Tag Archives: Kazakhstan

Kazakhstan cuts funding to sport

FEB. 25 2016 (The Conway Bulletin) – Samruk-Kazyna, Kazakhstan’s sovereign wealth fund, said it will cut funding to the Astana Presidential Sports Club, an umbrella organisation that sponsors everything from cycling to football to boxing. The club was officially set up in 2013 to promote Kazakhstan and Astana under the country’s yellow and blue colours. It received large sums of money. Successes included winning cycling’s Tour de France and FC Astana playing in the Champion’s League, football’s most high profile competition. Kazakhstan has been looking for ways to cut costs as the economic downturn bites.

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(News report from Issue No. 269, published on Feb. 26 2016)

Kazakh activist serves house arrest

FEB. 19 2016 (The Conway Bulletin) – Ermek Narymbayev, one of two Kazakh civil rights activists imprisoned last month for inciting social unrest, has been allowed to return home and serve out his sentence under house arrest, media quoted his wife as saying. Opponents of Kazakh president Nursultan Nazarbayev have accused him of cracking down on free speech.

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(News report from Issue No. 269, published on Feb. 26 2016)

Stock market: Tethys and Olisol

FEB. 22 2016 (The Conway Bulletin) — Tethys shares have surged back from their historical low of 1.63p after the company announced a change in the agreement with Olisol, which will allow Tethys to raise cash via a loan in Kazakhstan.

John Bell, Tethys’ executive chairman said that “in entering into this agreement, Tethys has gained a strong in-country strategic partner which has committed to remaining a minority shareholder.”

Olisol has thus finally and concretely become Tethys’ partner. After months of sustained low oil prices and fickle exploration and production data, Tethys was looking for a cash injection to finance its operation and restore investors’ trust.

Now Olisol and, likely, Bank RBK will complete a loan transaction for $10m and the deal with Olisol will go ahead as agreed last November. The entire deal should be completed within the next two months, according to Tethys.

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(News report from Issue No. 269, published on Feb. 26 2016)

Finally, McDonald’s set to open in Kazakhstan

ALMATY, FEB. 25 2016 (The Conway Bulletin) — McDonald’s said it will open its first restaurant in Kazakhstan on March 8 in central Astana, concluding the US food giant’s lengthy process for entering the Kazakh market.

The company previously said it planned to open its first restaurant in the second half of 2015. After years of rumours as to when McDonald’s would come to Kazakhstan, its first restaurant is now ready to open its doors.

The company plans to open a total of 16 restaurants in the next five years across the country.

In Kazakhstan, McDonald’s will partner with Kairat Boranbayev, a former head of Russo-Kazakh energy joint venture KazRosGas. Mr Boranbayev is also close to Kazakh President Nursultan Nazarbayev. His daughter Alima married Mr Nazarbayev’s grandson Aisultan.

McDonald’s said Mr Boranbayev’s involvement is purely related to business.

“Kairat [Boranbayev] has a diverse business background and a proven track record of running successful business ventures in his home country as well as our restaurants in Belarus,” Khamzat Khasbulatov, McDonald’s director in Russia, said in a statement.

In Kazakhstan, McDonald’s will face competition from KFC, Burger King and Hardee’s.

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(News report from Issue No. 269, published on Feb. 26 2016)

Kazakhstan slips towards recession

FEB. 23 2016, ALMATY/DUSHANBE (The Conway Bulletin) — Kazakhstan verged on acknowledging that its economy may actually shrink this year and a Tajik Central Bank official said it was in talks with the IMF for an emergency loan, more signals that a sharp regional economic crisis was deepening further.

Normally bullish about its own GDP growth predictions, the reconfigured Kazakh government GDP growth estimate of 0.5% is an important sign of the severity of the economic downturn linked to low oil prices. Kazakhstan had earlier predicted GDP growth in 2016 at 2.1%.

“If the cost of a barrel of oil is $40, GDP growth will be 2.1%, but we’ve taken the conservative approach and have assumed that the price of oil will costs $30 per barrel and that GDP growth will hit 0.5%,” journalists quoted Yerbolat Dosayev, the economy minister as saying. Oil is currently around $35/barrel.

Importantly, this new GDP growth estimate is far closer to that of international economist who have said that Kazakhstan’s economy could shrink in 2016. The last time that Kazakhstan’s economy dipped into a recession was in 2008.

Low oil prices and a recession in Russia which has wiped out essential remittance and business investment flows have hit Central Asia hard. The scale and speed of the downturn appears to have wrong-footed leaders, including Kazakh president Nursultan Nazarbayev and his advisers.

They have slashed government budgets and also sold off chunks of state-owned companies, but they haven’t been able to prevent the tenge from losing 50% of its value and inflation rising. Officials are now worried about anti-government protests.

On the southern fringe of Central Asia, Tajikistan, the world’s most remittance-reliant economy, has also been reeling from the impact of the downturn. It has called in the IMF to try to organise an emergency loan.

Jamoliddin Nuraliev, deputy head of Tajikistan’s Central Bank, told the FT that talks with the IMF had begun.

