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Kazakhstan puts four banks into government protection scheme

ALMATY/Feb. 28 2020 (The Bulletin) — Four Kazakh banks have entered a government scheme that protects them from bankruptcy after a Central Bank asset review test, the Kazakh Central Bank said in a statement.

The move comes at the end of the government’s review of assets held by 14 second-tier banks. This will concern analysts who have said that Kazakhstan’s banking sector is still too weak and that the banks’ asset-to-loan proportion is still too low.

The banks — Bank CenterCredit, ATF Bank, Eurasian Bank and Nurbank — are now protected from bankruptcy but will have to pay a premium for the insurance.

Although the banks have been taken into a government protection scheme, the Oleg Smolyakov, deputy chairman of the Kazakh Central Bank, said they were all adequately capitalised as they passed a minimum threshold of a capital adequacy ratio of 7.5%.

“We are confident that, based on the implementation of recommendations and measures, a further increase in the financial stability of the banking sector as a whole will be achieved,” he was quoted by the media as saying.

In December, sources had described the four banks as needing a bailout to survive after the asset review showed up holes in their balance sheets. Media reported that the asset protection scheme for the four banks would last five years and be worth $308m.

In the 2008/9 Global Economic Crisis, the government had to buy up three private banks. They were hit again after the 2014 collapse of oil prices.

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— This story was first published in issue 438 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2020

Uzbekistan wants to sell stake in giant state-owned gold producer

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TASHKENT/Feb. 28 2020 (The Bulletin) — — Uzbekistan said that it wanted to push through the most ambitious sell-off of state assets in Central Asia within the next five years.

Included in its list of assets for sale are a 10% stake in gold producer Navoi Mining and Metallurgical Plant, a 49% stake in Uzbekistan Airways and a 24% in the Uzbekneftegaz. It will also sell stakes in 1,000 businesses that are fully or part-owned by the government, including all of Uzbekistan’s vegetable oil producers and its alcohol distillers.

Perhaps the most eye-catching of these potential privatisations is the prospect of investors taking a 10% stake in the Navoi Mining and Metallurgical Plant. The Soviet-era plant is the single biggest industrial project in Uzbekistan, accounting for around 10% of Uzbekistan’s GDP. It also sucks up 18% of the government’s revenues and employs 54,000 people, according to Uzbek President Shavkat Mirziyoyev.

“By the volume of raw materials, the Navoi Mining and Metallurgical Plant is the third gold producer in the world. However, the value of its assets is much less than similar companies abroad,” the Uzbek government said in a statement.

“At present, the book value of NMMP is estimated at $1.3b, while the market price of comparable foreign enterprises is $11b.” And it is this perceived undervaluation that the Uzbek government wants to address with a privatisation programme.

The government’s statement said that it wanted to increase output at the plant to 94 tonnes by 2026 by implementing 40 projects worth $4b and the development of a new gold field at a cost of $525m.

Since Mr Mirziyoyev took over from Islam Karimov in 2016, he has pushed to open business to investors.

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— This story was first published in issue 438 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2020

European Court for Human Rights says Azerbaijan jailed reporter to punish her

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FEB. 28 2020 (The Bulletin) — The European Court for Human Rights (ECHR) ruled that Azerbaijan had imprisoned journalist Khadija Ismayilova in 2015 to “silence and punish her for her work” and ordered the government to pay her compensation of 20,000 euros. Ms Ismaylova, a journalist who has reported on government corruption, was released in 2016 after spending 537 days in jail. She had been sentenced to 7-1/2 years in jail for financial crimes that rights groups said were fabricated. This is the third ECHR ruling in favour of Ms Ismayilova against the Azerbaijani government. She said, though, that it has ignored the other rulings.
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— This story was first published in issue 438 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2020

Georgia’s economy grew 5.1% in 2019

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FEB. 28 2020 (The Bulletin) — Georgia’s economy grew by 5.1% in the year to the end of January, data from the government showed. This is up from 3.5% growth recorded a year ago and shows that the strong Georgian economic growth is set to continue. The data was recorded, though, before the spread of the coronavirus out of China started hitting economies.
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— This story was first published in issue 438 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2020

Kazakhstan cuts oil exports via Russia because of contamination

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FEB. 28 2020 (The Bulletin) — Kazakh officials said that they were cutting oil exports via the Russian Baltic Sea port of Ust-Luga next month because of continued contamination issues with its own oil production. Reuters reported that Kazakhstan had planned to send 800,000 tonnes of oil through Ust-Luga in March but that this has been cut back to 600,000 tonnes. It also said that CNPC Aktobemunaigas, a subsidiary of China’s CNPC, has detected high levels of organic chloride in its oil.

