JULY 23 2015 (The Conway Bulletin) – The Almaty-based Eurasian Development Bank (EDB) will loan $300m to Armenia to weather tough economic conditions, media reported quoting Russia’s deputy economy minister Sergei Storchak. The ADB was set up by Russia and Kazakhstan. It supports members of the Eurasian Economic Union.
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(News report from Issue No. 241, published on July 23 2015)
JULY 21 2015 (The Conway Bulletin) – French telecoms company Orange is considering selling its Armenian subsidiary to Ucom, an Armenian fibre optic cable. Orange has been operating in Armenia since 2009 and has 650,000 subscribers.
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(News report from Issue No. 241, published on July 23 2015)
JULY 17 2015 (The Conway Bulletin) – Net profit at KCell, Kazakhstan’s largest mobile operator, dropped by 23.6% in Jan-June compared to the same period in 2014 because of aggressive price competition, the company said.
A few days later, on July 21, Kazakhstan’s state monopolies committee also ordered KCell, owned by Sweden and Finland based Telia-Sonera, to return around 1.5b tenge ($800m) to its customers for overcharging, more evidence that mobile charges in Kazakhstan are falling sharply.
KCell CEO Arti Ots said: “Further intensification of competition, with notably aggressive pricing, has impacted our results for the second quarter of 2015.”
KCell’s competitors Tele2, also based in Sweden, also blamed a price war in Kazakhstan for lower-than-hoped for profits. Mats Granryd, the company’s CEO, said that prices in Kazakhstan are falling sharply.
“Kazakhstan is turning into a real bloodbath when it comes to pricing,” he told Reuters in an interview.
Mobile companies operating in Kazakhstan are competing to lower prices, in an effort to grab market share.
And the conse- quences of these pricing policies are filtering through. In earnings reports, both KCell and Tele2 said they have not been profitable in Kazakhstan in 2015.
Specifically, Kcell said that its sales in H1 2015 were down by 6.6% on the same period in 2014. It also said that service revenue dropped by 12.3%.
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(News report from Issue No. 241, published on July 23 2015)
JULY 17 2015 (The Conway Bulletin) – Azerbaijan Airlines will reduce the cost of is tickets in-line with a direct order from President Ilham Aliyev, local media quoted the company as saying in a press release. The statement showed just how much control Mr Aliyev has over Azerbaijan’s various state-linked companies.
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(News report from Issue No. 241, published on July 23 2015)
JULY 20 2015 (The Conway Bulletin) – Lifting of international sanctions against Iran will give Kazakhstan’s steelmaking industry, and the ArcelorMittal plant at Temirtau in particular, a boost, Asset Isekeshev, Kazakh minister for industrial development, said.
ArcelorMittal Temirtau, near Karaganda, is one of the most important factories in Kazakhstan outside the oil and gas sector but it has struggled recently because of a drop in demand for steel from Iran.
“The lifting of sanctions against Iran could be a big plus for ArcelorMittal. This is a big market for us and this would allow us to stabilise operations,” Mr Isekeshev said at a press conference.
According to officials from ArcelorMittal Temirtau, Iran makes up around a third of its export market. Over the past few years, ArcelorMittal has tried to cut costs at the plant. It has laid-off thousands of workers and imposed salary cuts.
A new railway transport route from Kazakhstan, across Turkmenistan into Iran should also help ArcelorMittal exports.
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(News report from Issue No. 241, published on July 23 2015)
JULY 22 2015 (The Conway Bulletin) – SOCAR, the Azerbaijani state- owned oil and gas company, resumed oil exports to Russia after a break of several weeks, Rovnag Abdullayev, the SOCAR chairman, was quoted by media as saying. No reason was given on why exports were resumed.
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(News report from Issue No. 241, published on July 23 2015)
JULY 23 2015 (The Conway Bulletin) – Tajikistan increased its electricity exports by 9.4% in the first half of 2015, compared to the same period last year, according to the ministry of energy. Afghanistan receives the majority of Tajik electricity exports. Electricity exports are increasingly important to Tajikistan.
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(News report from Issue No. 241, published on July 23 2015)
JULY 22 2015 (The Conway Bulletin) – Iran could export refined oil products to Kazakhstan, Vahid Ahmadi, the Iranian deputy science minister, told media. This is important because Kazakhstan is looking for ways to boost its supply of oil-based products.
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(News report from Issue No. 241, published on July 23 2015)
JULY 23 2015 (The Conway Bulletin) – Many Central Asian countries have pledged their support for a deal between Iran and Western countries over its nuclear programme that will allow sanctions to be lifted. The positive feeling is mutual. In April 2015, Iran’s Foreign Minister noted that there is “no ceiling for the expansion of relations with regional countries, whether in the Caucasus or in Central Asia”.
Central Asia and Iran have already been cooperating for some time.
December 2014 saw Europe via Iran the inauguration of the new Iran-Turkmenistan-Kazakhstan railroad, linking Central Asia to Iran’s southern ports. Iran has oil swap deals with both countries.
Turkmenistan also has gas pipelines running to Iran and in 2010 Iran sent equipment to Tajikistan for the construction of the Sangtuda-2 hydro- power plant.
Increased formal, and more flexible, cooperation will certainly benefit Central Asia. Iran will give Central Asia greater access to Middle Eastern and European markets. The energy export potential is attractive, particularly given that last year Russia said it would stop buying Central Asian gas, and Turkmenistan recently accused Gazprom of failing to pay debts. Supplying Europe with gas via Iran may be more feasible for Turkmenistan. The opening up of Iran also provides another legitimate partner in the region to counterbalance Russian and Chinese dominance, as is a key aim of the region’s “multi-vector foreign policy”.
However, it will also produce new competition in the region. In August 2014, before any nuclear deal was signed, Iran announced it would no longer import gas from Turkmenistan, instead building up domestic production. Having been excluded from markets for so long, Iran will want to build up its own trade partners rather than act as a transit country for Central Asia. Moreover, more Iranian oil on the market may cause a drop in oil prices, impacting Kazakhstan at already difficult times.
One thing is certain — new transport and energy infrastructure will need to be built for any Iranian reintegration to take place. China will no doubt be looking with interest at the opportunities this presents.
By Sarah Lain, Research Fellow at the Royal United Services Institute in London
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(News report from Issue No. 241, published on July 23 2015)
JULY 17 2015 (The Conway Bulletin) – Georgia’s parliament passed a final reading of a bill that strips supervision of the country’s commercial banking sector from the Central Bank. The World Bank had urged the government to drop the bill. President Giorgi Margvelashvili now has to sign the bill into law although he has said he may veto it.
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(News report from Issue No. 241, published on July 23 2015)