NOV. 8 2016 (The Conway Bulletin) — A source in SOCAR, Azerbaijan’s state-owned energy company, said that the company will supply Egyptian refineries with 2m barrels of oil annually, the Amwal Al Ghad magazine reported. Last week, Egypt and Azerbaijan agreed on a supply contract after Saudi Aramco said it would halt shipments to Egypt indefinitely.
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(News report from Issue No. 304, published on Nov. 11 2016)
NOV. 10 2016 (The Conway Bulletin) — An influential European Parliament committee backed a textile trade deal with Uzbekistan that had been moth- balled in 2011 on concerns over the use of child labour.
The vote is a triumph for Uzbekistan and acting-president Shavkat Mirziyoyev as it bestows credibility on the Uzbek cotton sector after years of negative headlines and boycotts by international clothing companies.
The Committee on International Trade will now recommend at a full European Parliament vote in December that a trade deal is made with Uzbekistan.
Reuters quoted Maria Arena, one of the MPs on the committee, as saying that Uzbekistan had improved its labour rights over the past few years.
“The progress made by the Uzbek authorities allows us to move forward and include textiles in our partnership agreement. But we will remain extremely vigilant,” she was quoted as saying.
Last year the UN’s International Labour Organisation (ILO) monitored the Uzbek cotton harvest. It said in a report that there had been major improvements in the way labour was organised and although it was still commonplace for government workers to leave their jobs to pick cotton during the harvest, the use of child labour was far reduced.
Human rights groups, though, were adamant that the European Parliament needed to set an example and avoid a deal with Uzbekistan. In an open letter to the committee sent three days before its meeting, the New York-based Human Rights Watch said that it was because of the European Parliament’s rejection of a trade deal in 2011 that Uzbekistan agreed to open up to UN monitors. It also said that the scenario in Uzbekistan wasn’t as positive as the committee made out.
“We were pleased to note that as a result of international pressure since 2013 children have not been forced to pick cotton on a nationwide scale, and child labour has effectively declined. Yet, local officials reportedly still resort to forced child labour out of a need to fulfil their quotas,” HRW said in its letter.
“Since 2014 we have received steady reports of extortion linked to the cotton harvest.”
Cotton is one of Uzbekistan’s most important commodities. For Mr Mirziyoyev, the timing of the recommendation is also important. He faces a presidential election next month.
He is certain to win this election and become the second post-Soviet president of Uzbekistan after Islam Karimov who died in September, but he still needs to win over popular support. Backing from the European Parliament that child labour is reducing in Uzbekistan and a trade deal can now be made will strengthen his position.
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(News report from Issue No. 304, published on Nov. 11 2016)
NOV. 10 2016 (The Conway Bulletin) — SOCAR Turkey Enerji, the Turkish subsidiary of Azerbaijan’s state owned energy company, said it wants to build a new chemical industrial park in Turkey. SOCAR Turkey Enerji and SOCAR Turkey Petrokimiya already own a controlling stake in Petkim, a petrochemical complex in Izmir, western Turkey.
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(News report from Issue No. 304, published on Nov. 11 2016)
NOV. 11 2016 (The Conway Bulletin) — Air traffic in Central Asia and the South Caucasus continues to suffer from the regional economic slump, as major international carriers cut flights and leave the market to fickle domestic players.
Most notably this year, British Airways cut its London-Baku link, the last remaining destination for the British flag carrier in the region. The connection had lasted over 20 years, ever since BP started to negotiate the so-called Contract of the Century.
Demand for air transport, however, has shrunk, especially in the business market. Low
commodity prices have made many regional business unprofitable. This, added together with some damaging reputational issues, such as the delisting of Kazakhstan’s ENRC from the London Stock Exchange, have made many Western businesses wary of the region.
So it’s not surprising that Turkish Airlines dropped its connections with Osh and Khujand when it decided to downsize its global network because of a drop in demand. The second-largest cities in Kyrgyzstan and Tajikistan just cannot make the cut for commercially viable air links.
Turkmenistan’s new flights to Georgia were also postponed indefinitely this week, a sign that even diplomatically-motivated aviation routes need to be profitable.
On the positive, the Russian and Tajik aviation committees agreed a deal to end their short-lived dispute over routes. This is important, vitally important, for Tajikistan’s migrant workforce who rely so heavily on Russia for their income.
Air routes have become part of a modern-day annual commute for people in developing countries, needed to carry them to waiting jobs.
