Tag Archives: Kyrgyzstan

Tajikistan turns down Kyrgyz request for extra power

DUSHANBE, JULY 26 2016 (The Conway Bulletin) — Tajikistan’s minister of energy, Usmonali Usmonzoda, said he had turned down a request from Kyrgyzstan for extra electricity because the Tajik power generating system did not have any spare capacity.

The inability of Tajikistan to send power to Kyrgyzstan shows just how interdependent countries in Central Asia are. It also comes at a time when extra scrutiny is being placed on the power generation systems in Tajikistan and Kyrgyzstan as they build up to powering the World Bank-backed $1.2b CASA-1000 power system to Pakistan.

At a press conference in Dushanbe, Mr Usmonzoda said that, due to rising industrial activity, Tajikistan does not have spare capacity.

“Kyrgyzstan asked for 2.5b kWh of electricity at 2.5 cents/kWh,” he told reporters. “This is a large volume and, because of the emergence of new domestic energy consumers, we decided to refrain from the supply.”

Last year, Tajikistan signed a short term supply agreement with Kyrgyzstan to export 146m kWh over the winter for 2.5 cent/kWh.

Now, though, Tajikistan may be looking for a better price.

Independent Bishkek-based energy expert Rasul Umbetaliyev told the KyrTAG news agency: “The minister diplomatically avoided answering directly, but the price for electricity exports from Tajikistan is currently 3.5 – 7 cents/kWh.”

Tajikistan is investing heavily in its power generating systems. It has approved a $3.9b project to build the Rogun hydropower system.

But with its economy stalling and industrial production lying stagnant rather than rising, production problems and not excessive demand could be holding back Tajikistan’s power exports.

Its electricity distributor, Barqi Tojik, has piled up $1.5b in debt. It hasn’t paid for the electricity it bought from power stations and it is still waiting to be paid by its largest customers.

The government is planning to split Barqi Tojik and bail it out.

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(News report from Issue No. 291, published on Aug. 1 2016)

Kyrgyzstan resists pressure to close Gulen-linked schools

BISHKEK, JULY 25 2016 (The Conway Bulletin) — Kyrgyzstan’s foreign minister Yerlan Abdyldayev shrugged off Turkey’s request to shut down Gulen-linked schools and told Ankara not to interfere in domestic Kyrgyz affairs, in what could spiral into a diplomatic spat between the two allies.

Last week, Turkish foreign minister, Mevlut Cavusoglu, sent a note to Kyrgyzstan asking to close 30 high schools and one university in Kyrgyzstan financed by the Gulenist movement, which Turkish President Recep Tayyip Erdogan has accused of masterminding a failed coup in mid- July.

The Kyrgyz side sent a strong reply, that, while stressing the importance of bilateral relations, rejected Turkey’s demands.

“We believe it is wrong that a minister of foreign affairs of one country instructs another country to take certain steps, especially using a language of ultimatums and blackmail,” Mr Abdyldayev said in his official reply.

The view was reflected on the streets of Bishkek.

“Turkey has no right to interfere in our internal affairs, Mr Erdogan’s issues with the opposition are Turkey’s own problems,” Alexander, 34, told The Conway Bulletin.

Kazakhstan gave a similar response to a similar request from Turkey over the weekend.

The Kyrgyz and Kazakh responses suggest a reduced role for Turkey in Central Asia. Turkey’s influence in Central Asia peaked soon after the break up of the Soviet Union in the mid 1990s. Since the turn of the century, though, it has ceded ground to a resurgent Russia and an ambitious China which has been looking to boost influence over what it sees as its near abroad.

Analysts also said Kyrgyzstan may be unwilling to shut down the Gulen- linked institutions because they were considered relatively high quality.

“Gulen’s education system showed how education can look, and there are many excellent graduates who work in state and private sectors,” said political analyst Mars Sariyev.

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(News report from Issue No. 291, published on Aug. 1 2016)

Gazprom Kyrgyzstan repairs pipeline

JULY 26 2016 (The Conway Bulletin) — Maintenance work at the Bukhara-Tashkent-Bishkek-Almaty gas pipeline will result in gas cutoffs in several Kyrgyz towns, the press service of Gazprom Kyrgyzstan said. The pipeline is part of a Soviet-designed system pumping Uzbek gas to Kyrgyzstan and Kazakhstan and the repairs and gas cutoffs show just how antiquated the pipeline network has become.

