Tag Archives: business

Turkmenistan and Iran row over $2b gas bill

DEC. 21 2016 (The Conway Bulletin) — Turkmenistan has accused Iran of not paying $2b of debt linked to gas supplies, media reported, threatening to sour carefully crafted friendly relations between the two neighbours.

The Russian service of Radio Free Europe/Radio Liberty quoted an unnamed Turkmen official as saying that Iran still owed it $2b for gas supplied since 2012. In return the Iranian state-run Fars news agency quoted an Iranian official as saying that Turkmenistan was using the tougher winter months, when Iran needs more gas, as a weapon. The Iranian official threatened to break off commercial links with Turkmenistan.

Turkmenistan and Iran have pulled together since Western sanctions were imposed on Iran in 2012 for its alleged determination to build a nuclear weapon.

During this time Turkmenistan’s gas supplies to Iran have doubled to 10b cubic metres. Iran also imports electricity from Turkmenistan.

The payment system, though, is complicated because of a series of barter deals. Earlier this year, Turkmenistan and Iran announced a deal through which Iran would take $30b of Turkmen gas over the next 10 years in exchange for $30b of technical assistance.

ENDS

(News report from Issue No. 310, published on Dec. 23 2016)

Azerbaijan to introduce online visa form

DEC. 16 2016 (The Conway Bulletin) — Azerbaijan will introduce an online visa application system from Jan. 10 2017 as it tries to bolster revenues from tourism.

With an economic downturn biting deep and wiping out essential profit from oil sales, Azerbaijan’s government has turned to tourism to try to plug the gap, an industry it has previously shunned. Azerbaijan’s government’s government collects 75% of its revenues from oil sales.

The head of the State Agency of Public Service and Social Innovations İnam Kerimov said that e-visa applications would improve the efficiency and transparency of the visa application process.

“At the moment the portal is in the test phase, but it will be completely ready till the 10th of January, 2017,” he said.

“Foreigners will be able to apply for visas and obtain them without waiting in the queue and collecting documents.”

A visa for a stay of up to 30 days will cost $20 and be emailed to the applicant within three days of the application being sent in.

In 2010, Azerbaijan scrapped a visa-on-arrival system for Westerners at Baku airport, making it far more difficult to enter the country. In that time it has rowed with Europe about media rights and free speech, while also hosting a series of high profile sporting and cultural events such as the European Games and the Eurovision Song Contest.

Corruption, and scepticism are rife in Azerbaijan, and people quickly questioned the motive behind the e-visa move and the tourism development drive.

“The authorities are trying to fill their expensive hotels,” said Irada, 45. “This system won’t benefit ordinary citizens.”

ENDS

(News report from Issue No. 310, published on Dec. 23 2016)

China’s AIIB lends Azerbaijan’s SGC $600m

TBILISI, DEC. 21 2016 (The Conway Bulletin) — The China-led Asian Infrastructure Investment Bank (AIIB) pledged to lend Azerbaijan’s Southern Gas Corridor company (SGC) $600m to finance its share of the TANAP gas pipeline that will pump gas from the Caspian Sea to Europe.

The loan heaps more cash from international institutions onto the project. Media reports said that the World Bank had also pledged $800m to the project. This follows loan deals last week from the Asian Development Bank and previously from the European Bank for Reconstruction and Development (EBRD).

Announcing its loan, the AIIB said that TANAP was a vital infrastructure project.

“This crucial upgrade of energy infrastructure between Asia and Europe will further strengthen the economy of Azerbaijan while underpinning energy security in Turkey, as well as several countries in southern Europe,” a statement quoted AIIB’s vice President and chief investment officer, DJ Pandian as saying.

The World Bank also said that TANAP was vital to support.

The total cost of TANAP is slated to be between $10b and $12b. SOCAR, Azerbaijan’s energy company, owns a 58% share in the project; Turkey’s Botas owns a 30% stake and BP owns a 12% stake.

ENDS

(News report from Issue No. 310, published on Dec. 23 2016)

Uzbekistan signs solar tech contract with China

DEC. 22 2016 (The Conway Bulletin) — China’s Singyes Solar Technologies won a contract to design, build and operate a 100MW solar farm in Uzbekistan, media reported. The $147m project, located near Samarkand, is the biggest overseas project won by Singyes. State- owned Uzbekenergo is the client, although the Asian Development Bank (ADB) is the main financier of the project. The ADB wants Uzbekistan to generate more of its power via renewable energy.

ENDS

(News report from Issue No. 310, published on Dec. 23 2016)

Kazakh bank appoints new CEO

DEC. 20 2016 (The Conway Bulletin) — ForteBank, one of the biggest banks in Kazakhstan, appointed Magzhan Auezov, who had been CEO of Kazkommertzbank for one year until mid-April, as its new CEO. Mr Auezov, a career banker, was brought into Kazkommertzbank to oversee its merger with BTA Bank. He left Kazkommterzbank, now rebranded as QazQom, in April to head the local banking lobby group. As well as taking over as CEO of ForteBank, Mr Auezov has also been made the CEO of Kassa Nova Bank. Both banks are majority owned by Bulat Utemuratov, considered to be close to Kazakh president Nursultan Nazarbayev.

