APRIL 4 2016 (The Conway Bulletin) – Inflation in Georgia is slowing, figures from the Georgian Statistics Committee revealed. In March, prices grew by only 0.3%. Annualised inflation fell to 4.1% from 5.6% the previous month. An 18.7% year-on-year increase in medical products prices was the main component of inflation.
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(News report from Issue No. 275, published on April 8 2016)
APRIL 1 2016 (The Conway Bulletin) – Mitsubishi Hitachi Power Systems (MHPS) will supply gas turbines and generators to the 400MW Zerger gas-fired power plant in Turkmenistan. Under a $300m contract signed last year, Japan’s Sumitomo is building the plant in the Lebap region of Turkmenistan, 600km north-east of Ashgabat.
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(News report from Issue No. 275, published on April 8 2016)
APRIL 2 2016 (The Conway Bulletin) – Serious fighting broke out between Azerbaijani forces and Armenian backed forces around the disputed region of Nagorno-Karabakh, smashing a tense ceasefire that had been in place for 22 years.
Casualty numbers were difficult to gauge but at least several dozen people were killed in the fighting, mainly soldiers. Video footage showed both sides firing rockets and pounding well dug-in positions with heavy artillery, as well as deploying tanks and helicopters.
Alarmed that the fighting could escalate, world leaders urged both sides to sue for peace.
From Washington, John Kerry, US secretary of state, said: “The United States condemns in the strongest terms the large-scale ceasefire violations along the Nagorno-Karabakh Line of Contact, which have resulted in a number of reported casualties, including civilians.”
Russian President Vladimir Putin dispatched Dmitri Medevedev to talk to both Armenian President Serzh Sargsyan in Yerevan and Azerbaijani President Ilham Aliyev in Baku.
As the Bulletin went to press a two-day-old ceasefire held, although there were reports of sporadic fighting.
When the Soviet Union fractured in the late 1980s and early 1990s, localised ethnic tension started to explode into pockets of fighting. Nagorno- Karabakh, a region that belonged to Azerbaijan was one of these region. It was populated mainly by ethnic Armenians who wanted to break away.
After years of fighting that killed 30,000 people the UN negotiated a ceasefire in 1994 that left Armenia- backed rebels running the region.
Thomas de Waal, one of the foremost commentators on the South Caucasus, wrote in the New York Times that the conflict could spread.
“A new all-out Nagorno-Karabakh conflict is the stuff of nightmares. Given the sophisticated weaponry both sides now possess, tens of thousands of young men would most likely lose their lives,” he said.
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(News report from Issue No. 275, published on April 8 2016)
ALMATY, APRIL 4 2016 (The Conway Bulletin) — Russian miner Polymetal continued its shopping spree in Kazakhstan buying gold miner Orion Metals, a company owned by Glencore’s subsidiary Kazzinc, for an initial $100m.
Orion Metals owns the Komarovskoye Gold Deposit, which lies 150km south of Polymetal’s Varvarinskoye field in north-east Kazakhstan.
“Komarovskoye has long been in our sights as a natural close fit for our Varvara hub,” Vitaly Nesis, CEO of Polymetal, said in a statement.
“We are very excited about the transaction which is expected to strengthen production profile, lower costs, and provide substantial incremental cash flows at Varvara in the near term.”
Varvara is a reference to Polymetal’s Varvarinskoye field.
Polymetal said Komoarovskoye, the gold field that Orion Metals owns, holds 43.5 tonnes of gold.
The deal with Kazzinc could reach $180m through the payment of royalties, if gold prices rise significantly.
In the past six months, Polymetal acquired companies and fields connected or close to its operations in both Kazakhstan and Armenia, in an effort to build production hubs.
Last November, Polymetal upgraded the size of its gold reserves at the Kyzyl project by 8% to 29.2m tonnes.
In 2015, it had bought the Kyzyl project for $620m from Sumeru, a private group owned by Timur Kulibayev, son-in-law of Kazakh President Nursultan Nazarbayev.
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(News report from Issue No. 275, published on April 8 2016)
APRIL 3 2016 (The Conway Bulletin) – A massive leak of documents from the Mossack Fonseca law firm based in Panama showed that government leaders and businessmen around the world have been using offshore tax havens to shelter assets and cash. Included in this list were Azerbaijani President Ilham Aliyev’s family, Georgia’s former PM Bidzina Ivanishvili and the grandson of Kazakh President Nursultan Nazarbayev.
