Tag Archives: Kazakhstan

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)

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.

ENDS

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

Kazakhstan to control NGO funds

MAY 18 2016 (The Conway Bulletin) – Kazakhstan’s ministry of culture established an agency that will manage grant funding for NGOs, a decision in line with the new NGO law that President Nursultan Nazarbayev signed in December 2015. Human rights and NGO lobby groups have said that this law and this agency will restrict their ability to receive funding and undermine their work.

ENDS

(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.

ENDS

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

Kazakh police arrest activists

ALMATY, MAY 20 2016 (The Conway Bulletin) — Kazakhstan’s police detained several activists ahead of a planned demonstration against reforms to the land code in an attempt to stifle opposition forces which have been attracting support in the country’s main centres.

Police detained various activists on May 17 and 18, when courts in Atyrau, Almaty, Uralsk and Astana ordered the arrest of several people on charges of participating or planning unsanctioned public meetings.

Courts ordered pre-trial detention sentences for three to 15 days.

Max Bokayev, an activist from Atyrau, and Bakhytzhan Toregozhina, director of human rights NGO Ar.Rukh.Khak. in Almaty were among the most prominent figures to be detained.

Amendments to the land code, approved in November 2015, have been at the heart of protests that sparked in Atyrau in mid-April and spread throughout Kazakhstan over the weeks that followed.

The protests have now taken on a more general anti-government agenda.

People in Kazakhstan are increasingly frustrated with the drop in economic conditions. Jobs are being cut, inflation is rising.

ENDS

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

Business comment: Corporate Governance in Central Asia

MAY 13 2016 (The Conway Bulletin) – These are tough times for corporate governance and the general business climate in Central Asia.

In rapid succession, news of a raid at a gold company in Kyrgyzstan, the seizure of a Kazakh refinery in Romania, an allegedly fraudulent scheme to fake sales of Uzbek cars and the freezing of a murky hotel sale linked to two exiled Kazakhs in New York came to our readers’ attention over the past two weeks.

Since the raid at its subsidiary’s office in Bishkek, Centerra Gold has reiterated its readiness to cooperate with the authorities and the government to negotiate a solution. We think the raid was a way for the government to flex its muscles.

A bizarre scheme to fake car sales from Uzbekistan to Russia was unearthed this month, perhaps reminding us of how two plus two is not always equal to four in Central Asia. Undoubtedly, the current economic crisis has sparked more corruption.

The seizure of KMG Romanian refinery allows us to look back into the murky deal that first brought Kazakh state-owned business into Romania. Authorities didn’t seem impressed with acrobatic financial manoeuvres performed by former managers at Rompetrol. They’re now seeking damages and a court sentence might negatively affect China’s CEFC, which just bought into the venture.

Lastly, it’s not a surprise that a US court froze the sale of a hotel owned by Mukhtar Ablyazov and Viktor Khrapunov, two Kazakh businessmen and arch-rivals of President Nursultan Nazarbayev. They seemed to be needing some cash but their involvement in court cases in Kazakhstan, the US and Europe turns their transactions into red flags.

ENDS

(News report from Issue No. 280, published on May 13 2016)

Pen portrait: Dariga Nazarbayeva

MAY 13 2016 (The Conway Bulletin) – From part-time opera singer, to the ex-wife of one of her father’s most hated enemies, Dariga Nazarbayeva, the eldest daughter of Kazakh President Nursultan Nazarbayev has led a life in the public eye.

She is now a deputy PM and had been an MP until quietly dropping off the Nur Otan party list, that’s her father’s party, at an election in March. But Ms Nazarbayeva, who turned 53-years-old on May 7, is never far from the headlines and this week she was revealed to have been the part- owner of a company registered in the British Virgin Islands. It is unclear what the company ever did or owned.

Although other public figures may be tarnished with such an association, Ms Nazarbayeva will no doubt be able to see out any fall out. Afterall, she has fallen from favour before and bounced back to be considered a potential next president of Kazakhstan.

