APRIL 15 2016 (The Conway Bulletin) – Tajikistan’s Parliament approved a bill to establish President’s Day on Nov. 16, official media reported. The day will mark the date that President Emomali Rakhmon assumed office in 1994. President’s Day will not be a public holiday.
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(News report from Issue No. 277, published on April 22 2016)
APRIL 18 2016 (The Conway Bulletin) – The cost of running water to Kazakh households was an average 28% higher in March 2016 compared to a year earlier, data from the Statistics Committee showed. The data underlined just how sharp inflation has been in Kazakhstan since a devaluation of the tenge last year. In some areas the price was even steeper. In Aktobe, the price of water has increased by 76%.
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(News report from Issue No. 277, published on April 22 2016)
APRIL 19 2016 (The Conway Bulletin) – The board of Ozenmunaigas, a subsidiary of Kazakhstan’s Kazmunaigas, said it named Dauletzhan Khasanov as its new CEO. Mr Khasanov, who is also deputy director of KMG EP, replaced Maksat Ibagarov. In Kazmunaigas’ 2015 annual report Ozenmunaigas was listed as a loss-making venture.
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(News report from Issue No. 277, published on April 22 2016)
APRIL 21 2016 (The Conway Bulletin) – UN secretary-general Ban Ki-moon cancelled a visit to the South Caucasus this week due to an unforeseen emergency, his press service told media. The UN had planned a visit to Armenia, Azerbaijan and Georgia in April for Mr Ban. Analysts hoped his tour would have appeased the warring sides around Nagorno-Karabakh, a territory that both Armenia and Azerbaijan claim as their own. Instead Mr Ban planned to travel to Yemen and Syria.
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(News report from Issue No. 277, published on April 22 2016)
APRIL 15 2016, ALMATY (The Conway Bulletin) – A sharp economic downturn and a 40% overvaluation of the tenge last year combined to destroy Kazakhstan’s car making industry, new data showed.
The Kazakhstan Automobile Business Association (AKAB), an industry lobby group, said that in the first three months of 2016 Kazakhstan produced 428 cars, a fraction of the 12,450 cars produced a year earlier.
The data highlights the plight of the car making industry in Kazakhstan, which had once been held up as an example of how the country’s industrial base can modernise.
There are three car factories in Kazakhstan – AziaAvto, Saryarka AvtoProm and Avtomashholding. Between them they make cars for Lada, Kia, Chevrolet, Skoda, Hyundai, SsangYong and Peugeot.
None of the three car factories replied to Conway Bulletin requests for comment.
A general economic downturn was exacerbated last year by a disparity between the price of the tenge and the rouble until mid-August, when the Kazakh Central Bank finally allowed its currency to devalue. Between January and the devaluation, the tenge, propped up by the Central Bank, was around 40% over-valued against the rouble.
This had two effects. Kazakhs headed north to buy their new cars from Russian dealerships, undermining domestic sales, and exports to Russia collapsed.
MPs also said a $3,000 registration fee introduced at the beginning of this year on cars built in 2015 has deterred people from buying cars. It was introduced to re-coup lost revenue from Russian cars sold to Kazakhs in 2015.
Car showrooms around Almaty lie empty. There are simply no customers. Markhaba and her family have been considering buying a new car. She explained why they still haven’t one.
“The price of new cars in tenge increased by 20% to 30%, and we are still considering whether we really need to buy one or not.” she said.
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(News report from Issue No. 277, published on April 22 2016)
APRIL 21 2016 (The Conway Bulletin) – Bank Standard and the International Bank of Azerbaijan (IBA) started negotiations to merge their assets, in what could be a major shift in Azerbaijan’s banking sector. IBA is, by far, the largest bank in the country. It controls 60% of all domestic loans. Azerbaijan’s ministry of finance owns 55% in IBA. Bank Standard, owned by AB Standard Group, is said to be close to Azerbaijan’s political elite.
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(News report from Issue No. 277, published on April 22 2016)
APRIL 21 2016, ALMATY (The Conway Bulletin) – Kazakh oil service companies have said they are concerned about changes in the country’s subsoil law that the government needs to make to comply with WTO and Eurasian Economic Union regulations.
Nurlan Zhumagulov, head of the Union of oil service companies, said the proposed new law could harm local businesses.
“The new code will cut support for domestic producers. It will cancel the conditional inclusion in bids of local goods, workers and services in subsoil contracts,” Mr Zhumagulov told local media.
Local content, an industry code- word for the use of domestic assets and human resources, has been a cornerstone of Kazakhstan’s oil industry. Over the past two decades, with a series of laws, the government had raised the proportion of local workers and service contracts awarded to Kazakh companies in the oil sector.
Now, WTO regulations and the prospect of similar rules in the Eurasian Economic Union might stop subsidies and favouritism, a move cheered by international firms looking to win business in Kazakhstan. They have said that the changes to the subsoil law will make the tender process fairer.