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(News report from Issue No. 304, published on Nov. 11 2016)
NOV. 9 2016 (The Conway Bulletin) — Oil company PetroKazakhstan said it has completed planned maintenance and remodelling work at its Shymkent refinery three days ahead of schedule. Kazakhstan’s ministry of energy has repeatedly said that the country needs to upgrade its refineries and build a new one. London-traded KMG EP, a subsidiary of state-owned Kazmunaigas, owns a 33% stake in PetroKazakhstan, while China’s CNPC owns the rest.
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(News report from Issue No. 304, published on Nov. 11 2016)
NOV. 11 2016 (The Conway Bulletin) — Encouraging production results at Kyrgyzstan’s largest gold mine, Kumtor, supported Centerra Gold shares in Toronto, although they were weighed down by a fall in the price of gold.
The company said that because a court in Bishkek has restricted its access to cash held by its Kumtor gold mine, it could not pay a quarterly dividend and may have to seek a cash injection to continue operations. It didn’t give any more details of this but it would be a departure from previous policy.
The spat with the Kyrgyz government, which has become increasingly heated in the past two years, seems to be constantly on the verge of breaking point.
In general, though, Centerra’s share price has followed the price of gold. However, should news from Kyrgyzstan continue to be negative, Centerra’s stock price might start diverging from this pattern.
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(News report from Issue No. 304, published on Nov. 11 2016)
NOV. 7 2016 (The Conway Bulletin) — KEGOC, Kazakhstan’s electricity distributor, renewed its plans to sell off its stakes in Kazenergoprovod, a Semey-based company that sells AC cables. First in May, then in August, KEGOC had unsuccessfully tried to sell its 49.9% stake for 98.4m tenge ($290,000). Founded in 2012, Kazenergoprovod has posted losses for three consecutive years. Local East Industry Company owns 51.1% of Kazenergoprovod.
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(News report from Issue No. 304, published on Nov. 11 2016)
NOV. 8 2016 (The Conway Bulletin) — Turkish Airlines, Turkey’s flagship carrier, dropped Osh, Kyrgyzstan’s second-largest city, and Khujand, a major city in northern Tajikistan, as destinations in a global revision of its connections. Turkish said it was suspending flights to 22 destinations and making around 30 aircrafts redundant in an effort to focus only on profitable routes.
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(News report from Issue No. 304, published on Nov. 11 2016)
ALMATY, NOV. 4 2016 (The Conway Bulletin) — Halyk Bank, one of Kazakhstan’s biggest lenders, said it will sell a 60% stake in its subsidiary, Altyn Bank, to China’s CITIC Bank at the start of next year, China’s most significant investment in the Kazakh banking sector.
The parties did not disclose the cost of the transaction, but experts believe it could be around $300m.
“The valuation of Altyn’s current assets as of September 30 is 316b tenge ($929m) and we can expect an increase in the bank’s activity in Q4. After premiums and non-performing loans discounts, the final figure could be around $300m,” Rasul Rysmambetov, director of the Public Fund Financial Freedom, told the Kursiv newspaper.
Altyn Bank is the successor of HSBC Kazakhstan that Halyk Bank bought in March 2014 for $176m.
China already owns Bank of China in Kazakhstan and Industrial and Commercial Bank of China in Almaty, two small-sized lenders founded in 1993. Owning Altyn Bank will boost its presence and could help the bank grow trade with China.
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(News report from Issue No. 304, published on Nov. 11 2016)
ALMATY, NOV. 8 2016 (The Conway Bulletin) — The Kazakh government will gives subsidies of 15m tenge ($43,455) to mortgages for new homes, Marat Idryshev, head of the Association of Kazakh Constructors said, part of President Nursultan Nazarbayev’s plan to breathe life into Kazakhstan’s flatlining economy.
Mr Nazarbayev announced the Nurly Zher programme in September, the name means Bright Land in Kazakh, a few months after a series of unprecedented anti- government protests focused on mortgages and land ownership showed just how frustrated ordinary Kazakhs were with the state of the economy.
Precise details of the $1.3b plan to re-energise Kazakhstan’s construction sector have been thin, so Mr Idryshev’s comments are important. He said that the mortgage market was severely undernourished in Kazakhstan.
“Today the proportion of mortgages given by commercial banks in Kazakhstan is no higher than 5%,” he told media. “In Russia it is 50-70%, a world standard. We will act in accordance with the experience of our neighbours. The government will subsidise mortgages.”
The subsidy should, Mr Idtzhev said, bring interest on mortgages down to around 10% from 17%.
The collapse of the tenge last year made it difficult for mortgage holders to pay back their loans. Almaty-based economist Zharas Akhmetov said the plan should dampen growing tension.
“This, firstly, will support the housing market. Secondly, this will remove tension in society,” he told the Bulletin. “One of the drivers of economic growth is construction, and not only construction of houses but also roads and industrial objects.”
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 304, published on Nov. 11 2016)