Tag Archives: business

Georgian winegrowers protest against falling prices

SEPT. 11 2015, TBILISI (The Conway Bulletin) — Several hundred farmers protested in the ancient winemaking region of Kakheti in eastern Georgia, demanding that the government increase subsidies for harvested grapes.

Eyewitnesses said that the demonstrations were passionate and angry but peaceful, although some protesters brawled with police after tension boiled over. There were no reports of any injuries and only three people were detained but the unrest does show how the former Soviet Union’s economic malaise is deepening.

A grape farmer attending the protests told broadcaster Rustavi2 that they will not back down, but that people are afraid.

“I demand a rise of prices. People are afraid of this government, they do everything to keep us quiet. What should we do?” grape farmer Murtaz Gorkhelashvili said.

The price for a bunch of grapes has fallen by 40-55% this year because of a fall in wine export to Russia and Ukraine.

Western-imposed sanctions on Russia and a sharp fall in oil prices have tipped its economy into recession. A civil war has heavily dented Ukraine’s economy.

In 2014 wine production accounted for 2.5% of Georgia’s GDP, a higher proportion than France, even, where wine makes up around 0.9% of GDP.

Independent consultant and freelance wine writer Caroline Gilby described how important wine is to Georgia’s economy and also to its national identity.

“Wine is economically critical to this small country with its limited natural resources,” she said.

The government subsidy, an election promise by the Georgian Dream coalition in 2012, of an extra 0.35 lari per kilo of white grapes and 0.15 lari per red grapes for farmers is considered insufficient by the protestors.

ENDS

(News report from Issue No. 248, published on Sept. 18 2015)

S&P affirms BBB- for Kazakhstan

SEPT. 11 2015 (The Conway Bulletin) — Rating agency Standard & Poor’s affirmed Kazakhstan’s long-term sovereign debt rating at BBB with a negative outlook, but said weak governance hindered economic performance. It also highlighted limited monetary flexibility and an over-dependence on hydrocarbons as weaknesses.

ENDS

(News report from Issue No. 248, published on Sept. 18 2015)

CPC pipeline upgrades pumping stations in Kazakhstan

ALMATY, SEPT. 14 2015 (The Conway Bulletin) — The Caspian Pipeline Consortium (CPC), has finished upgrade work to two pumping stations that will boost the capacity of its oil pipeline running from west Kazakhstan to Russia’s Black Sea port of Novorossiysk.

Plans to increase the capacity of the Tengiz field near Atyrau have been delayed because of low oil prices, but the gradual expansion of the CPC’s capacity is still important.

Specifically, the latest upgrade work was focused on the pipeline’s two pumping stations in Kazakhstan. The upgrade will boost the flow of oil through the pipeline to 38m tonnes of oil from 35m.

This is a stepping stone towards hitting higher capacity. Nikolai Savin, a deputy vice-president at Russian pipeline company Transneft, explained the consortium’s ambitions.

“The expansion will allow us to increase the volume of transported oil to 67-70m tonnes a year,” local media quoted him as saying. “In the future, the Kazakh fields at Tengiz, Karachaganak and Kashagan will ship around 55m tonnes through CPC.”

CPC, which was established in 2001, is an international pipeline jointly operated by the Russian and Kazakh governments together with national and multinational oil companies led by US’ Chevron. Chevron is also the lead Western partner developing the Tengiz field in the Tengizchevroil consortium (TCO).

The Tengiz field is Kazakhstan’s main oil producer, pumping roughly 27m tonnes of oil each year. This is a third of Kazakhstan’s total oil production. Almost all of the oil produced by Tengiz is exported via CPC.

For years, TCO has been planning to expand production. The project was suspended, though, earlier this year because of the sustained low oil prices, frustrating both investors and the Kazakh government.

According to Sauat Mynbayev, Chairman of Kazmunaigas, Kazakhstan’s state-owned company which holds shares in both CPC and TCO, a final investment decision for Tengiz will be made in Jan. 2016 (Sept. 17). In any case, he said costs had been cut.

“When it was planned, the TCO expansion was quoted at $38b,” Mr Mynbayev told the Interfax news agency. “In the current circumstances, we decided to re-negotiate with all contractors to bring the cost down to around $34b.”

