Tag Archives: Kyrgyzstan

EEU plans single electricity market, say energy ministers after meeting in Tajikistan

JUNE 14 2016 (The Conway Bulletin) – The Eurasian Economic Union, a trade bloc led by Russia but also involving Belarus, Kazakhstan, Kyrgyzstan and Armenia plans to set up a unified electricity market by 2019, EEU members’ energy ministers said after a meeting in Dushanbe. Tajikistan aspires to be part of the EEU, which critics have said is a Kremlin project to extend its control.

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(News report from Issue No. 285, published on June 17 2016)

Kyrgyzstan accuses Centerra of corruption at Kumtor

BISHKEK, JUNE 14 2016 (The Conway Bulletin) — Kyrgyz President Almazbek Atambayev instructed state prosecutors to investigate agreements signed by Canadian miner Centerra Gold in 2003-04, after corruption charges emerged against both Centerra and former officials at the state-owned Kyrgyzaltyn.

Earlier this week, the country’s security service said that Dastan Sarygulov, the 69-year-old former head of Kyrgyzaltyn from 1992 to 1999, had been charged with plotting a coup earlier this year and taking bribes in the 1990s.

The charges appear to be based on accusations made last week by Len Homeniuk, former head of Centerra and Kumtor Gold, who sent a letter to Kyrgyz prosecutors alleging corrupt practices that had involved the miner over its entire lifetime, explicitly naming Mr Sarygulov.

In the letter, Mr Homeniuk said that the companies he headed were regularly asked for bribes by Kyrgyzaltyn, which owns a 32% stake in Centerra.

“[Their requests] were sometimes very significant, more than $200,000 in a given month,” Mr Homeniuk wrote. “Dustan Sarygulov and Kamchybek Kudaibergenov always explained such requests that they were under pressure by the office of the President.”

Centerra, Kumtor Gold and Kyrgyzaltyn have not commented on the allegations.

The revelations seem to be well- timed for Kyrgyzstan.

Sarygulov was already under house arrest, accused of having participated in the coup plot.

Now, analysts say, the Homeniuk letter could be a powerful tool for Mr Atambayev to both discredit his predecessors and taint Centerra’s record in Kyrgyzstan, just as it prepares an arbitration case in Stockholm against the government for blocking its business development.

“Timing is important. Homeniuk’s revelations seem a gift to Mr Atambayev now,” Mars Sariyev of the Institute of Public Policy, a Bishkek-based think tank, told The Bulletin.

Centerra owns the Kumtor Gold Company, which operates the country’s largest gold mine, which accounts for around 7% of Kyrgyzstan’s GDP.

In March security forces raided the office of Kumtor in Bishkek looking for evidence of financial wrongdoing. Centerra has said that Kyrgyzstan is using heavy-handed tactics to try and claim more direct ownership of Kumtor.

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(News report from Issue No. 285, published on June 17 2016)

Business comment: Gold in Central Asia

JUNE 17 2016 (The Conway Bulletin) – Gold prices climbing up towards $1,300/ounce, but not everyone in the mining sector in Central Asia is happy.

In Kazakhstan, Russian miner Polymetal received a much-needed lifeline from Sberbank to push forward with its Kyzyl project in north-eastern Kazakhstan. The gold sector in Kazakhstan is enjoying a positive season, as production numbers in the country are up 3.7% to 13 tonnes of fine gold in the first five months of the year, compared to Jan.-May 2015.

The steady growth is paired with increased investment, as Polymetal is focusing its growth outside Russia on Kazakhstan and Armenia.

But this year has not brought only good news in Kazakhstan. In March, Alhambra Resources said it was seeking damages against Kazakhstan’s government, via the World Bank’s International Centre for Settlement of Investment Disputes, for the bankruptcy of its Kazakh subsidiary.

Recovering commodity prices, however, can do little to improve the mood in Kyrgyzstan, where Centerra Gold and the government are increasingly entangled in what could become a decisive legal battle.

Centerra sought the resolution of the continuous fines and corruption probes at the Stockholm court of arbitration.

The Kyrgyz government responded with more fines and charged a former director of Kyrgyzaltyn — which owns a stake in Centerra — of taking bribes from the Canadian miner.

These charges, fuelled by allegations from a former Centerra director, would make the Canadian company guilty of paying bribes, serving an order to the government, which is trying hard to show Centerra under a bad light.

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(News report from Issue No. 285, published on June 17 2016)

Kyrgyzstan’s fund chief resigns

JUNE 15 2016 (The Conway Bulletin) – Almazbek Kadyrkulov, chairman of Kyrgyzstan’s State Property Management Fund quit abruptly after a year in the job. Mr Kadyrkulov did not explain his resignation but he had recently received harsh criticism from PM Sooronbay Jeenbekov and other MPs. The Fund is in charge of managing state assets.