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(News report from Issue No. 291, published on Aug. 1 2016)

Business comment: Centerra’s Good, Bad, and Ugly

AUG 1 2016 (The Conway Bulletin) — This month, Canadian miner Centerra Gold received permission from the Kyrgyz government to continue its operations at the Kumtor gold mine in the east of the country, increased its production guidance and said it will pay out dividends for the second quarter of the year.

Kyrgyzaltyn, which owns 32% in Centerra, will receive $2.3m in dividends.

This will be the first time Kyrgyzaltyn has received a dividend from Centerra since 2014, when a Canadian court froze its assets due to a pending court case. Last week, the Canadian court dismissed the case and this week it released Kyrgyzaltyn’s assets.

By only reading official press releases, the month of July must have been excellent for Centerra and Kyrgyzaltyn.

But there’s more, and it looks ugly in the medium term.

Centerra raised cash through loans and new shares to buy a majority stake in Thompson Creek a US-based miner focused on Canadian gold. The whole operation will be worth $1.1b.

But issuing new shares will anger Kyrgyzaltyn, which will see its stake in the company shrink to around 28.8%. This means less direct revenues from the Kumtor gold mine, which is 100% owned by Centerra. Essentially, the Kyrgyz government wants to bring the gold mine back under its control.

If relations between the Candian miner and the Kyrgyz government do worsen, the fate of the Kumtor gold mine, Kyrgyzstan’s largest mining asset, could become more uncertain than ever.

For both Kyrgyzstan’s economic outlook and also for its reputation as a place to do business, this is not good.

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(News report from Issue No. 291, published on Aug. 1 2016)

Hollande to visit Kyrgyzstan

JULY 27 2016 (The Conway Bulletin) — French President Francois Hollande told the new Kyrgyz ambassador to France that he is considering a visit to the Central Asian country in the near term, official media reported. Earlier this month, German Chancellor Angela Merkel visited Bishkek, her first to Central Asia. Her stopover in Bishkek en route to a conference in Mongolia was seen as a reward for Kyrgyzstan’s relative democracy.

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(News report from Issue No. 291, published on Aug. 1 2016)

Car sales fell in Tajikistan and Kyrgyzstan

JULY 19 2016 (The Conway Bulletin) — Tajikistan’s customs agency said that the country imported around 1,300 cars in H1 2016, a drop of 80% compared to the same period last year. Earlier reports said that car imports in Kyrgyzstan have also dropped in H1 2016. Tajikistan and Kyrgyzstan are two of the most remittance-dependent countries in the world and their economies have been hit hard by a recession in Russia.

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(News report from Issue No. 290, published on July 22 2016)

Kyrgyz reputation drop deters Chinese

BISHKEK, JULY 20 2016 (The Conway Bulletin) — Looking to woo investors from China and to boost stagnant domestic industries, Kyrgyzstan made a direct plea last month to Chinese businesses to buy into 43 different factories.

The problem is that, seven weeks on, none seem particularly interested. In an interview with The Conway Bulletin, Alkhanbek Imanaliyev, the CEO of Bishkek-based knit-wear company Ilbirs, blamed a fall in Kyrgyzstan’s image as a place to do business for the lack of interest. He hasn’t had a single visit from a Chinese company looking to invest in Kyrgyzstan.

“We welcome any investors as long as they don’t change the profile of the factory and retain local people as employees,” he said. “But raids and scandals around the Kumtor gold mining company intimidate them.”

Chinese investment has become a mainstay of business and infrastructure projects in Central Asia. China has openly looked to curry political favour through its investments.

But it hasn’t all been smooth.

Chinese companies generally prefer to import labour from China, raising tension with local workers. This has lead to fights, especially in Kazakhstan and Kyrgyzstan.

Over the past couple of years, groups of Kyrgyz locals have even raided foreign-owned business on horseback to settle disputes and to intimidate. This year, also, the Kyrgyz tax authorities raided a refinery owned by a Chinese company arrested the Chinese deputy director.

On the Kumtor Gold mine, the Kyrgyz government is locked in a protracted row with Toronto-listed Centerra Gold over its ownership.

All this appears to have undermined Chinese investors’ confidence, a major problem for Kyrgyzstan which is looking to boost investment.

