Tag Archives: Kazakhstan

Mongolia withdraws direct flights to Kazakhstan

MAY 19 2016 (The Conway Bulletin) — Kazakhstan’s flagship carrier Air Astana said Mongolia’s aviation authority had withdrawn permission to open a direct flight from Astana to Ulaanbaatar in June. The company said that the Mongolian aviation authority did not give a reason for unilaterally withdrawing permission to fly. A spat with the Russian aviation authority over the use of airspace had previously delayed the launch of the link. Officially, Air Astana denied that the two incidents were related.

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(News report from Issue No. 281, published on May 20 2016)

Kazakh Pension Fund loans cash

MAY 17 2016 (The Conway Bulletin) – Kazakhstan’s Central Bank said it had given 62b tenge ($186m) in loans from the state’s Pension Fund to around 30 commercial banks, in an effort to boost their liquidity. Kazakhstan’s Pension Fund, previously held at commercial banks, was nationalised between 2013 and 2014. It held up to $20b. Last month, the Central Bank opened a credit line from the Fund for commercial banks.

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(News report from Issue No. 281, published on May 20 2016)

Gelncore to sell futures in Kazakhstan

MAY 17 2016 (The Conway Bulletin) — Switzerland-based trader Glencore is considering selling gold futures, not its whole gold mining operation at Vasilkovskoye, a source close to the deal told the business website atameken.info. Glencore owns 70% of Kazzinc, the company that operates Vasilkovskoye which is located 300 km north-west of Astana. Reports had previously stated that Glencore was looking to sell its stake in the mine.

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(News report from Issue No. 281, published on May 20 2016)

Rakishev dismisses latest KazKom downgrade

ALMATY, MAY 18 2016 (The Conway Bulletin) — Kazkommertsbank, Kazakhstan’s largest lender, said it wants to buy back up to $500m in Eurobonds due this year, a bullish response to a recent double downgrade it received from international ratings agencies.

In a wide-ranging press conference, KazKom’s new chairman Kenes Rakishev said the bank has enough liquidity to pay for its debt, which will reach maturity later in 2016 and in early 2017.

“While our consultants advise us to buy back $300m, we are ready to buy back $500m,” Mr Rakishev told media and investors. “It’s a business decision as it is now cheaper to deal in the domestic market than it was when the bonds were issued.”

Mr Rakishev was appointed chairman of KazKom earlier this month after effectively completing a buyout of the country’s largest bank. He is the son-in-law of Kazakh defence minister, Imangali Tasmagambetov. He owns large stakes in several major

Kazakh companies and is often considered to be working on behalf of more senior members of the Kazakh elite.

Earlier in the week, the ratings agency Standard & Poor’s had cut KazKom’s debt rating to CCC+ because it said that via its merger with BTA Bank, the indebted bank that the government had owned, KazKom had inherited a swathe of bad debt in foreign currencies.

Some analysts have said that the KazKom/BTA merger and Mr Rakishev’s takeover were driven by politics and not business.

Mr Rakishev, though, brushed the downgrade aside and pointed out that other ratings agencies had already factored this into their calculations and issued earlier downgrades.

“I think we’ve passed the darkest zone and that we will move on to a completely new zone and concentrate on how to eliminate negative things that have occurred,” he said.

And Mr Rakishev also said that he wanted KazKom to shift its emphasis into the SME sector.

“We have an opportunity here to grow,” he said. “And not only in Almaty and Astana but also in the regions.”

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(News report from Issue No. 281, published on May 20 2016)

Business comment: Flying TSE – ULN

MAY 20 2016 (The Conway Bulletin) — The two coldest capital cities in the world will not be connected after all.

Air Astana postponed indefinitely the launch of a new link with Ulaanbaatar because of an ongoing spat between the Kazakh flagship carrier and the Mongolian civil aviation agency.

This can be easily dismissed as a hiccup in the business process, but there might be more to it.

Publicly, Air Astana said: “We had permission to start flights in March 2016. In April the CAAM [the Mongolian agency] unilaterally withdrew it without any valid grounds.”

Responding to a question from the Bulletin posted on Twitter, Air Astana said that the spat with Mongolia has nothing to do with the problems with Russia’s aviation agency, which left a Top Gear crew stranded in Moscow last year while a handful of flights were cancelled.

“It isn’t linked to Russia CAA,” the Air Astana tweet read.

But it’s hard to believe that the two incidents are not connected, since both happened in the same week and were cross-referenced by the Kazakh government when it addressed the issue. This might well be a case of international politics interfering with the business world in Central Asia.

