Tag Archives: Kazakhstan

EBRD loans Kazakhstan €200m to develop renewables

ALMATY, DEC. 16 2016 (The Conway Bulletin) — The European Bank for Reconstruction and Development (EBRD) pledged to give Kazakh businessmen 200m euros to improve the country’s renewable energy sector.

For the EBRD the motivation is to boost Kazakhstan’s green energy production. Solar and wind generate only around 1% of Kazakhstan’s power at the moment. Hydro produces around 13% of its power and the rest is generated by smoke belching coal-powered stations.

“Once all the projects come on- stream, annual CO2 emissions are expected to reduce by about 600,000 tonnes, which would help the country to achieve its commitments to cut emissions under the Paris climate agreement,” the EBRD said in a statement.

The 2015 Paris Agreement was a global deal to cut carbon emissions.

Kazakhstan may once have turned its nose up at taking EBRD cash to produce green energy. Now, though, it is happy to go along with the concept. It is struggling to see off a steep economic downturn that has hit its revenues. Oil and gas are its major exports but prices have halved.

And, alongside a fall in revenues, Kazakhstan also needs to boost power. Its population has swelled and grown richer, demanding more power.

It still needs to replace a nuclear power station that was decommissioned in the 1990s. Plans to build a replacement have been scrapped for the time being and a thermal power plant that was being built on the shores of Lake Balkhash with South Korea has also been ditched this year because it was too expensive.

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(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.

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

Kazakh presenter resigns after fake news

DEC. 20 2016 (The Conway Bulletin) — Ruslan Smykov, a presenter with the Kazakh TV news channel First Channel Eurasia, resigned after he broadcast a fake news interview with a Russian TV host. It’s unclear why Mr Smykov broadcast the fake interview but the incident does highlight the weak editorial control in the Kazakh media.

ENDS

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

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)

Kazakh President unveils new monument

DEC. 16 2016 (The Conway Bulletin) — Kazakh president Nursultan Nazarbayev unveiled a new monument in Astana to mark the 25th anniversary of independence from the Soviet Union. He ignored the fifth anniversary of the shooting dead of at least 15 people by police during riots in the western city of Zhanaozen.

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

Kazakhstan to host Syria peace talks

DEC. 16 2016 (The Conway Bulletin) — Kazakhstan is being considered as a neutral territory to hold peace talks between Syrian rebels and pro-government forces, Turkish Foreign Minister Mevlut Cavusoglu said. Kazakh president Nursultan Nazarbayev wants Kazakhstan to play the role of global peace- maker and has previously said that Syrian peace talks could be held in Astana or Almaty. Kazakhstan has previously held two rounds of Syrian peace talks.

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(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

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

Chinese win LNG contract in Kazakhstan

DEC. 20 2016 (The Conway Bulletin) — Wison Engineering, a Chinese construction company that specialises in the oil and chemical sectors, said it had been awarded a contract to build a liquefied natural gas (LNG) facility in the Zhambyl region of southern Kazakhstan by Astana Trans Oil, a Kazakh state- linked company. Wison said the deal was part of China’s Belt and Road economic policy to develop trade and transport links through Central Asia. It said the plant would be operational by 2018 but gave no financial details.

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

Iranian president Rouhani tours Kazakhstan, building support for Iran’s trade routes

ALMATY, DEC. 21/22 2016 (The Conway Bulletin) — Iranian Leader Hassan Rouhani toured Kazakhstan, Kyrgyzstan and Armenia, a tour that underlines Iran’s ambitions in the region.

Western sanctions on Iran were eased this year, triggering a wave of enthusiasm of a potential return of Western business but, aside from a handful of high-profile deals, this has failed to materialise. Analysts have said that, instead, Iran and Mr Rouhani have turned their focus on Central Asia where they have built up strong business and economic ties over the past few years.

This was highlighted in a statement released by Mr Rouhani’s press team before he left Tehran. He said that Armenia, Kazakhstan and Kyrgyzstan formed a vital part of Iran’s trade corridors.

“We will gain access to Europe and the Black Sea through Armenia, and to the northern and eastern countries through Kazakhstan,” he said.

“Also, China is seeking to connect its railway to Tajikistan, Afghanistan and the Islamic Republic of Iran through Kyrgyzstan”.

And positive bilateral relations were on show throughout Mr Rouhani’s trip. Speaking after his meeting in Astana with Mr Rouhani, Kazakh president Nursultan Nazarbayev said: “An agreement was reached to strengthen the political influence of the two countries within the framework of international organizations such as the UN, the Organization of Islamic Cooperation, SCO.”

The issue of the UN is particularly important as Kazakhstan is starting two years as one of the non-permanent Security Council members.

Prior to landing in Kazakhstan, Mr Rouhani had visited Armenia. It has developed ties based on swapping its gas for Armenia’s electricity.

From Kazakhstan, Mr Rouhani travelled to Bishkek where he received public support from president Almazbek Atambayev for Iranian membership of the Russia and China led Shanghai Cooperation Organisation (SCO). Iran applied to join the group in 2008 but Western sanctions slowed its application. Now those sanctions have been lifted, Iranian membership has been talked of again.

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

Kazakh energy company confirms deal with China’s CEFC to sell refinery

ALMATY, DEC. 15 2016 (The Conway Bulletin) — Shrugging off a Romanian investigation into the privatisation in 2003 of its main refinery asset, KMG International, the Black Sea orientated subsidiary of Kazakhstan’s state-owned energy producer Kazmunaigas, reaffirmed its commitment to sell a 51% stake in the company for $680m to China’s CEFC.

If the deal, first put together in May, does go ahead it will be a relief to the Kazakh government which has been trying to raise much needed cash to see it through a steep economic downturn linked to a sharp drop in oil prices.

For China, the 51% stake in KMG International would give it control over the Petromida refinery on Romania’s Black Sea coast near Constanta, which has a refining capacity of 5m tonnes of oil a year. The company also controls hundreds of petrol stations across Romania, Bulgaria, Moldova and Georgia through the Rompetrol brand.

KMG International’s CEO, Zhanat Tussupbekov, said the financial backing of CEFC would allow the company to expand.

“The strategy of KMG International with its new major shareholder aims at developing major projects, Romania being the business priority,” he said.

“We plan to increase the refining capacity to 10m tonnes of crude per year, to build up to 200 new fuelling points, to develop industrial services in upstream and downstream areas, as well as to build a co-generation plant on Petromidia platform.”

Importantly, though, the deal still needs regulatory approval from the EU, Romania and China.

The original deal for the sale had stalled because of a Romanian investigation into the purchase of Rompetrol, which owned the Petromida refinery, by Dinu Patriciu in 2003 for $760m. He sold the refinery four years later for $1.6 to Kazmunaigas. Patriciu died in 2014. The investigation into the deal doesn’t appear to be concluded.

Kazmunaigas International owns 55% of the company that owns the Petromida refinery. The Romanian government owns the other 45% of Petromida.

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