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(News report from Issue No. 285, published on June 17 2016)

Extremists are increasing, says Kyrgyz police

JUNE 14 2016 (The Conway Bulletin) – Kyrgyz police said in a statement that they have identified around 4,000 extremists in the country, more than double the previous census they had published in September 2015. Most of the individuals that the police classified as extremists belong to the banned Hizb ut-Tahrir Islamic party. A word of caution, though. Countries in Central Asia have a record of inflating the number of extremists and terrorists, which they use as a scapegoat to crackdown on opposition.

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(News report from Issue No. 285, published on June 17 2016)

Russia’s Gazprom to invest in Kyrgyzstan

JUNE 6 2016 (The Conway Bulletin) — Russian PM Dmitri Medvedev said that state-owned gas company Gazprom will invest around $1.5b in Kyrgyzstan’s energy infrastructure and that it will cancel export duty on oil and oil products. Mr Medvedev made the statement while in Bishkek on an official visit. Oil and petroleum products make up 51.9% of Kyrgyz imports from Russia.

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(News report from Issue No. 284, published on June 10 2016)

Kyrgyz Prosecutor imposes ban on Centerra manager’s travel

JUNE 6 2016 (The Conway Bulletin) — Canadian miner Centerra Gold said Kyrgyzstan’s Prosecutor has imposed a temporary ban on travel for some unnamed managers at the Centerra-controlled Kumtor Gold Company. The Kyrgyz government has not commented. Last week Centerra said that it had started arbitration proceedings against the Kyrgyz government in Stockholm for hindering its business in various ways.

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(News report from Issue No. 284, published on June 10 2016)

Kyrgyz court opens lawsuit against Atambayev

JUNE 9 2016 (The Conway Bulletin) — A Kyrgyz court opened a lawsuit against President Almazbek Atambayev, lodged by human rights activists Tolekan Ismailova and Aziza Abdyrasulova, whom Mr Atambayev had called “saboteurs” in May. Ms Ismailova and Ms Abdyrasulova want Mr Atambayev to publicly apologise and pay 2m soms ($29,300) in damages.

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(News report from Issue No. 284, published on June 10 2016)

Centerra sues Kyrgyzstan

BISHKEK, MAY 30 2016 (The Conway Bulletin) — Centerra Gold, the Toronto-listed company that owns the Kumtor gold mine in east Kyrgyzstan, lodged arbitration proceedings against the Kyrgyz government, pushing their already-strained relationship to breaking-point.

The company laid out three areas for its litigation challenge. It said it would challenge both an environmental claim against it and a charge by the Kyrgyz prosecutor that a $200m dividend paid in 2013 was illegal. Centerra also said it suspected that a delay in gaining official approval for its 2016 mining plan was designed to frustrate it for political reasons.

“The company will continue to contest all of the claims in international arbitration in accordance with the 2009 Restated Investment Agreement,” Centerra said in a statement.

It filed the arbitration case with the Stockholm Chamber of Commerce, a favoured destination for dispute resolution for projects in Central Asia. Earlier this year, the Stockholm court ruled in favour of an Estonian building company against the Kazakh foreign ministry.

Centerra’s reference to the 2009 agreement refers to the renegotiation of the contract. This boosted Kyrgyzstan’s share in Centerra to 32% from just under 16%. Centerra, in turn, fully owns the Kumtor Gold Company that operates the mine.

Kyrgyzstan is the largest share- holder in Centerra but has said that it wants to take a larger, more direct stake in the country’s biggest industrial unit.

And it appears to have been applying pressure on Centerra to force the issue. In March, Kyrgyz police raided the Kumtor Gold offices in Bishkek, looking for evidence of wrongdoing.

And a court in Bishkek has also been slapping down fines against Kumtor Gold over environmental damage and the government has delayed signing off on 2016 production plans.

This appears to be the start of a showdown in Kyrgyzstan’s mining sector. Once proceedings begin, lawyers and prosecutors, managers and ministers will confront each other in a legal battle that will ultimately decide control of the Kumtor mine and Kyrgyzstan’s economic output. Kumtor generates around a tenth of Kyrgyzstan’s GDP.

Investors also appeared to cheer the arbitration move by Centerra Gold’ pushing its share price up by 1.6% the day after the announcement to 6.86 Canadian dollars.

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(News report from Issue No. 283, published on June 3 2016)

Stock market: Centerra Gold

JUNE 3 2016 (The Conway Bulletin) — Centerra Gold shares in Toronto usually closely follow the ups and downs of spot gold prices, but a recent escalation of the spat with the Kyrgyz government has altered this trend.

Investors welcomed the strong verbal reaction by the company to a raid in a Centerra-owned office in Bishkek at the end of April and gave the stock a boost in the first weeks of May.

Since then, though, a number of environmental fines have dented confidence. It’s been a rocky ride with the share price bouncing around depending on the various statements issued by each side. At the start of the week, as this graph shows, Centerra’s share price rose on news that it would start arbitration proceedings against the Kyrgyz government.

Decreasing gold prices, as the graph shows, now add to the mix and with a legal battle with Kyrgyzstan on the horizon, analysts have become increasingly pessimistic on Centerra’s target price.

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(News report from Issue No. 283, published on June 3 2016)