaigas E&P lost almost 20% this week, trading at $6.47 onFriday, almost certainly linked to Kazakhstan’s weak prospects in terms of oil production. Kcell fell by 13.4% finishing the week at $5.35 after TeliaSonera announced last week it would leave its Eurasian markets. TeliaSonera owns 62% of Kcell.

ENDS

(News report from Issue No. 249, published on Sept. 25 2015)

Moody’s drops Kazakhstan growth

SEPT. 22 2015 (The Conway Bulletin) – International ratings agency Moody’s lowered its growth prediction for Kazakhstan in 2016 to 2% from 2.2%. Moody’s kept its forecast for 2015 steady at 1.5%. Low oil prices have hit Kazakhstan’s budget and its ability to generate revenues.

ENDS

(News report from Issue No. 249, published on Sept. 25 2015)