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— This story was first published in issue 438 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2020

Georgian Capital buys up renewable energy

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TBILISI/Feb. 27 2020 (The Bulletin) — — Georgian Capital, the conglomerate that owns most of Georgia Healthcare, schools around Tbilisi, a property development company and a beer producer, said that it had returned to profit in 2019 after reporting a loss in 2018. The London-listed company also said that it was buying the 34% of Georgian Renewable Power Company that it didn’t already own from RP Global for $13.8m. This may rise by up to $4.5m if electricity price rise in 2023-5.

The Georgian Renewable Power Company owns wind farms and hydropower stations.

Georgia Capital chairman and CEO Irakli Gilauri said of the deal: “The minority acquisition gives us greater flexibility to execute our planned growth strategy to become a key player in the fast-growing Georgian electricity market.” Georgia has been emphasising green power.

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— This story was first published in issue 438 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2020

Georgian government and opposition restart election reform talks

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FEB. 27 2020 (The Bulletin) — Mediated by the US embassy in Tbilisi, the Georgian Dream coalition government and Georgian opposition parties re-started stalled negotiations on electoral reform. There had been four previous rounds of negotiations from November when the Georgian Dream downgraded efforts to bring in proportional representation ahead of a parliamentary election this year. The opposition walked out of talks at the start of February after the detention of one of its leaders.
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— This story was first published in issue 438 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2020

Lydian says court backs it in dispute with government

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FEB. 27 2020 (The Bulletin) — Toronto-based Lydian International said that a court in Armenia had dismissed eight of 10 criticisms of its operations at the Amulsar gold mine in the south of the country, including that it had mined illegally and that protected and near-extinct animal species had been found on its site. Lydian has been stopped since June 2018 from accessing the mine by protesters who have blocked the access road. They have complained that Lydian’s operations were ruining the environment, a standpoint that the Armenian mining inspection body agreed with in August 2018. Lydian said the rulings were politically motivated at the time.

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— This story was first published in issue 438 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2020

Kaspi.kz posts jump in profits and talks up IPO options

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ALMATY/Feb. 27 2020 (The Bulletin) — — Four months after postponing an IPO on the London Stock Exchange, Kapsi.kz, a Kazakhstan-based banking and technology group, said that income rose to 197b tenge ($525m) in 2019, a 79% rise from 2018.

Kaspi.kz which owns Kapsi Bank, one of the largest high street retail banks in Kazakhstan, postponed its IPO because it said that market conditions were poor, although analysts said that it may have been irked by receiving a poorer market reception than expected.

Kapsi.kz has close links to the Kazakh elite and, until the start of 2019, Kairat Satybaldy, the nephew of Kazakhstan’s former president, Nursultan Nazarbayev, had officially owned the biggest stake in the company.

The company’s other main shareholders are Baring Vostok funds, Goldman Sachs, chairman Vyacheslav Kim and CEO Mikheil Lomtadze.

Reuters quoted sources inside Kaspi.kz saying that the company was once again considering an IPO and quoted Mr Lomtadze as saying: “We continue to monitor market conditions closely in relation to our potential initial public offering.”

In its full-year report, Kaspi.kz said its revenue had increased by 37%.

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— This story was first published in issue 438 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2020

Top Armenian judge sues Pashinyan for defamation

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FEB. 27 2020 (The Bulletin) — One of the most senior judges in Armenia, Hrayr Tovmasyan, who is head of the Constitutional Court, said that he had filed a defamation lawsuit against Armenian PM Nikol Pashinyan. The lawsuit is just the latest twist in the fight between the Constitutional Court judges and Mr Pashinyan. He has accused them of undermining reforms that a revolution in 2018 swept in and has ordered them to resign, which they have refused. A referendum in April will potentially give Mr Pashinyan the power to sack the judges.
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— This story was first published in issue 438 of the Central Asia & South Caucasus Bulletin