Ms Nazarbayeva was married to Rakhat Aliyev, the one-time favourite of President Nazarbayev. Together they controlled some of Kazakhstan’s biggest industries before Aliyev rowed with his father-in-law in 2007.

He fled into exile, accused of murder and set himself up in Europe as an opponent. Ms Nazarbayeva, by contrast, stayed in Kazakhstan and slowly mended her relationship with her father. She disowned all links to her former husband and instead concentrated on building up her father’s trust. This seems to have paid off. Ms Nazarbayeva re-entered parliament as an MP at the parliamentary election in 2012 and was made a deputy PM last year.

More than a handful of analysts have now said that with no other clear contenders, Mr Nazarbayev could be grooming his eldest daughter to take over from him. She quit as an MP at the 2016 election, potentially making it easier for her to take the top job. It wouldn’t have been possible to be president and an MP.

Her father also now ensures that her profile is maintained by starring next to him at major events and speeches.

As for the opera singing, Ms Nazarbayeva is regarded as a decent amateur, even giving a concert at the Bolshoi Theatre in Moscow, as well as appearing on Kazakh TV.

ENDS

(News report from Issue No. 280, published on May 13 2016)

Revenues fall at VimpelCom’s regional subsidiaries

ALMATY, MAY 12 2016, (The Conway Bulletin) – Revenues at Russian mobile operator VimpelCom’s Central Asia and the South Caucasus operations were sharply down in the first quarter of 2016 compared to the same period in 2015, a sign of the continuing economic malaise that has undermined consumer confidence in the region.

In Armenia, Georgia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan, VimpelCom operates under the Beeline brand. Its customer base in the region shrank by 6% to just above 24m, roughly in line with figures released last month by its rival TeliaSonera.

In Kazakhstan, VimpelCom said that revenue from its mobile operations was just under 24b tenge in Q1, 10% lower than 2015, and that its subscriber base had fallen 4% to 9.2m.

The Kazakh mobile market has become increasingly competitive. Sweden’s Tele2 merged with Kazakhstan’s Altel earlier this year and has been undercutting its bigger rivals.

In its quarterly report, VimpelCom said that prices would stay low.

“Competition remains intense, however, although the company continues to maintain its commercially rational pricing strategy,” it said. “Beeline expects the competitive environment to remain challenging throughout 2016.”

And, other than in Uzbekistan were a new pricing strategy had sustained revenues, it was a similar story in other subsidiaries. In Georgia revenues were down 30% in US dollar terms and in Tajikistan down 27%.

VimpelCom said of the drop in revenue in Tajikistan that this was “mainly due to lower incoming international traffic as a result of fewer migrants living abroad due to the macro-economic slowdown in the region and a weakening local currency.”

A recession in Russia has heavily reduced job opportunities for migrant workers from Tajikistan, hitting remittances and economies in Central Asia.

Earlier this year, VimpelCom paid a fine of $795m after it admitted paying bribes in 2007/8 to access the Uzbek mobile market.

ENDS

(News report from Issue No. 280, published on May 13 2016)

UN condemns clampdown in Kazakhstan

MAY 12 2016 (The Conway Bulletin) – The UN High Commissioner for Human Rights condemned what it said was the Kazakh authorities crackdown on protests against proposed amendments to the land code. “The government must immediately end all forms of persecution and take effective measures to protect civil society,” it said. The protests forced Pres. Nursultan Nazarbayev to delay planned changes to the land code. Mobile recordings of the protests showed police clashing with demonstrators.

ENDS

(News report from Issue No. 280, published on May 13 2016)

Loan plugs Kazakh government’s deficit

MAY 11 2016 (The Conway Bulletin) – Kazakhstan’s ministry of finance said it has agreed to take a $1b loan from the World Bank’s International Bank for Reconstruction and Development to plug a budget deficit that has opened up since an economic downturn hit the region. Finance minister Bakhyt Sultanov, said the loan will have a 20-year maturity and will be used to pay for government expenses in 2016.

ENDS

(News report from Issue No. 280, published on May 13 2016)