Tag Archives: IFI

EBRD considers Azerbaijani gas

JULY 26 2016 (The Conway Bulletin) — The European Bank for Reconstruction and Development (EBRD) said it is negotiating financing TAP, a trans-Adriatic gas pipeline which forms part of the so-called Southern Gas Corridor network that will pump Azerbaijani gas to Europe. In an interview with AP, the EBRD said it is looking to invest €500m ($550m) in the project. Azerbaijan’s state-owned SOCAR (20%), BP (20%), Italy’s Snam (20%), Belgium’s Fluxys (19%), Spain’s Enagas (16%), and Switzerland’s Axpo (5%) own TAP.

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(News report from Issue No. 291, published on Aug. 1 2016)

IMF considers loan to Tajikistan

JULY 26 1 2016 (The Conway Bulletin) — Negotiations for a $500m IMF loan are continuing, Jamoliddin Nuraliyev, deputy chief of Tajikistan’s Central Bank told local media. The IMF has scheduled a visit to the country in August to lay out details for the loan. Mr Nuraliyev said that the country needs support to see it through a “difficult economic period.”

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(News report from Issue No. 291, published on Aug. 1 2016)

Azerbaijan’s gas corridor to be funded

JULY 20 2016 (The Conway Bulletin) — Azerbaijan’s finance minister Samir Sharifov said that his country is in talks with several international financial institutions to raise funds to pay for the construction of the so-called Southern Gas Corridor, a network of pipelines that will pump gas from the Caspian Sea to Europe. Mr Sharifov told the FT that the World Bank, the European Bank for Reconstruction and Development and the Asian Development Bank are all considering supporting the project.

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(News report from Issue No. 290, published on July 22 2016)

Kyrgyz President signs CASA-1000 deals

JULY 19 2016 (The Conway Bulletin) — Kyrgyz President Almazbek Atambayev signed a range of laws that ratify domestic and international agreements on CASA-1000, an electricity transmission project that will send power from Tajikistan and Kyrgyzstan to Afghanistan and Pakistan. Loans from international lenders, including the World Bank and the Islamic Development Bank, will make up 70% of Kyrgyzstan’s total funding for the project.

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(News report from Issue No. 290, published on July 22 2016)

ADB sends loan to upgrade Azerbaijan’s electricity

JULY 15 2016 (The Conway Bulletin) — After lengthy negotiations, the Asian Development Bank (ADB) decided to loan $750m to Azerbaijan, to co-fund improvements to the country’s power distribution sector.

The aim is to connect peripheral regions outside Baku, which suffer from chronic system losses, to the main grid and reduce inefficiency and waste. But with electricity generation falling, Azerbaijan needs to put more attention and effort towards its upstream power sector, rather than the downstream.

It’s true that Azerbaijan is self- sufficient and produces all the electricity it consumes domestically, as the ADB also said.

The worry is rather on the shrinking margin of extra production allocated to exports.

In 2015 electricity exports halved compared to the previous year according to Azerbaijan’s customs agency. Azerbaijan exported 276.8m kWh of electricity in 2015 against 588.3m kWh in 2014.

And the problems continued this year.

In the first half of 2016, electricity generation at Azerlight, the country’s main producer, fell by 6%, compared to the same period last year, to 10.8b kWh. Consumption, on the other hand, continued to grow exponentially at annual rates of 5-9% since 2010.

For quite some time Azerbaijan has said it wants to export more electricity to its neighbours Turkey and Iran, a power export target that seems in vogue across the region currently.

Now this option seems to be falling off the priority list as the government has become increasingly worried that Azerbaijan could soon need external help to fulfil its domestic demand.

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(News report from Issue No. 289, published on July 15 2016)

Briefing: Tajikistan’s Rogun dam project

JULY 15 2016 (The Conway Bulletin) — >>Right. Let’s get started. The Rogun Dam. What is it and what is it all about?

>>For Tajikistan and President Rakhmon, the Rogun dam project is vitally important. If it is ever built, and the plans have been knocking around since the Soviet era, the Rogun dam will be the tallest dam in the world at up to 335 m. It will also double Tajikistan’s power generation capacity. The problem is that the dam has proved highly controversial, domestically and internationally, and is also expensive to build.

>>Hang on. Slow down. This is a lot take on. So, Rogun is massive but why is it controversial?

>>It’s controversial because human rights group have accused the government of forcibly moving thousands of people away from the Vakhsh River valley, the area that will be dammed and flooded. The government has also imposed a Rogun dam tax on people to pay for the project. This has gone down badly with human rights groups. Externally, Uzbekistan, Tajikistan’s neighbour, hates the idea of the Rogun dam. It worries that the dam will divert water from irrigating its cotton fields.

>>How serious are Uzbekistan’s concerns?

>>Central Asia is a fragile region. If Uzbekistan is making threatening noises
towards Tajikistan, people need to take notice. Analysts and diplomats have spoken of water wars in Central Asia. I’m not saying that the Rogun dam is going to trigger a war but it is another pressure point that people need to watch.

>>Got it. So with all these obstacles and problems why is Tajikistan pushing for problems?

