Tag Archives: economy

Karachaganak partners agree to pay Kazakhstan $1.1b

ALMATY/OCT. 1 (The Conway Bulletin) — The partners developing the Karachagank oil and gas site, a cornerstone of Kazakhstan’s energy production, agreed to pay the Kazakh government $1.1b, settling a long-running dispute over profit sharing.

Kazakhstan will also receive an estimated $415m in extra revenue by 2037, based on the price of oil at $80/barrel, in the new profit sharing deal.

For the Karachaganak partners — Shell, ENI, Lukoil, Chevron and Kazmunaigas — and their shareholders, the deal marks the end of a dispute that could have severely undermined the project from 2015 when Kazakh officials first accused the consortium of an unfair profit sharing deal. None of the partners have yet commented on the deal.

The final $1.1b agreed fee is less than the initial $1.6b that Kazakhstan had pushed, although the additional earnings will probably take it close to that amount.

There is also a $1b long-term loan that the consortium has agreed to give to Kazakhstan to develop its regions.

The partners have also committed to spending $5b on upgrading the site to ensure that production continues.

Karachaganak is one of the most important oil and gas projects in Kazakhstan producing nearly 50% of its gas and 18% of its oil production.
This year, Kazakhstan has increased oil production by 5.3% to 60m tonnes by the end of August, the Kazakh energy ministry said earlier this month.

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>>This story was published in issue 387 of The Conway Bulletin on Oct. 1 2018

Azerbaijanis shop in crisis-hit Iran

SEPT. 23 (The Conway Bulletin) – The number of Azerbaijanis shopping in neighbouring Iran this year has increased by 43.4% from last year because of a collapse in the Iranian economy, media reported quoting government figures. Re-imposed US sanctions have hit Iran hard and devalued its rial currency. This has meant that, with improved Iran-Azerbaijan relations, Azerbaijanis have been able to travel across the border on short-term visas for inexpensive shopping trips.
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>>This story was published in issue 387 of The Conway Bulletin on Oct. 1 2018

Armenia keeps interest rate at 4%

SEPT. 25 (The Conway Bulletin) – Armenia’s Central Bank said annualised inflation by end-August was 3.3%, roughly in-line with its predictions. It kept interest rates at 4% as it expected inflation to drop slightly over the next year. This bucks a trend as other Central Banks have warned inflation is creeping up once again.
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>>This story was published in issue 387 of The Conway Bulletin on Oct. 1 2018

Subsidy cuts in Turkmenistan will hurt

–Turkmen subsidy cuts will irritate ordinary people but are unlikely to trigger massive anti-government protests, writes James Kilner

OCT. 1 — Successive former Soviet states have had to bite the bullet on reforming their various subsidy systems. This year, the most high-profile reforms have been to Russian and Kazakh pensions. The age of retirement has slowly been increased with the realisation that the state just can’t afford to pay for so many people in their 60s not to work.

Now news has broken that Turkmenistan has finally decided to do away with its previously excessively generous subsidies. The Turkmen government has been chipping away at subsidy levels for a few years but from January there won’t be any at all.

This is a big leap and there is genuine concern among analysts that Turkmen officials may face the ire of ordinary people. Some analysts have even talked up the possibility of anti-government protests.

Anti-government protests over subsidy cut-backs have happened before in the region. In 2015, protests across Yerevan forced the government to climb down over proposed electricity price rises.

Of course, Armenia is different from most other countries in the Central Asia and South Caucasus region. Street-level politics is an accepted part of the power spectrum in Armenia, as shown by a revolution in April and May that propelled Nikol Pashinyan into the premiership. Georgia too has a reputation for protests as a part of its political spectrum. The Rose revolution of 2003 turned Mikheil Saakashvili into a president. In Tbilisi, the full range of protests — pro-government, anti-government; pro-gay rights, anti-gay rights; pro-drug use, anti-drug use and so on — are relatively common. This year a march by workers of a mothballed regional sugar factory forced the government to reopen it.

In Central Asia, protests are treated with much less tolerance by the authorities and are a rare form of political expression. The main exception, of course, being Kyrgyzstan which has been through two revolutions since 2005.
News from Turkmenistan shows that its economy is doing poorly and points to a population having to deal with various deprivations. There is a lack of basic foodstuffs, money transfers out of the country are limited and people leaving the country are heavily monitored.

Subsidy cuts on basic utilities will hurt and there will be pockets of protests in Turkmenistan. There have been previously when cuts were announced and there will be now. But this is one of the most controlled police states in the world. Small-scale protests are one thing but what is more difficult to envisage are wide-scale protests that genuinely threaten the government.
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>>This story was first published in issue 387 of The Conway Bulletin on Oct. 1 2018

Turkmenistan will cut all utility subsidies from 2019

SEPT. 26 (The Conway Bulletin) – Turkmen President Kurbanguly Berdymukhamedov signed into a law a decree that cancels the last of Turkmenistan’s once-generous subsidies system, another admission that the country’s economy is struggling to recover from a 2014-17 downturn.

