Tag Archives: business

Kazakhstan increases manufactured goods exports

SEPT. 21 (The Bulletin) — Kazakhstan has increased exports of manufacturing goods by 28% in the first six months of the year compared to the same period last year, media quoted development minister Zhenis Kasymek as saying. One of the biggest boosts to the $7.5b worth of manufacturing exports was from the car industry. Lada Niva, which makes cars in Oskemen, started exports to China and the UAE.

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— This story was first published in issue 344 of The Conway Bulletin, now called the Central Asia & South Caucasus Bulletin, on Sept. 24 2017.

— Copyright the Central Asia & South Caucasus Bulletin 2017

Georgia fights crop eating stinkbug

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TBILISI/SEPT. 21 (The Bulletin) — Georgia’s agriculture ministry said it would deploy planes to drop chemical pesticides over thousands of acres of agriculture land in the west of the country to stop the spread of the Asian stinkbug.

The Asian stinkbug has been blamed for destroying thousands of tonnes of Georgia’s hazelnut harvest this year.

Local farmers and businesses have started to turn on the government for not doing enough to stop the spread of the bug after months of warnings. The government has said in response that it has done all it can to halt the spread.

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— This story was first published in issue 344 of The Conway Bulletin, now called the Central Asia & South Caucasus Bulletin, on Sept. 24 2017.

— Copyright the Central Asia & South Caucasus Bulletin 2017

Veon says devalued Uzbek soum has cost it “hundreds of millions of doillars”

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TASHKENT/SEPT. 21 (The Bulletin) — Veon, the New York-listed Amsterdam-headquartered telecoms company formerly called Vimpelcom, said that that the liberalisation and devaluation of the Uzbek soum had cost it hundreds of millions of dollars.

Earlier this month, the Uzbek government scrapped a US dollar peg for the Uzbek soum, allowing it to lose half its value. The move was generally applauded as necessary to modernise Uzbekistan’s economy and for giving foreign investors clarity but businesses already entrenched in Uzbekistan said there would be a cost.

Veon, which operates the Unitel subsidiary in Uzbekistan under the Beeline brand, said there were advantages in the long-run but that, in the short term, profits were lower.

“Under these liberalized exchange rules, Veon may in the longer term be able to more effectively repatriate cash from Uzbekistan,” it said in a statement.

“[But] as a result [of the devaluation], Veon expects annualised decreases in revenues of $300-350m and in underlying EBITDA of $175-225m.” These comments are important as they come from a company already doing business in Uzbekistan.

Veon has previously been fined for paying a bribe to a company ultimately owned by the daughter of Uzbek president Islam Karimov for market access to Uzbekistan in 2007/8.

Sweden’s Telia and Norway’s Telenor have also been fined for paying bribes in Uzbekistan.

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— This story was first published in issue 344 of The Conway Bulletin, now called the Central Asia & South Caucasus Bulletin, on Sept. 24 2017.

— Copyright the Central Asia & South Caucasus Bulletin 2017

Economic activity rises in Armenia

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SEPT. 20 (The Bulletin) — Armenia’s economic activity index showed a rise of 5.5% between Jan. and Aug. compared to the same period in 2016, the National Statistics Agency said. The index is considered the most important index to watch for business sentiment in Armenia.

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— This story was first published in issue 344 of The Conway Bulletin, now called the Central Asia & South Caucasus Bulletin, on Sept. 24 2017.

— Copyright the Central Asia & South Caucasus Bulletin 2017

EBRD is interested in buying a stake in International Bank of Azerbaijan, says Azerbaijan

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BAKU/SEPT. 19 (The Bulletin) — Azerbaijani media said that The European Bank for Reconstruction and Development (EBRD) was potentially interested in buying a stake in its largest bank, the International Bank of Azerbaijan (IBA).

Suma Chakrabarti, the EBRD’s president, was in Baku earlier in the month, although he doggedly denied the EBRD’s interest in IBA.

“I was there last week, we spoke to Azerbaijani President Ilham Aliyev, we said we would be happy to help in restructuring and refocusing of this bank,” he was quoted as saying.

The speculation has been triggered by comments from senior government officials who said that they wanted to sell off chunks of IBA, which restructured $3.3b of debt earlier this year, in 2018.

Azerbaijan’s government effectively bailed out IBA this year by increasing its stake in the bank, which dominates the Azerbaijani banking market, to 76.7% from 55%. Azerbaijan’s economy has been particularly badly hit by a fall in the price of oil since mid-2014 and has fallen into a recession.

Bad loans at banks have also multiplied and in May, Moody’s the ratings agency, said that the government had spent 18% of its GDP on propping up its banking sector.

The EBRD has a history of intervening in the financial sector in Central Asia and the South Caucasus. Earlier this year it agreed to increase its stake in Azerbaijan’s Unibank to help it stave off bankruptcy.

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— This story was first published in issue 344 of The Conway Bulletin, now called the Central Asia & South Caucasus Bulletin, on Sept. 24 2017.

