Tag Archives: business

Armenian government declines gas price rise for consumers

YEREVAN/JUNE 19 (The Bulletin) — Consumers in Armenia will not pay any more for their gas despite a push by Russia’s Gazprom, the gas supplier, to increase prices after the Armenian Public Services Regulatory Commission ordered a price freeze.

The ruling is a victory for Armenian PM Nikol Pashinyan who has styled himself as the champion of the people since he was propelled to power in a revolution in 2018.

In 2015, street protests against rises to electricity tariffs forced the government into an embarrassing u-turn and Mr Pashinyan was desperate not to stoke frustration now, especially with anger at the government’s handling of the coronavirus growing and the prospect of the economy tipping into a recession.

Quoting the Public Services Regulatory Commission, media in Armenia said that consumers would continue to pay a subsidised 139 Armenian drams per cubic metre of gas and vulnerable groups will pay 100 drams per cubic metre if their consumption does not exceed 600 cubic metres per year.

Instead, businesses that consume more than 10,000 cubic metres of gas per year and greenhouses will pay more for their gas, meeting some of the price rises that the Russian gas monopoly Gazprom had been asking for.

Earlier this month, Mr Pashinyan had proposed that the Kremlin-led Eurasian Economic Union unify gas tariffs across the region.

This was rejected by the Kremlin, though, which said it needed more price flexibility to react to global market moves.

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— This story was first published in issue 451 of the Central Asia & South Caucasus Bulletin on June 23 2020

— Copyright the Central Asia & South Caucasus Bulletin 2020

Uzbekistan to open up regional airports to foreign airlines

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TASHKENT/JUNE 18 (The Bulletin) — Uzbekistan will allow foreign airlines to land at all its regional airports from Aug. 1, a move that it hopes will boost the country’s prospects as the preferred stopover for Europe-Asia air travel.

The route has become increasingly lucrative since China started to push its Belt and Road Initiative and is hotly contested between the Central Asian countries.

Uzbek officials said that they would trial the increased access to its airports for foreign airlines under what it dubbed its “Open Skies” policy.

“Open Skies at the regional airports of Uzbekistan will be introduced using the fifth air freedom, which allows unloading and taking on board passengers, mail and cargo from or to the third country on the territory of the partner country,” media quoted Uzbekistan’s aviation authorities as saying.

The UN’s Fifth Air Freedom referenced by Uzbek officials allows airlines to stop at airports in third countries to pick up and offload passengers and cargo. Uzbekistan introduced this freedom at its main international airport at Tashkent in 2018.

Like its neighbours, Uzbekistan has been trying to lure airlines to its airports. This year it also said that it would cut ground handling and refuelling fees.

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— This story was first published in issue 451 of the Central Asia & South Caucasus Bulletin on June 23 2020

— Copyright the Central Asia & South Caucasus Bulletin 2020

Coronavirus undermines region’s projected growth

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ALMATY/April 5 (The Bulletin) — The coronavirus will undermine what had looked like a strong year of economic growth in 2020 and instead knock the Central Asia and South Caucasus region into a recession.

Of the six countries in the region that have declared states-of-emergencies and infections of the coronavirus, only Kazakhstan has officially said that its economy will shrink in 2020 but analysts expect others to follow.

Kazakh economy minister Ruslan Dalenov said on April 2 that the combined impact of the coronavirus and a fall in oil prices mean that Kazakhstan’s economy will shrink by 0.9% in 2020.

Oil is Kazakhstan’s main export and with prices dropping by 40% to around $35/barrel because of a price war and a drop in demand triggered by the spread of COVID-19, the disease caused by the coronavirus, Mr Dalenov said oil exports would fall.

“A decrease is also expected compared to previously approved growth rates in the manufacturing industry, agriculture, construction and the services sector, including trade,” he said.

Kazakhstan had previously predicted GDP growth of 4.5% for 2020. It last went into a recession in 2016 after a previous oil price collapse.

In Armenia, the Central Bank is still predicting GDP growth this year but only of 0.7%, down from an earlier prediction of 7.6%.

Other countries have held off giving predictions on the economic cost of the spread of the coronavirus although they have all said that their original growth estimates are likely to be heavily reduced.

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— This story was first published in issue 441 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2020

Berdymukhamedov prepares Turkmen business for restrictions

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APRIL 5 (The Bulletin) — Although it has not reported any cases of the coronavirus and has not imposed a lockdown on its cities, reports from Turkmenistan said that President Kurbanguly Berdymukhamedov was still discussing various measures to support small and medium-sized businesses from the economic fallout. The US-funded Radio Free Europe/Radio Liberty has also reported large food price spikes in Turkmenistan, linked to fears about the spread of the coronavirus.

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— This story was first published in issue 441 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2020

Gazprom wants to increase price of gas for Armenia’s poorest

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YEREVAN/April 1 (The Bulletin) — Gazprom Armenia has applied to the country’s Public Services Regulatory Commission to increase the price of gas that it supplies to the poorest sections of Armenian society from August, media reported (April 1).

