JUNE 18 2013 (The Conway Bulletin) — Azerbaijan’s energy company SOCAR has agreed to buy a 66% stake in Greek gas distributor DESFA for $540m, media reported. The deal highlights cash-rich Azerbaijan’s appetite for foreign assets and should also make the Trans-Adriatic Pipeline, part of a gas route from the Caspian Sea to Europe, more viable.
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(News report from Issue No. 140, published on June 24 2013)
JUNE 24 2013 (The Conway Bulletin) — In an open letter on its website, a Kazakh law firm acting for the local subsidiary of Japanese car manufacturer Toyota said that it wanted makers of counterfeit goods carrying its brand to be prosecuted.
The open letter is important as it acts as a warning. The car market in Kazakhstan is booming, fresh figures showed that new car sales continued to increase last year, and Western brands are looking to establish themselves.
The market is growing, the technical know-how to build the cars is in place but protection for Western brand’s intellectual property rights can often be lacking.
Toyota, which also produces cars under the Lexus brand, has previously flagged up counterfeit goods in Kazakhstan as a problem. The latest letter highlights that point.
For Toyota, defending its brand is especially important as it was only in February that it signed a deal to start producing cars at a plant in Kostanay, north Kazakhstan.
The issue of brand protection is also increasing important for Kazakhstan on a wider level.
As more and more Western companies with well-established brands enter the country and as WTO membership nears, Kazakhstan’s officials, legislators and prosecutors have to ensure that robust brand protection is in place.
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(News report from Issue No. 140, published on June 24 2013)
JUNE 17 2013 (The Conway Bulletin) — Plans have emerged to build an 88-storey complex in Astana, the Kazakh capital. Media reported that the Abu Dhabi Plaza will cost $1.1b to build and will be the tallest building in Central Asia. The plans show that there is still appetite for ambitious building projects in Astana.
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(News report from Issue No. 140, published on June 24 2013)
JUNE 18 2013 (The Conway Bulletin) — China National Petroleum Company (CNPC) and France’s Total agreed a deal with London and Toronto-listed Tethys Petroleum to develop an oil and gas site in Tajikistan. The deal gives each company a third stake in the Bokhtar project. Developing Bokhtar successfully could transform Tajikistan’s economic future.
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(News report from Issue No. 140, published on June 24 2013)
JUNE 23 2013 (The Conway Bulletin) — The three Kazakh billionaire founders of London-listed ENRC — Alexander Machkevitch, Alijan Ibragimov and Patokh Chodiev — have prepared a new deal to privatise the metals and mining company, media reported. The deal is reported to be worth $4.7b and include a chunk of shares in Kazakh miner Kazakhmys.
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(News report from Issue No. 140, published on June 24 2013)
JUNE 18 2013 (The Conway Bulletin) — The Kazakh government’s plan to unite pension savings in one fund is looking vulnerable.
Unveiled in January, the plan had been greeted with a decidedly mixed reaction. The idea was to draw efficiencies from a single scheme and to create a fund worth roughly $20b to dip into during an economic recession.
Detractors of the plan, that would see 10 private pension schemes and one state-run pension scheme unified under the Central Bank, said it would be uncompetitive.
Kazakhstan had been the first post-Soviet country to encourage private pension schemes and many bankers considered ditching them tantamount to being a turn-coat.
Now Halyk Bank, which has the largest private pension scheme in Kazakhstan, has said it would rather sell off its pension scheme for cash by the end of 2013 than swap it for shares in nationalised bank BTA.
In March, Kazakhstan deputy PM, Kairat Kelimbetov said that the three biggest pension schemes would be offered shares in state-run bank BTA in exchange. BTA went bankrupt in 2009 during the global financial crisis.
BTA bank is still distressed and had to re-structure its $11b debt for the second time last year.
Halyk Bank’s opinion counts as it is the biggest bank in Kazakhstan by volume of cash lent.
The move to switch Kazakhstan’s pension scheme was always going meet resistance. This is likely to be an unsettling period for the Kazakh banking sector.
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(News report from Issue No. 140, published on June 24 2013)
JUNE 21 2013 (The Conway Bulletin) — For Western companies, Uzbekistan’s image as a place to do business is at a low ebb. The rule of law in Uzbekistan is considered weak and corruption widespread. India and China, though, have been celebrating some recent successes.
China has been grabbing headlines with large-scale initiatives often thrashed out at government level but Indian companies have also, often more quietly, been making headway.
One of the more eye-catching announcements was that a joint-venture between OliveTelecom, an Indian mobile technology manufacturer, and UzTelecom had started production of its Android tablet near the city of Navoi in central Uzbekistan.
A factory in one of the Uzbek government’s economic free zones, a low tax area for foreign investors, is making the OlivePadV-T300 Tablet PC. The tablet will be sold within Uzbekistan only and retail at 350,000 som (roughly $160).
Production of the OliveTelecom tablet shows that foreign investors can, potentially, operate in Uzbekistan and also that the Uzbek labour market is capable of producing hi-tech gadgets.
Neighbouring Kazakhstan has long said it wants to diversify its economic base away from heavy industry and the energy sector. It can now look to Uzbekistan for advice.
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(News report from Issue No. 140, published on June 24 2013)
JUNE 17 2013 (The Conway Bulletin) — Russia’s Gazprom has said it wants to buy a 20% stake in Armenia’s ArmRosGazprom that it doesn’t yet own. Armenia’s government currently owns the outstanding 20% stake in ArmRosGazprom. ArmRosGazprom is Armenia’s monopoly gas distributor and the move would give Russia control over Armenian energy consumption.
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(News report from Issue No. 140, published on June 24 2013)
JUNE 17 2013 (The Conway Bulletin) — The figures in the BP Statistical Review of World Energy can be dry but the stories behind the figures are important.
The 2013 edition is an important barometer for the energy-centric economies in Central Asia and the South Caucasus. The most telling figure for the region in this year’s edition of the review was that oil consumption in Kazakhstan grew by over 10% in 2012.
This is a large jump. In the countries covered in the review only Israel’s oil consumption increased at a higher rate. The global rise in oil consumption in 2012 was 0.9%.
The increase reflects Kazakhstan’s emergence from a sharp economic retraction triggered by the global crisis of 2008/9 when oil consumption fell.
Last year Kazakhstan, with a population of 17m, consumed 265,000 barrels of oil per day. By comparison, Uzbekistan, population 29.5m, consumed 82,000 barrels/day and Turkmenistan, population 5m, consumed 100,000 barrels/day.
Across the Caspian Sea, BP reported that Azerbaijan, population 9.3m, consumed 93,000 barrels of oil per day, a jump of 5.4%. This rise in Azerbaijan’s oil consumption, although not as big as Kazakhstan’s leap, still shows an increase in economic activity.
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(News report from Issue No. 139, published on June 17 2013)
JUNE 5 2013 (The Conway Bulletin) — Political fighting between Georgian President Mikheil Saakashvili and his main rival PM Bidzina Ivanishvili has dented foreign investment in Georgia, Reuters reported by quoting several foreign businessmen and official statistics.
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(News report from Issue No. 138, published on June 10 2013)