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(News report from Issue No. 275, published on April 8 2016)
APRIL 8 2016 (The Conway Bulletin) – Central Banks in Central Asia are boasting about de-dollarisation these days, painting a rosy picture of their success in combating their economies’ dependence on the greenback.
A closer look at the stats, however, reveals that a combination of heavy interventions in the currency markets and interest rate tweaking were the main drivers of healthier Kazakh tenge and Kyrgyz som.
But now Central Banks have to grapple with inflation, which continues to grow, and demand for credit, which continues to shrink.
Central Banks propped up local currencies, against a US dollar that has now slowed its rise against Emerging Markets currencies and commodities.
Restrictions on exchange points, bans on pricing goods in dollars and public calls for confidence have all contributed to curbing the use of dollars.
But Central Banks might have run out of options now and they need to steer away from “crisis mode” if they want to really restore confidence in their still ailing currencies.
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(Editorial from Issue No. 275, published on April 8 2016)
APRIL 4 2016 (The Conway Bulletin) – Kazakhstan’s state-owned oil company, Kazmunaigas, said it finalised an agreement it signed in December with Switzerland-based oil trader Vitol. The deal will allow Vitol to buy oil from Kazmunaigas for an advance payment of up to $3b. The press service of Samruk Kazyna, the sovereign wealth fund that owns Kazmunaigas, said the deal will last for four years.
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(News report from Issue No. 275, published on April 8 2016)
TBILISI, APRIL 1 2016 (The Conway Bulletin) — Russian state-owned power company Inter RAO wants to sell a portion of its electricity generation assets in Georgia, a move that would confirm its retreat from the South Caucasus.
Sources told RIA Novosti that Inter RAO is looking for a buyer for its subsidiary Mtkvari Energy, which operates the 600 MW Mtkvari thermal power plant.
The Mtkvari plant — located near Gardabani, 40km south-east of Tbilisi — is the largest gas-fired thermal power station in Georgia. Inter RAO has been hit hard by an economic malaise in Russia and is looking to raise cash by selling non-core assets.
“At the moment, we cannot confirm that such a deal has taken place,” the company’s press service told media.
Last October, Inter RAO sold Electricity Networks of Armenia JSC, the grid operator in Armenia, to Tashir Group, a Russian real estate company.
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(News report from Issue No. 275, published on April 8 2016)
APRIL 2 2016, BISHKEK (The Conway Bulletin) — Kyrgyzstan banned labelling goods for sale in anything other than Kyrgyz som, a move it said would help strengthen the national currency and reduce its economy’s reliance on US dollars.
Since a crash in the value of local currencies in Central Asia and the South Caucasus last year, de-dollarisation has become a buzzword among Central Banks.
In Kyrgyzstan, the authorities have concentrated on persuading more people to use som over US dollars to buy goods. And this now includes banning shopkeepers from pricing goods in US dollars.
The punishment for pricing goods in US dollars still hasn’t been announced but it will be a challenge to the authorities to impose the ban successfully.
Zhumakadyr Akeneyev, a former head of oil traders association and now an economic commentator, said de-dollarisation was a positive step.
“Finally, for the first time since independence, we have turned our face to the national currency,” he said.
Other Kyrgyz said that while they broadly welcomed the move, they were also sceptical that it would work.
“I like this idea. Many people, who borrowed money from the banks in foreign currencies, suffered from devaluation of som,” said 25-year-old Saltanat. “However, I think the government should leave some space for use of foreign currencies too.”
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(News report from Issue No. 275, published on April 8 2016)
APRIL 1 2016 (The Conway Bulletin) – Russian gas company Gazprom cut the price of gas it sells to Kyrgyzstan by 9% to $150 per 1,000 cubic metres. Kyrgyz President Almazbek Atambayev had been lobbying for this for some time, saying that a fall in global prices should mean a price reduction for consumers in Krygyzstan. Gazprom bought the Kyrgyz gas distributor in 2014 for a symbolic $1, promising to clear its debt and invest in infrastructure.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 275, published on April 8 2016)