“It’s crisis time,” he said.

Tajikistan has depleted its currency reserves in its Central Bank trying to defend the value of it somoni currency. At the same time, data has shown that the flow of remittances from Russia have dropped by around half.

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(News report from Issue No. 269, published on Feb. 26 2016)

Kazakh Parliament to discuss neew subsoil law

FEB. 23 2016 (The Conway Bulletin) – A new subsoil law in Kazakhstan, which Western investors hope will reduce costs and improve access to geological information, will be presented to parliament within the next few months, Aset Magauov, the deputy energy minister said. Kazakhstan has been developing a new subsoil law for the past 18 months.

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(News report from Issue No. 269, published on Feb. 26 2016)

Kazakh police arrest leading journalist

FEB. 22 2016, ALMATY (The Conway Bulletin) — Police arrested Seitkazy Matayev, one of Kazakhstan’s most prominent journalists and a former press secretary of Kazakh President Nursultan Nazarbayev, as well as his son Aset for stealing government money and for tax evasion.

The arrests are a an escalation of the pressure that journalists are under in Kazakhstan. They appeared to show that no journalist, whatever their reputation and links, is beyond the reach of the authorities during a crackdown which analysts have linked to a sharp downturn in the economy and a parliamentary election next month.

Mr Matayev served as a spokesman for Nazarbayev in 1991-3, is head of the journalists’ union and runs the National Press Club in Almaty, used as a discussion platform for opposition, journalists, activists, politicians and businessmen.

He was also the founder and owner of the KazTAG news agency of which his son was CEO. The authorities said that they had stolen a combined 300m tenge ($861,000), from state organisations.

Journalists told The Conway Bulletin’s Almaty correspondent that Mr Matayev’s arrest signalled that the authorities wanted to increase the pressure on journalists further.

Zhanna Baitelova, a freelance journalist, said it was no surprise that the authorities were pressuring Kazakhstan’s opposition media.

“But when they detain the head of Journalists’ Union of Kazakhstan, an organisation that is per se neutral, it is shocking,” she said. “The situation with press freedom in Kazakhstan is critical, especially in the light of recent events.”

Police later released Asset Matayev. Seitkazy Matayev was placed under house arrest.

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(News report from Issue No. 269, published on Feb. 26 2016)

OBI store to open in Kazakh city

FEB. 25 2016 (The Conway Bulletin) — German DIY kit retailer OBI will build its first store in Almaty, Baurzhan Baibek, the city’s mayor told local media. Construction works will start in May and the new store will open in 2017. Kazakhstan’s DIY market is growing as more and more people follow the European trend for renovating their homes. Although an economic downturn has battered Kazakhstan it is still considered a decent market for well- known European brands open up in. Earlier this month, French retailer Auchan opened its first store.

ENDS

(News report from Issue No. 269, published on Feb. 26 2016)

Kazakhstan says it does not have right to buy Karachaganak stake

ALMATY, FEB. 23 2016 (The Conway Bulletin) — Kazakhstan’s government said it will not try to buy a 29.25% stake in the Karachaganak gas field that Shell inherited from BG Group after it completed a takeover earlier this month.

Previously, Kazakh officials had said the government might use its preemptive rights to buy out BG Group’s share in the field, one of the most prolific in independent Kazakhstan’s history.

Kazakhstan has now said it does not have any preemptive rights to buy the stake because the Shell-BG deal was not directly linked to the Karachaganak contract. Shell, which completed its $53b takeover of BG on Feb. 15, has not commented.

A direct change in the structure of the contract would have given the Kazakh government the right to move first and buy stakes on sale at market prices. The government used this mechanism when ConocoPhillips wanted out of the contract for Kashagan, a giant oil field in the Caspian Sea, in 2013. At the time, Kazakhstan matched a $5.4b offer by India’s ONGC Videsh and later sold the stake to China’s CNPC for the same price.

Now, the government has decided it has no right to do so.

Of course, Kazakhstan’s economic position has changed considerably since 2013. Then it was awash with spare cash. Now it is counting its coppers and flogging off chunks of previously sacrosanct state companies to pull through a deepening economic crisis.

And, for Kazakhstan, shying away from the Shell/BG stake in Karachaganak makes it look good and pro- Western business, especially important in this tight economic climate.

Karachaganak’s shareholders are Shell with a 29.25% stake, ENI with 29.25%, Chevron with 8%, Lukoil with 13.5% and Kazmunaigas with 10%.

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(News report from Issue No. 269, published on Feb. 26 2016)

KAZ Minerals grows production in Kazakhstan

FEB. 25 2016 (The Conway Bulletin) — KAZ Minerals said it will grow production of copper cathode by around 70% in 2016 as new deposits of Bozshakol and Aktogay come online this year. The company plans to produce up to 155,000 tonnes of copper cathode in 2016. KAZ Minerals’ revenues fell by 21% last year compared to 2014. The company received a boost when Kazakhstan decided to abandon the tenge’s peg to the US dollar, leading to a sudden depreciation of the local currency.

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(News report from Issue No. 269, published on Feb. 26 2016)