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Armenia cuts interest rates to counter low prices

NOV. 10 2015 (The Conway Bulletin) – Armenia’s Central Bank lowered its key interest rate by half a percentage point to 9.75%, its lowest level since January, because of slowing inflation.

The interest rate move highlights the delicate balance that Central Banks across Central Asia and the South Caucasus are having to strike between defending their currencies and stimulating growth to navigate through a deepening economic crisis.

The Central Bank said a drop in commodities prices and slowing global demand had dented price growth.

It said that inflation last month measured 0.4%, compared to 1% in October 2014. Overall annualised inflation measured 1.9% for the 12 months to the end of October.

“The board estimates that this trend will continue in the coming months and will have a deflationary impact on domestic prices,” the Central Bank said of weakening global commodities prices.

Armenia’ currency, the dram, has dropped by 15% this year against the US dollar. Its interest rates had risen to 10.5% in February but prices in Armenia have slowed, dragging down overall inflation.

The biggest problem for Armenia, like most of its neighbours in the South Caucasus is the recession in Russia.

This has hit vital remittance flows and also savaged is key export market. The Armenian dram is now overvalued against the Russian rouble and demand inside Russia has also dropped, hitting overall export potential.

This month, as the Bulletin reports in this week’s Business News, the country’s biggest fish farm business declared itself bankrupt. Its biggest market had been Russia and this market had disappeared.

ENDS

(News report from Issue No. 256, published on Nov. 13 2015)

Dal Engineering signs memorandum to build cement plant in Uzbekistan

NOV. 10 2015 (The Conway Bulletin) — Turkish construction company Dal Engineering signed a memorandum to start building a new $225m cement plant in Uzbekistan. Dal Engineering will partner with state- owned Almalyk Mining and Metallurgical Combine to build a 1.5m tonnes/year plant in the southern region of Surkhandariya by 2017. Slow foreign investment has delayed the project. Once built, the new plant will increase cement production capacity in Uzbekistan by 20%.

ENDS

(News report from Issue No. 256, published on Nov. 13 2015)

Kazakh Team Astana receives cycling licence

NOV. 9 2015 (The Conway Bulletin) – After a four-month-long review linked to a drug doping scandal, Astana Pro cycling team received its World Tour licence. Astana Pro, which is funded by the Kazakh sovereign wealth fund Samruk-Kazyna and races in the national colours, has been involved in several doping cases since it was set up in 2007.

ENDS

(News report from Issue No. 256, published on Nov. 13 2015)

BP says it is confident Azerbaijan’s ACG oil output will be strong

NOV. 10 2015 (The Conway Bulletin) — BP said it expects to maintain last year’s production levels at Azeri Chirag-Guneshli (ACG), the largest oil field complex in Azerbaijan, despite analysts’ predictions that output would fall.

BP, which owns a 35.8% stake in ACG, has been under pressure to ensure that Azerbaijan’s most important oil project doesn’t reduce its output any further.

“We expect that the production on the results of 2015 at the block will not be lower than last year. Current production figures are ahead of the forecasted ones,” Gordon Birrell, BP regional director, told reporters .

Analysts had predicted a drop of 3% in Azerbaijan’s country-wide oil output in 2015 compared to 2014.

In H1 2015, production at ACG declined by 2.3% to 641,000 barrels/day compared to the same period in 2014.

This means that the third quarter report, due in the next few weeks, will have to show an increase in production to cancel out the Q1 drop.

Maintenance work halted operations at West Azeri in May and at Chirag in September. BP said it would carry out further work at Chirag on Nov. 10 for 25 days.

ENDS

(News report from Issue No. 256, published on Nov. 13 2015)

Kazakhstan cuts food subsidies

NOV. 10 2015 (The Conway Bulletin) – In what it described as a push to promote competition, the Kazakh government said it will cut subsidies for bread, petrol, and animal husbandry. In particular, the government will cut subsidies for wheat producers from 2,500 tenge/tonne ($8) to zero. The government may be looking to save money.

ENDS

(News report from Issue No. 256, published on Nov. 13 2015)

Kyrgyz President wants change

NOV. 6 2015 (The Conway Bulletin) – Two years before he steps down as Kyrgyzstan’s president, Almazbek Atambayev, said he wants the country to fully embrace the parliamentary model of governance. Analysts interpreted this as an attempt to shore up power for his Social Democratic party.

ENDS

(News report from Issue No. 256, published on Nov. 13 2015)

Georgia tweaks budget to boost health

NOV. 9 2015 (The Conway Bulletin) – Georgia’s government wants to tweak the national budget for a second time this year to increase funding for one of its key policies — creating an improved universal health care system.

Finance minister Nodar Khaduri said that increased revenue from tax and a reduction in the regional aid budget would pay for the increase in health care spending.

Earlier this year, the ruling Georgian Dream government submitted a budget which included a drop in revenue raised by taxes, a fall it linked to a regional economic downturn. That thinking has now changed.

The universal healthcare that the Georgian government wants to build is one of their headline policies. It will now absorb around 16% of the health ministry’s total budget.

“It is a successful program and many people apply to use it,” media quoted Mr Khaduri as saying. “So it became necessary to add funds to this program.”

ENDS

(News report from Issue No. 256, published on Nov. 13 2015)

Telenor suspends execs involved in Uzbek bribe

NOV. 11 2015 (The Conway Bulletin) – Norwegian telecoms company Telenor said it had suspended four executives, including COO Richard Olva Aa, while an investigation into alleged bribe paying by VimpelCom in Uzbekistan continues. Telenor owns 33% of VimpelCom.

ENDS

(News report from Issue No. 256, published on Nov. 13 2015)

EU-Armenia to conclude deal

NOV. 12 2015 (The Conway Bulletin) – Final negotiations between the EU and Armenia over a deal to replace a failed 2013 association agreement should be concluded by the end of the year, Karen Nazaryan, deputy Armenian foreign minister said. The deal is important as it increases EU interaction with Armenia.

ENDS

(News report from Issue No. 256, published on Nov. 13 2015)

Uzbekistan looks to European companies for rail upgrade

NOV. 10 2015 (The Conway Bulletin) — Uzbekistan wants to upgrade its railway system and it has turned to European companies for the technology and the know-how.

Temir Yollari, Uzbekistan’s state-owned railway company, signed a €38m ($41m) deal with Spanish train manufacturer Talgo to buy two high-speed electric trains.

The new AVE 250 trains will be delivered in 2017. Temir Yollari is already using two Talgo trains, purchased in 2009, for its Tashkent-Samarkand route, opened in 2011.

The Uzbek government is spending around $400m to complete the rail link by 2016 — a potential windfall for European and other western companies looking for deals in the region.

Once completed, the railway line will half the travel time from Tashkent to Bukhara to around 3-1/2 hours.

In another deal struck this week, Temir Yollari signed a memorandum with French company Alstom to establish a production line for asynchronous traction motors, an advanced electric train engine, which Uzbekistan intends to use on new locomotives.

The asynchronous traction technology has not yet been introduced in the former Soviet Union.

“We appreciate the opportunity to work in Uzbekistan’s attractive investment environment and see this project as mutually beneficial for the parties [and] as the first step in the

development of Alstom’s long partnership with the country,” said Martin Vaujour, VP for Alstom CIS.

On paper, Uzbekistan is improving its legislation. The latest World Bank “Doing Business” ranking praised Uzbekistan for its reforms in the past two years. But it is still regarded as a difficult place. Corruption, bureaucracy and asset grabs by the state have all scarred investors.

ENDS

(News report from Issue No. 256, published on Nov. 13 2015)