Any move by Gazprom Armenia to increase the price it charges Armenian households for gas will be difficult to pull off. The impact of the coronavirus has undermined households’ ability to pay higher prices and Armenian society has a reputation for resisting utility price rises. In 2015 a proposed electricity price rise in Armenia led to major protests in Yerevan and an eventual climbdown.

Reports said that from Aug. 1, Gazprom Armenia wants to charge households on social benefits 36% more for their gas and to slightly reduce the price paid by other households. The overall effect would be to equal out pricing. There is no publicly available data on the number of low-income households on social benefits.

Armenian officials lined up to criticise the proposed price increase, calling it inappropriate given the probable economic impact of the spread of the coronavirus.

“Given the current situation in the global energy market, we consider it appropriate to start new negotiations on reducing the price of thousand cubic meters of gas on the Armenian-Georgian border,” Armenia’s deputy PM Mher Grigoryan wrote in a letter to the chairman of Gazprom, Alexei Miller.

The Russian side has not responded but negotiations are expected to be fraught. When Russia has previously increased the price it charges Armenia for gas, the Armenian government has said that it will switch to buying gas from its neighbour Iran with which it has built up friendly relations over the past decade.

Media also reported that Armenian PM Nikol Pashinyan had spoken to Russian President Vladimir Putin about the proposed gas price rises. He said that gas should be priced in roubles, which has fallen in value over the past month because of a slump in oil prices and the impact of the spread of the coronavirus.

“We believe that it will be more correct and logical to pay for gas in roubles,” Mr Pashinayn was quoted as saying.

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— This story was first published in issue 441 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2020

Armenia says the coronavirus will wipe out any potential GDP growth

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APRIL 2 (The Bulletin) — Armenia’s economy minister, Tigran Khachatryan, said that the coronavirus will wipe out any previously projected economic growth this year.

Economists had been predicting another strong year of growth for Armenia with a GDP rise of around 7.5% but it has been hit hard by the spread of the coronavirus – with 822 infections, the highest in the region – and COVID-19, the disease caused by the coronavirus.

The Armenian Central Bank has also said that economic growth will slow to 0.7% in 2020, but Mr Khachatryan, the economy minister, said that it was too early to even predict this level of growth.

“We believe that in 2020 there will be a significant reduction in economic indicators as opposed to optimistic forecasts made at the beginning of the year,” he was said.

Fitch, the ratings agency, warned that the economic fallout from the coronavirus will damage Armenia’s banking sector and increase the ratio of nonperforming loans. It also said the government’s current account deficit would increase from 1% of GDP to 5%.

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— This story was first published in issue 441 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2020

Kazakh car factory to start producing Chevrolets

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APRIL 1 (The Bulletin) — Kazakh car factory SaryarkaAutoProm in Kostanay launched the start of production of Chevrolet cars under licence from Uzbekistan’s state-owned UzAuto. Company officials said that it wanted to produce 26,000 cars in the first year, rising to 100,000 in later years. The expansion into Kazakhstan was planned by UzAuto before the spread of the coronavirus.

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— This story was first published in issue 441 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2020

Georiga pledges $606m to prop up economy

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APRIL 1 (The Bulletin) — Georgia’s government pledged $606m to help business try to weather the impact of the coronavirus pandemic and the Central Bank said that it was relaxing its lending and capitalisation rules for smaller banks to free up another $400m.

On the $606m aid for businesses, Georgian PM Giorgi Gakharia said: “This is the help that will be directed to the maintenance of jobs, to the maintenance of companies, to the ongoing production of companies and to the maintenance of current businesses.”

The Central Bank has also been selling its US dollar reserves to prop up its currency. The lari has stabilised, although it is still at an all-time low.

Georgia’s economy ministry has said that the pandemic will knock the country’s GDP growth rate, but it has not said by how much.

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— This story was first published in issue 441 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2020

Central Asia Metals cancels dividend payout

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APRIL 1 (The Bulletin) — Central Asia Metals, which produces copper in Kazakhstan, scrapped plans to pay a final dividend for 2019 and said it would reduce expenditure this year to try to save cash. The company, which is listed on the London Stock Exchange, said that a drop in commodity prices because of the spread of the coronavirus had forced it to change its plans.

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— This story was first published in issue 441 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2020

Food prices rise in Turkmenistan because of coronavirus fears

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MARCH 26 (The Bulletin) — Turkmenistan has also not reported any cases of the coronavirus but Radio Free Europe/Radio Liberty has reported that much like in Tajikistan, food prices have risen sharply. With regards, the economy, Pres. Kurbanguly Berdymukhamedov may be more concerned about the fall in the price of oil than about the coronavirus.

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— This story was first published in issue 440 of the Central Asia & South Caucasus Bulletin