Analysts immediately said that the rollback in subsidies may trigger protests. Previous subsidy cuts have sparked off small rare anti-government demonstrations in Turkmenistan, regarded as one of the world’s most authoritarian and reclusive countries.

Like other countries in the region, the Turkmen government has cut its Soviet-era subsidy system over the past few years but from the start of next year households will have to pay near-market prices for gas, electricity and water. Previously petrol and food had also been heavily subsidised. Media reported that there has been a vague promise that people will pay “preferential prices”, although it is unclear what exactly this means.

Turkmenistan has been slow to recover from a regional economic downturn. Its main revenue generator is gas which is locked into inflexible long-term export contracts with China.

The Turkmen government is trying to broaden its export base. It has opened a new fertiliser plant and a new power plant, both focused on exports, in the past month but analysts have said that revenues from these projects will take time to trickle down to the population.
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>>This story was first published in issue 387 of The Conway Bulletin on Oct. 1 2018

Kyrgyzstan holds interest rates steady

SEPT. 25 (The Conway Bulletin) – Kyrgyzstan’s Central Bank kept its key interest rate at 4.75% because it also said that inflation had slowed. Specifically, the Kyrgyz Central Bank said that food prices had stagnated. It said that it expected overall inflation to measure 4% by the end of 2018.
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>>This story was published in issue 387 of The Conway Bulletin on Oct. 1 2018

Armenian economy grows 6.5%

SEPT. 27 (The Conway Bulletin) – Armenia’s economy will expand by 6.5% in 2018, higher than the previous expectations of a 4.5% growth, finance minister Atom Janjughazyan told a government meeting. Armenia, like the rest of the region, is rebounding from an economic downturn between 2014-17. A sharp rise in activity in the construction sector has been a key driver of the economic upturn.
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>>This story was published in issue 387 of The Conway Bulletin on Oct. 1 2018

INCOMPLETE STORY: Kyrgyz-Kazakh trade rows

>> So what is going on here? Why are Kazakhstan and Kyrgyzstan rowing about trade?

>> In an interview with Euronews, Kyrgyz President Almazbek Atambayev blamed Kazakhstan for imposing a trade barrier in 2010 which then forced it to join the Kremlin-lead Eurasian Economic Union. The Kazakh side responded by denying that this had ever happened and issuing a formal complaint.

>> So is this serious? What is the back-story to this?

>> This an extension of a long-running feud between the two neighbours over trade. Each has accused the other of underhand tactics which have damaged their trade. Kazakhstan is a far bigger economy than Kyrgyzstan. This puts Kazakhstan is a far stronger position than Kyrgyzstan and Kyrgyz MPs and officials often accuse it of essentially bullying it. The issue here, though, maybe that Atambayev is looking to deflect from his unpopular move in 2015 to pull Kyrgyzstan into the Kremlin’s Eurasian Economic Union. Kyrgyzstan became the fifth member of the group after Russia, Belarus, Kazakhstan and Armenia.

>> Why has the Eurasian Economic Union become so unpopular in Kyrgyzstan?

>> It’s mainly the timing of joining that was the problem. Russia had just tipped into a recession linked to a collapse in oil prices. Jobs for migrant workers dried up and various projects that Russia had promised to fund were scrapped. At the same time, Kyrgyzstan’s economy started faltering and the currency started to fall. Officials looking to shift blame found an easy target in the Eurasian Economic Union. There have also been some genuine problems with paperwork and with what was described in 2015 as a flood of cheap imports from Kazakhstan and Russia into Kyrgyzstan, which damaged local producers.

>> Are there any numbers to back this up?

>> The data that Kyrgyz officials use to back up their arguments is from the Kyrgyz Statistic Committee which said that trade with other Eurasian Economic Union members was down by over 18% last year. This was held up as proof that the Eurasian Economic Union was not working. The reality is a bit more complex. Kazakhstan also published trade figures that showed its trade with other Eurasian Economic Union figures had fallen by a similar amount. This may be more to do with the general regional economic downturn than the Eurasian Economic Union.

Real wages in Kazakhstan slow

JAN. 28 (The Conway Bulletin) – Real wages in Kazakhstan have fallen for a third consecutive year, Halykfinance said in a report. It said that inflation had continued to outstrip wage growth. Wages, the report said, had fallen by 2% in the first three quarters of 2017 and that this would trend would continue in 2018, although it would slow to a real wage drop of 0.5%.

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>>This story was first published in issue 360 of The Conway Bulletin

Turkmenistan cute petrol subsidies; prices soar

FEB. 1 (The Conway Bulletin) – Turkmenistan raised its prices for petrol by 50% overnight, a sharp reminder of the financial pressure that the country is under. Petrol had been heavily subsidised by the government and while the prices are still low, around 1.5 manat or nearly half a US dollar for a litre, the price increase will rankle. Last year the government also cut subsidies on utilities.

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>>This story was first published in issue 360 of The Conway Bulletin