ENDS

(News report from Issue No. 310, published on Dec. 23 2016)

Azerbaijan’s SOCAR signs deal with Lotos

DEC. 22 2016 (The Conway Bulletin) — SOCAR Trading, part of the Azerbaijani state-owned energy company, has agreed to send crude oil, liquefied petroleum gas (LPG) and liquified natural gas (LNG) to Poland’s Lotos Oil, media reported. Lotos Oil is listed on the Warsaw stock exchange and is the country’s second largest oil producer. This year it also bought 2m barrels of crude oil from Iran.

ENDS

(News report from Issue No. 310, published on Dec. 23 2016)

Radisson Red to open in Georgia

DEC. 16 2016 (The Conway Bulletin) — Rezidor Hotel Group, which operates the Radisson brand of hotels, said that it planned to open a 100-room Radisson Red hotel in Tbilisi by 2019. Radisson Red, only released this year, is the Rezidor’s mid-range offering, pitched slightly below the Radisson Blue brand but above Park Inn. It’s another indication that the Georgian economy is picking up slightly.

ENDS

(News report from Issue No. 310, published on Dec. 23 2016)f

Institutional loans

DEC. 23 2016 (The Conway Bulletin) — It’s been a good couple of weeks for inter-governmental banks’ Central Asia and South Caucasus portfolios. They have lent heavily in the region, supporting infrastructure projects from gas pipelines in Azerbaijan to solar and wind power projects in Kazakhstan.

It’s a win-win situation. The institutional banks want to lend the money that their shareholders – nation states – and their constitutions require. Demand may be a better way of putting it.

For Kazakhstan and Azerbaijan, the funds are a welcome source of cash at a time of economic constraint. Their economies are under huge pressure at the moment from the sustained low oil prices. Azerbaijan’s GDP has shrunk this year and Kazakhstan’s is stagnant.

They were once attractive options to lend to for commercial banks looking for decent exposure in Emerging Markets. Now they would find it difficult to raise the cash without paying prohibitively expensive interest rates.

That’s where the loans from intergovernmental banks come in. They are cheap and chunky.

The latest round of loans came with the involvement for the first time of the Asian Infrastructure Investment Bank (AIIB).

This it the China-based bank that was set up on Christmas day last year but only started operations in January this year. It has now invested $600m in a loan to Azerbaijan’s Southern Gas Corridor company which is helping to build the TANAP gas pipeline from the Caspian Sea to Europe.

The AIIB has put down a major marker, then, and potentially set itself up as a challenger to the traditionally West-based intergovernmental banks that have previously dominated.

ENDS

(News report from Issue No. 310, published on Dec. 23 2016)

Comment: Kazakhstan wants to stimulate mortgages, explains Toleukhanova

DEC. 23 2016 (The Conway Bulletin) — Land has been an emotional issue in Kazakhstan.

In the spring, Kazakhstan saw some of its biggest ever protests with thousands of people demonstrating over plans to give foreigners more rights to land. The protests worried the government and also drew attention to existing laws which granted 1kmsq of free land to every Kazakh. Land is cheap in Kazakhstan, the ninth largest country in the world with a population of just 17m.

Since then hundreds of thousands of people have applied to receive their free slice of Kazakh steppe. This is rough land with no infrastructure, exposed to some of the harshest weather conditions south of the Arctic.

Faced with a sharp economic downturn, Kazakh President Nursultan Nazarbayev has been eager to please. He’s promised to build the infrastructure needed to make the land liveable. The problem is the Kazakh government doesn’t have much money.

Instead, the Kazakh government wants to attract private investment. Primarily, it aims to encourage private construction companies to stimulate construction with affordable loans and to trigger a house-buying boom by subsidising mortgages.

The new government program is called Nurly Zher, which means Bright Land in Kazakh.

Economy minister Kuandyk Bishimbayev has said that the government expects GDP to increase by 7.7% during the whole period of the programme and create annually 25,000 jobs.

But experts are doubtful. Kazakhstan needs comprehensive structural economic reforms rather than government handouts.

Representatives from business and the economy say people can’t even afford subsidised mortgages. Commercial banks are also wary of handing out mortgages. A 50% devaluation of the tenge has triggered a lack of confidence. Bad debt levels are approaching danger levels. This is coupled to a lack of political will. Ministers usually implement government programmes initiated by the President but rarely initiate something of their own. The price of failure would be too great. The unwillingness to dig deep into problems and concentrate only on surface issues is typical of the Kazakh government and reflect a political stagnation .

By Aigerim Toleukhanova, the Bulletin’s Almaty correspondent

ENDS

(News report from Issue No. 310, published on Dec. 23 2016)

Qatar starts flying to Georgian capital

DEC. 20 2016 (The Conway Bulletin) — Qatar Airways said that it was starting up a new four-times-per- week direct flight between Doha and Tbilisi. Qatar already flies direct from Doha to both Yerevan and Baku. Linking Tbilisi directly to the Qatar Airways network is important as it should increase Tbilisi’s ability to pull in international investment and tourism.

ENDS

(News report from Issue No. 310, published on Dec. 23 2016)