ENDS

(News report from Issue No. 248, published on Sept. 18 2015)

Kazakh Mangistau receives inflow of migrants

SEPT. 14 2015 (The Conway Bulletin) – Almaty and the oil-rich region of Mangistau in the west of the country are the only regions in Kazakhstan receiving a significant inflow of people looking for work, data published on the ranking.kz website reported. The data also showed that most of the people moving to these areas settled in villages rather than cities.

ENDS

(News report from Issue No. 248, published on Sept. 18 2015)

LG to handle Uzbekistan’s database

SEPT. 14 2015 (The Conway Bulletin) — LG CNS, a Korea-based global IT service provider and subsidiary of LG, signed an agreement with the Uzbek government to manage its various databases. The parties have created the joint venture, LG CNS Uzbekistan. CEO Kim Daehoon said he wanted to use the joint-venture to pursue more government-orientated projects in Central Asia.

ENDS

(News report from Issue No. 248, published on Sept. 18 2015)

Armenians protest electricity price rise

SEPT. 12 2015 (The Conway Bulletin) – Police in Armenia detained 50 people during a protest against electricity price rises for businesses. The government backed down after a series of protests in July and said it would subsidise a 17% price rise for residential property but that businesses would have to pay it.

ENDS

(News report from Issue No. 248, published on Sept. 18 2015)

Russia’s RAO wants to sell Armenia electricity network

SEPT. 17 2015, YEREVAN (The Conway Bulletin) — The owner of the Armenian Electric networks company, Russia’s Inter RAO Holding, said it wanted to sell the company to Cyprus-registered Liormand Holdings Limited, triggering more bad feeling towards the company which many people already blame for trying to raise electricity prices.

It’s unclear why RAO would want to sell the Armenian electricity provider to a Cyprus shell company, but Russia does have a background in using this type of scheme to muddy companies’ ownership structures.

Whatever the reasons, the depth of bad feeling towards RAO and confusion about what the deal means for ordinary people was clear on the streets of Yerevan after the announcement.

Anna Khachatryan, a student, said: “We don’t know anything about Liormand Holdings Limited. Is it a good manager?”

Earlier this year thousands of people protested in Yerevan against a proposed 17% price rise, eventually forcing the government to back down and drop most of the plans.

The 1in.am news website wrote in a commentary, that the deal to sell the company was problematic.

‘The sale of the electricity networks does not give the answers of existing important economic and political questions, but, in fact, raises many new questions,” it wrote.

ENDS

(News report from Issue No. 248, published on Sept. 18 2015)

Kazakhstan’s Mangistau region receives inflow of migrants

ENDS

(News report from Issue No. 248, published on Sept. 18 2015)

Tea factory opens in Georgian capital

SEPT. 15 2015 (The Conway Bulletin) — Geoplant, the largest tea-producing company in Georgia, opened a $2m plant in Tbilisi’s western district of Ozurgeti. The government scheme ‘Produce in Georgia’ provided the funding for the construction of the tea sorting and packing plant. The company said the sorting plant will help it increase export capacity. Geoplant owns the Gurieli brand of tea. It was established in 1996 and set up the Gurieli Export brand in 2010 to boost sales.

ENDS

(News report from Issue No. 248, published on Sept. 18 2015)

Business comment: Halyk Bank & The Money Markets

SEPT. 18 2015 (The Conway Bulletin) — On Sept. 17, for the first time the Central Bank of Kazakhstan published data on the activities of Kazakh banks in the currency market. This decision greatly pleased liberal economists and advocates of transparency in Kazakhstan’s banking sector. But it didn’t please everybody. In one table, the Central Bank listed the amount of US dollars that banks

purchased and sold the day before. If a bank buys a large quantity of US dollars, it suggests that it may be engaging in speculation activities, or at least this is what the public could read into the data. By unveiling turnaround data only, the Central Bank irked Halyk Bank, who ranked first for volume traded.

The next day, in a rare complaint, Halyk Bank said the figures were “incomplete and misleading”.

Despite having traded $58m (around 12% of the whole banking sector), Halyk said it had been a net seller by $34m.

This is a much more patriotic figure.

And the bank, owned by powerful businessman Timur Kulibayev and his wife Dinara Nazarbayeva, now wants the Central Bank to publish the detailed numbers since Aug. 17, the day before the first adjustment to the tenge/dollar exchange rate, which led to the decision to let the tenge off its dollar peg, effectively spurring a new devaluation.

ENDS

(News report from Issue No. 248, published on Sept. 18 2015)