>>It’s become Rakhmon’s pet project. He probably has another five or ten years left in office and it really feels like he wants and needs the Rogun dam to be his legacy. It’s also become vitally important for Tajikistan’s electricity generation sector. Electricity is becoming an important export commodity for Tajikistan as it has signed up to be the main power generator for the so-called CASA-1000 project.

>>CASA-1000? What is that?

>>It’s the World Bank-backed project to build a power transmission network from Tajikistan to Pakistan. It will cost around $1.2b, cross Afghanistan and be operational, if it all goes to plan, by 2019. The challenge is both security and power generation.CurrentlyTajikistan, and to a lesser extent Kyrgyzstan, doesn’t have the capacity to generate enough power to meet its CASA- 1000 commitments. That’s where Rogun comes in.

>>And the financing? This seems to be an expensive project just when the region is trying to deal with a financial crisis. Where is the finance coming from?

>>Good question. We’re not entirely clear. We’ve only been told that it is a mix of government funds and private investment. Who the private investors are and what their motives are is unknown.

>>I see. So what next?

>>Well, the Tajik government awarded a $3.9b contract to Italian builder Salini Impregilo to start construction work on the dam. We’re still waiting for work to begin but Salini Impregilo has said it will kick off soon. This has been a stop-start project so actually seeing the diggers go in and the workers start to build the dam is important. If this does happen, it’ll dominate news headlines for years to come.

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(News report from Issue No. 289, published on July 15 2016)

World Bank denies Uzbek forced-labour accusations

JULY 8 2016 (The Conway Bulletin) — The World Bank denied allegations that it was fuelling forced labour in Uzbekistan after local human rights campaigners complained about the indirect consequences of a loan from the World Bank’s financial arm to an Uzbek-Indonesian textile joint venture.

The complaint targets a $40m loan approved in December 2015 by the International Finance Corporation (IFC) to Indorama Kokand Textile (IKT), the Uzbek subsidiary of Indorama TBK, a Jakarta-based textile company.

The IFC said that it gave the loan to IKT because it has verified the company’s labour practices.

“[IKT] can trace its cotton supply to ensure it sources only from areas covered by third-party monitoring against child and forced labor,” IFC spokeswoman Elizabeth Price told Reuters.

IKT also refuted the allegations.

“Indorama Corporation has a strict policy of zero tolerance on use of any form of forced labor,” IKT spokesman Prakash Kejriwal said.

The claimants are three local human rights campaigners and one Uzbek alleged victim of forced labour. They said that this loan would reinforce the system of forced labour in the country.

“The IFC loan to IKT and support to commercial banks in Uzbekistan risks perpetuating the forced labor system,” the claimants said in their statement filed with the IFC.

The loan was issued to finance the expansion of the company’s textile plant in Kokand, east Uzbekistan.

The claim highlights the reputational problems of doing business in Uzbekistan for foreign countries. It will likely direct international attention to the issue of forced labour in the country’s cotton picking industry. Uzpahtasanoateksport, the state owned company responsible for the collection and the sale of cotton, is IKT’s sole supplier.

Since 2009, the United States has banned imports of Uzbek cotton and in 2013 it blocked a shipment of IKT cotton at the port of Los Angeles.

Indorama TBK owns 89.26% of IKT, while Uzbekistan’s Central Bank owns the rest.

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(News report from Issue No. 289, published on July 15 2016)

ADB agrees $750m loan to update Azeri power

JULY 12 2016 (The Conway Bulletin) — The Asian Development Bank (ADB) said it will lend $750m to Azerbaijan to co-fund improvements to the country’s outdated regional power distribution systems.

The project, worth around $1b, aims to refurbish the distribution network and the efficiency of Azerishiq (Azerlight), the state-owned power distribution company.

Azerbaijan’s government will invest the remaining $250m. The ADB said that it will send its $750m loan in three tranches of $250m.

“This ADB program will help address the bottleneck in electricity supply and provide round-the-clock and reliable electricity to households and entities in secondary cities and rural areas in Azerbaijan,” Sean O’Sullivan, director general in ADB’s Central Asia Department, said.

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(News report from Issue No. 289, published on July 15 2016)

EBRD loans $100m to Georgia’s telecom

JULY 14 2016 (The Conway Bulletin) — The EBRD said it had loaned $100m to MagtiCom, Georgia’s largest telecoms operator, to buy Caucasus Online, a Georgian internet service provider that also works in Armenia and Azerbaijan. MagtiCom, whose main shareholders are two American telecoms companies, has almost 2m subscribers.

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(News report from Issue No. 289, published on July 15 2016)

EBRD funds Georgia’s fertiliser maker

JULY 4 2016 (The Conway Bulletin) — The EBRD said it is about to unlock a $155m loan to Georgia’s fertiliser producer Rustavi Azot. The loan will be part of a $175m funding programme to modernise its production line and reduce the factory’s emissions. RustaviAzot, located 25km south of Tbilisi, employs around 2,000 workers and has an output capacity of up to 220,000 tonnes of ammonia per year. In March, the plant faced closure for failing to pay its gas bill.

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(News report from Issue No. 288, published on July 8 2016)