But let’s take Air Astana’s version at face value. In this case, the spat with the Russian and Mongolian civil aviation agencies and the recent announcement that the launch of a connection to Tehran would be a triple setback for the company owned by the sovereign wealth fund Samruk- Kazyna (51%) and British BAE Systems (49%).

Maybe the bullish attitude of the previous months, boasting new routes and international agreements, is unjustified?

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(News report from Issue No. 281, published on May 20 2016)

Polymetal production grows from deposits in Kazakhstan and Armenia

MAY 18 2016 (The Conway Bulletin) — Russian miner Polymetal increased its production guidance for the next three years to reflect the gold deposits it has bought in Armenia and Kazakhstan this year. By the year 2020, the Kapan and Komarovskoye mines will add 12.5% to Polymetal’s total production. Polymetal bought Kapan, located in southern Armenia, in March and Komarovskoye, in north-east Kazakhstan, in April.

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(News report from Issue No. 281, published on May 20 2016)

Kazakhstan to control NGO funds

MAY 18 2016 (The Conway Bulletin) – Kazakhstan’s ministry of culture established an agency that will manage grant funding for NGOs, a decision in line with the new NGO law that President Nursultan Nazarbayev signed in December 2015. Human rights and NGO lobby groups have said that this law and this agency will restrict their ability to receive funding and undermine their work.

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(News report from Issue No. 281, published on May 20 2016)

Lubricant plant opens in Kazakhstan

MAY 19 2016 (The Conway Bulletin) — Russian energy company Lukoil said it had started construction work on a new lubricant manufacturing plant in Kazakhstan. Lubricants Central Asia, Lukoil’s subsidiary which will operate the plant, plans to open the plant in 2018. Kazakhstan and China will be the main markets for the plant, which will have a capacity of 100,000 tonnes/year. Kazakhstan wants to develop industries beyond oil and gas production and mining.

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(News report from Issue No. 281, published on May 20 2016)

Kazakh police arrest activists

ALMATY, MAY 20 2016 (The Conway Bulletin) — Kazakhstan’s police detained several activists ahead of a planned demonstration against reforms to the land code in an attempt to stifle opposition forces which have been attracting support in the country’s main centres.

Police detained various activists on May 17 and 18, when courts in Atyrau, Almaty, Uralsk and Astana ordered the arrest of several people on charges of participating or planning unsanctioned public meetings.

Courts ordered pre-trial detention sentences for three to 15 days.

Max Bokayev, an activist from Atyrau, and Bakhytzhan Toregozhina, director of human rights NGO Ar.Rukh.Khak. in Almaty were among the most prominent figures to be detained.

Amendments to the land code, approved in November 2015, have been at the heart of protests that sparked in Atyrau in mid-April and spread throughout Kazakhstan over the weeks that followed.

The protests have now taken on a more general anti-government agenda.

People in Kazakhstan are increasingly frustrated with the drop in economic conditions. Jobs are being cut, inflation is rising.

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(News report from Issue No. 281, published on May 20 2016)

Business comment: Corporate Governance in Central Asia

MAY 13 2016 (The Conway Bulletin) – These are tough times for corporate governance and the general business climate in Central Asia.

In rapid succession, news of a raid at a gold company in Kyrgyzstan, the seizure of a Kazakh refinery in Romania, an allegedly fraudulent scheme to fake sales of Uzbek cars and the freezing of a murky hotel sale linked to two exiled Kazakhs in New York came to our readers’ attention over the past two weeks.

Since the raid at its subsidiary’s office in Bishkek, Centerra Gold has reiterated its readiness to cooperate with the authorities and the government to negotiate a solution. We think the raid was a way for the government to flex its muscles.

A bizarre scheme to fake car sales from Uzbekistan to Russia was unearthed this month, perhaps reminding us of how two plus two is not always equal to four in Central Asia. Undoubtedly, the current economic crisis has sparked more corruption.

The seizure of KMG Romanian refinery allows us to look back into the murky deal that first brought Kazakh state-owned business into Romania. Authorities didn’t seem impressed with acrobatic financial manoeuvres performed by former managers at Rompetrol. They’re now seeking damages and a court sentence might negatively affect China’s CEFC, which just bought into the venture.

Lastly, it’s not a surprise that a US court froze the sale of a hotel owned by Mukhtar Ablyazov and Viktor Khrapunov, two Kazakh businessmen and arch-rivals of President Nursultan Nazarbayev. They seemed to be needing some cash but their involvement in court cases in Kazakhstan, the US and Europe turns their transactions into red flags.

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(News report from Issue No. 280, published on May 13 2016)