— Copyright the Central Asia & South Caucasus Bulletin 2017

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SEPT. 18 (The Bulletin) — Switzerland-based oil trader Vitol has extended its so-called cash-for-crude loans to Kazakhstan to $5b, the FT reported. This is an extension of the original $3b deal thrashed out between Kazakh state oil and gas company Kazmunaigas and Vitol in April last year. The deals have come about as Kazakhstan needs to generate cash on forward oil contracts. They have positioned Vitol at the centre of the Kazakh oil system, shipping barrels to Russia and on to Europe.

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— This story was first published in issue 344 of The Conway Bulletin, now called the Central Asia & South Caucasus Bulletin, on Sept. 24 2017.

— Copyright the Central Asia & South Caucasus Bulletin 2017

Kyrgyz-Czech hydropower project deal is scrapped

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SEPT. 18 (The Bulletin) — A deal lauded by Kyrgyz President Almazbek Atambayev only three months ago as proof that Kyrgyzstan can attract major foreign direct investment has been scrapped. Kyrgyz PM Sapar Isakov announced the deal was dead after it became clear that Liglass, the Czech company, had no way of paying $37m to Russia by mid-September to takeover construction of the major Upper Naryn Cascade hydropower project.

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— This story was first published in issue 344 of The Conway Bulletin, now called the Central Asia & South Caucasus Bulletin, on Sept. 24 2017.

— Copyright the Central Asia & South Caucasus Bulletin 2017

Azerbaijan increases exports of non-oil products

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SEPT. 16 (The Bulletin) — Azerbaijan increased exports of non-oil products in the first eight months of the year by 30%, deputy economy minister Sahil Babayev was quoted by media as saying at a press conference. He said that agriculture exports had increased by 37% and industrial products by 25.4%. Azerbaijan has been looking to increase the status of non-oil products in its economy.

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— This story was first published in issue 344 of The Conway Bulletin, now called the Central Asia & South Caucasus Bulletin, on Sept. 24 2017.

— Copyright the Central Asia & South Caucasus Bulletin 2017

Joint Iran-Azerbaijan car plant to be finished soon

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SEPT. 13 2017 (The Conway Bulletin) — The construction of a car-making joint-venture factory between Iran and Azerbaijan will be finished shortly, media quoted deputy Azerbaijani economy minister Sahil Babayev as saying. He said that the first cars of the JV between Azerbaijan’s AzEuroCar and Iran’s Khorodo would roll off the plant next year. It will have a capacity of 10,000 units. Azerbaijan has been looking at ways to boost its non-oil industrial output.
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— This story was first published in issue 343 of The Conway Bulletin on Sept. 15 2017

BP-led consortium signs deal to extend ACG licence

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SEPT. 14 2017 (The Conway Bulletin) — A consortium lead by BP signed a deal to extend its operation of the Azeri-Chirag-Guneshli (ACG) fields in the Azerbaijani section of the Caspian Sea, an agreement originally dubbed the “Contract of the Century” in 1994.

Under the new deal, BP and its partners will run ACG, Azerbaijan’s biggest producing oil fields, until 2050. The original contract was due to expire in 2024.

Negotiations for a renewed deal had been ongoing all year and despite each side’s frustrations with the other, an agreement had always been likely.

At the signing ceremony in Baku, Bob Dudley, the BP CEO, said: “Over the past 23 years the ‘Contract of the Century’ has truly transformed Azerbaijan, energy supplies to Europe and all of us who have worked so hard to make it a success. Today’s contract is perhaps an even more important milestone in the history of Azerbaijan.”

SOCAR chairman Rovnag Abdullayev was equally exuberant.

“Today is a significant day for Azerbaijan,” he said. “Since the signing of the first PSA in 1994, ACG has benefited from $33bn of investment, producing around 440 million tonnes of oil, and delivering directly more than $125bn of net profit to our country.”

For Azerbaijan, this second operating agreement for ACG is much improved from the original. SOCAR, the Azerbaijan state oil and gas company, increased its stake in the project to 25% from 11.65%. The Azerbaijani government, strapped for cash in the midst of an economic downturn, will also receive a one-off $3.6b payment.

For BP, securing an extension to the agreement was vital. ACG forms a major part of its reserves and income. Its share in the project has been cut to 30.37% from 35.8%. Its partners, other than SOCAR, have also had to agree to an equity cut to secure a new deal on ACG.

Chevron now owns a 9.57% sake, Inpex 9.31%, Statoil 7.2%, ExxonMobil 6.79%, TPAO 5.73%, Itochu has 3.65% and ONGC Videsh holds 2.31%.
Relations between Azerbaijan and the BP-led coalition have become increasingly fraught over the past few years.

Azerbaijan has been frustrated that BP hasn’t been able to stem a drop in production at the site and BP executives have become increasingly exasperated at the negative headlines surrounding Azerbaijan, which has been accused by the West of clamping down on the media and of various corrupt practices.

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— This story was first published in issue 343 of The Conway Bulletin on Sept. 15 2017