Having negotiated since the mid- 1990s, Kazakhstan finally joined the WTO in November 2015. It requires Kazakhstan to scrap its local content legislation and stop favouring its local companies.
This comes at a tough time for the oil industry. The sharp fall in oil prices, which averaged $51/barrel in 2015, meant that service industry’s revenues fell by 25% last year, accord- ing to Mr Zhumagulov.
But the Asset Issekeshev, minister of industry, appeared to brush aside these concerns
“We are aware of all these questions and they will be resolved in the framework of the new code,” he said.
Spurred on partially by an economic downturn that has hit government revenues, Kazakhstan wants to attract more foreign investment into its extractive sectors.
It has identified its current subsoil laws as a potential weakness and a barrier to entry.
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(News report from Issue No. 277, published on April 22 2016)
DUSHANBE, APRIL 18 2016, (The Conway Bulletin) — Central Asia’s largest aluminium smelter, TALCO, laid off 607 workers to cut costs, an indication of how a heavy fall in global commodity prices has hit industry in Tajikistan.
TALCO is Tajikistan’s largest factory, its biggest taxpayer and its biggest consumer of electricity. It dominates the Tajik economy so for it to lay off 607 workers cuts deep into the national conscience. TALCO now employs 8,200 workers.
According to a report by the Reuters news agency, foreign consultants had advised the company to cut around 2,000 workers from the workforce to maintain a healthy balance sheet.
The company, however, chose what it described as a “a gentle strategy to optimise costs”.
Aluminium prices, now at $1,530/tonne, are around 25% lower than in August 2014.
Besides having to cope with lower revenues, TALCO is also under the spotlight for unpaid electricity bills to the national distributor Barqi Tojik and is the focus of a parliamentary investigation in Norway over alleged corrupt practices.
The Norwegian investigation involves Norsk Hydro, a government- owned smelter that has done business with TALCO.
Norway’s MPs want to know who the beneficial owner of Talco Management, registered in the British Virgin Islands, is. Talco management controls TALCO in Tajikistan.
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(News report from Issue No. 277, published on April 22 2016)
SHUSHI/Azerbaijan, APRIL 22 2016 (The Conway Bulletin) — The high mountains, steep cliffs and green landscapes are a pleasure to the eye, but Nagorno Karabakh feels empty, quiet and sad.
From the Armenian border to Shushi, one of the disputed region’s larger towns, several ghost-like settlements hug the road.
Shushi itself is strewn with rubble but not from fighting that sparked earlier this month, the worst since a UN brokered ceasefire was imposed in 1994. This rubble was from fighting in the early 1990s when Christian Armenian-backed fighters took the town from Muslim Azerbaijani soldiers. The abandoned mosques lie testament to that.
Saro Saryan, an ethnic Armenian originally from Baku, brought out a bottle of vodka and insisted that it must be finished before morning was out. He fled Baku in 1990.
His son sat beside him, silent, eyes glued to his iPad. He was back from fighting against Azerbaijani forces.
Saryan, now flush with vodka, chipped in. “I’m extremely proud of my son for volunteering to fight on the front lines. Karabakh is a proud country and we’ll fight till the end for our historical right,” he said.
In contrast to Shushi’s emptiness, the streets of Stepanakert, the Armenian capital of Nagorno-Karabakh, are clean and filled with people. Military convoys rumble past, children ride bikes, a lady walks her dog.
The locals may flash a friendly smile but the stress of war is never far away. “Many families left Karabakh once the conflict resumed, it’s sad. But what can they do?” said 30-year-old Zara.
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(News report from Issue No. 277, published on April 22 2016)
APRIL 22 2016 (The Conway Bulletin) – Energy ministers in Baku and Astana were frustrated last week after a meeting of oil producers in Doha failed to agree to freeze oil production at January 2016 levels. Advocates of capping production had said that this would help oil prices rebound.
But Azerbaijani and Kazakh objectives at the meeting may have been slightly different to those of Saudi Arabia or Russia.
Certainly, they wanted a deal to push up oil prices but they also wanted to use any agreement as a fig leaf to cover up their sinking production levels.
Azerbaijani and Kazakh production and export volumes are too low to influence oil prices directly. They are price takers, not setters. The problem is that their ageing oilfields are simply uneconomical at $40 or even $60/barrel and this has forced producers out of the market.
Azerbaijan and Kazakhstan will continue to “freeze” production, because there’s nothing else they can do. Their production, and consequently their exports, are bound to fall again this year, according to all major forecasting agencies, from OPEC to the IEA and the EIA.
A recent survey of oil experts at PRIX said, for the first time since it started polling, that global oil exports are bound to fall in Q2. Azerbaijan and Kazakhstan will be part of this trend, the quarterly report said.
Had the Doha meeting succeeded, Azerbaijan and Kazakhstan could have hidden falling production figures behind an international agreement.
Now they have to face further oil price volatility, the main outcome of the failed Doha talks, and without a smokescreen to defend their lower output figures.
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(News report from Issue No. 277, published on April 22 2016)