Not everybody in Kyrgyzstan, though, was even happy about the initial offer made to Chinese investors. At the Soviet-era lamp factory in Maily-Suu, in west Kyrgyzstan, workers worry they could lose their jobs if the company is taken over.

“This factory ensures jobs for 2,700 people, which is roughly 12% of Maily-Suu town population,” Avazkan Arzykulova, head of the labour union at the factory, told The Bulletin. She has written to the Kyrgyz government asking them to block any sale to a Chinese company.

For now, though, it doesn’t appear as if Ms Arzykulova and her colleagues don’t have anything to worry about.

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(News report from Issue No. 290, published on July 22 2016)

Kyrgyzstan-operated Centerra finalises investments

JULY 20 2016 (The Conway Bulletin) — Canadian miner Centerra Gold said it finalised a financing deal with three investment banks to partially fund its takeover of Thompson Creek, a US-based miner. Centerra will receive 185m Canadian dollars ($142) from BMO Capital Markets, Credit Suisse Securities Canada and Scotiabank. Centerra Gold’s main asset is the Kumtor gold mine in Kyrgyzstan.

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(News report from Issue No. 290, published on July 22 2016)

Briefing: Region’s economies sputter into life

JULY 22 2016 (The Conway Bulletin) — >>Malaise, downturn recession. What exactly going on in Central Asia and the South Caucasus?

>>All countries in the region are either growing slower than last year or, in some cases, their economies are even shrinking. The crisis is regional, although each country has shown its own specific problems.

>>This is the region-wide problem. I can see but what caused it?

>>The US dollar strengthened so much in 2014 that it triggered a sharp drop in oil and commodity prices. This pulled dollars away from Emerging Markets, like our own patch. As commodity prices sank, Russia fell into a crisis that quickly turned into a recession. The depreciation of the rouble cut the value of salaries earned by migrant workers, triggering a slowdown in remittances to Central Asia and the South Caucasus.

>>Okay, but oil prices picked up again since the 13- year low point in January. Isn’t that good for energy exporters in Central Asia and the South Caucasus?

>>Higher oil prices have helped state-owned oil companies to relax their emergency mode, but they’re still too low to justify the region’s most expensive projects. Think of the Kashagan oil project in Kazakhstan’s sector of the Caspian Sea, or the upgrade of Azeri Chirag-Guneshli oil project in Azerbaijan. Plus there are negative signs for transparency over the re-organisation of government companies and structures in the energy sector in Kazakhstan and Turkmenistan.

>>And what about the other commodities, such as gold and aluminium?

>>Gold is a big component of Kyrgyzstan’s GDP as it depends on the performance of the Kumtor gold mine in the east of the country. This year, operational problems and corporate battles have slowed production, which has significantly hit Kyrgyzstan’s growth figures. It now could slip into a recession. Tajikistan, on the other hand posted a promising 6.6% GDP growth in the first half of 2016 and state-owned smelter TALCO increased aluminium production. But these numbers should be read with caution. TALCO also said that it is currently operating at a loss, as its production costs are 25% higher than market prices.

>>Right, so is it all bad?

>>Not necessarily. Dollarisation, as Georgia’s Central Banker said this week, is still a problem across the region and the currencies continue to be weak. But despite some devaluations and depreciations, most of them have kept steady in 2016, which is a sign that governments want to keep their economies stable and will spend their reserves to prop them up.

>>And for companies looking to do business in the region, how bad is it?

>>If in 2015 we saw scores of international companies running away from projects in Central Asia and the South Caucasus, this year we’ve seen promising developments, such as the final investment decision for the expansion of the Tengiz oil- field in Kazakhstan and the signing of the contract for the construction of the Rogun dam in Tajikistan, both multibillion-dollar commitments. French hypermarket Auchan has also opened up its long-awaited store in Dushanbe. Perhaps confidence is returning or at least a sense of “let’s just get on with it”.

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(News report from Issue No. 290, published on July 22 2016)

Kyrgyz President signs CASA-1000 deals

JULY 19 2016 (The Conway Bulletin) — Kyrgyz President Almazbek Atambayev signed a range of laws that ratify domestic and international agreements on CASA-1000, an electricity transmission project that will send power from Tajikistan and Kyrgyzstan to Afghanistan and Pakistan. Loans from international lenders, including the World Bank and the Islamic Development Bank, will make up 70% of Kyrgyzstan’s total funding for the project.

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(News report from Issue No. 290, published on July 22 2016)