Tag Archives: Kyrgyzstan

Kyrgyz gov to sue Centerra

FEB. 3 2016 (The Conway Bulletin) — Kyrgyz PM Temir Sariyev said the government is considering suing Centerra Gold over its plans to issue a fresh batch of shares. According to Mr Sariyev, state owned company Kyrgyzaltyn, which owns a 32.7% stake in Centerra, has signed a contract with a law firm to prepare a case. In 2015, Centerra decided to issue new shares. The Kyrgyz government has complained this would dilute its share.

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(News report from Issue No. 266, published on Feb. 5 2016)

Kyrgyz business blames EEU for poor outlook

FEB. 5 2016, BISHKEK (The Conway Bulletin) — Frustrated Kyrgyz businessmen and company owners are blaming a worsening economy on joining the Russia-led Eurasian Economic Union (EEU) last year.

The criticism of the EEU, whether it is accurate or not, is a major problem for Kyrgyzstan’s leadership which dragged the country into the trade bloc despite deep-rooted unease from ordinary Kyrgyz. Also in the EEU are Russia, Kazakhstan, Belarus and Armenia.

In Bishkek, Azamat, who was selling cars, said Kyrgyzstan had aligned itself with the wrong countries.

“While we are in the Customs Union we will have nothing to develop,” he said.

The Customs Union is the old name for the EEU, which analysts have said was dreamt up by the Kremlin to extend its political control.

Western sanctions and a collapse in oil prices have tipped Russia’s economy into a recession. It has cancelled overseas projects, including a hydropower plant in Kyrgyzstan, and remittance flows from Kyrgyz workers in Moscow have fallen by around 40%. Inflation is rising in Kyrgyzstan and economic growth rates are being cut – a familiar story across the region.

Emil Umetaliev, a former Kyrgyz economy minister who now owns a travel company, told The Conway Bulletin that the EEU has been a major hindrance to small and medium sized companies, rather than the help that had been promised.

“The Eurasian economic union tends to organise countries’ interdependence on resources,” he said. “It does not encourage small and medium enterprises to develop and does not have a friendly investment climate.”

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(News report from Issue No. 266, published on Feb. 5 2016)

Kyrgyz CBank should cut spending, says IMF

FEB. 4 2016 (The Conway Bulletin) – Kyrgyzstan’s Central Bank needs to slow its interventions in the currency market in order to avoid depleting its reserves, the IMF said at the end of a mission to Bishkek. The IMF had been on a fact-finding mission ahead of a meeting in April when Kyrgyzstan hopes to extend its borrowing. Its Central Bank has been buying som heavily to support its value.

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(News report from Issue No. 266, published on Feb. 5 2016)

Chaarat finds gold in Kyrgyzstan

FEB. 3 2016 (The Conway Bulletin) — British Virgin Island-registered Chaarat Gold completed a feasibility study for a gold mine it is exploring in north-west Kyrgyzstan. The mine is Chaarat’s only asset. Dekel Golan, Chaarat’s CEO, said in an interview that the study revealed low production costs (around $650/troy ounce, including the government tax), which means the company will go ahead with the project.

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(News report from Issue No. 266, published on Feb. 5 2016)

Critics say the Kyrgyz-Russian Fund is failing

BISHKEK, JAN. 26 2016 (The Conway Bulletin) — Businesses, company owners and lobby groups in Kyrgyzstan have criticised the Kyrgyz- Russian Investment Fund, launched with great fanfare in 2014 ahead of Kyrgyzstan’s entry into the Kremlin- led Eurasian Economic Union, as ineffective.

The criticism will sting as it comes after Russia withdrew support for a $2b hydropower project in Kyrgyzstan. It also underlines the Kremlin’s waning influence in Central Asia.

“The Kyrgyz-Russian Investment Fund does not have enough resources to keep the economy stable, as it cannot substitute a drop in remittances which used to come from Kyrgyz labour migrants in Russia and

revenues from re-exporting Chinese goods through Kyrgyzstan,” Uluk Kydyrbayev, head of the National Alliance of Business Associations lobby group, told The Bulletin.

An anti-crisis plan presented by the government on Jan. 26, which placed the Fund at its core, triggered an outpouring of frustration by businesses.

The Kyrgyz-Russian Investment Fund measures around $500m and was supposed to act as source of cheap credit for Kygyz businesses. At least some of this cash, though, has been used to bail-out mortgage holders who have seen their debts spiral with the devaluation of the som against the US dollar.

Like the rest of the region Kyrgyzstan is trying to navigate its way through a worsening economic crisis. One of the consequences is a fall in remittances from Russia.

Tilek Toktogaziyev, head of an organic food company, said that the Kyrgyz-Russian Fund had been a failure and had favoured big business over small business.

“The credits are only given to big companies who have break-even activities in past three years and have been present in the market for a long time,” he said.

He said the lowest credit the Fund gives is $3m. To win this loan, the company owner also has to make a contribution of 20%.

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(News report from Issue No. 265, published on Jan. 29 2016)

EU sends 15m euro to Kyrgyzstan

JAN. 26 2016 (The Conway Bulletin) – The European Union said it had released the second tranche of a 30m euro loan and grant to Kyrgyzstan designed to support and promote stability and democracy. Of the final 15m euro payment, 5m euro was a grant and 10m euro was a loan. The EU said the payment was “to support the restoration of a sustainable external financial situation for the Kyrgyz Republic.”

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(News report from Issue No. 265, published on Jan. 29 2016)

Mine worker dies in Kyrgyzstan

JAN. 25 2016 (The Conway Bulletin) – A man working at the Centerra Gold-owned Kumtor gold mine in Kyrgyzstan died in an accident. Neither Centerra Gold nor the Kyrgyz government, which owns a stake in the company, have commented on the accident. The Kumtor gold mine is the single biggest economic asset in Kyrgyzstan and is the focus of an ownership row.

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(News report from Issue No. 265, published on Jan. 29 2016)

Kyrgyz hydropower station operates at full

JAN. 24 2016 (The Conway Bulletin) – Kyrgyz President Almazbek Atambayev told parliament that the Toktogul hydropower station was now operating at full capacity after an outage just before Christmas knocked out a couple of the power generating units , media reported. Toktogul is Kyrgyzstan’s biggest hydropower station and its breakdown forced Kyrgyzstan to buy electricity from neighbouring Kazakhstan.

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(News report from Issue No. 265, published on Jan. 29 2016)

Kyrgyzstan’s tax police raids Chinese refinery

JAN. 20 2016, BISHKEK (The Conway Bulletin) — Kyrgyz police raided the China-run Junda oil refinery in the north of the country and accused it of evading 54.5m som ($716,000) in taxes, charges that will strain Kyrgyzstan-China relations.

During the raid, police detained the company’s deputy director Lin Yu-shan and placed its accountant, Lyudmila Marchenko, under house arrest.

Baktybek Ashirov, head of the Kyrgyz state service for combating economic crimes, told Parliament that the Junda refinery had paid 30m som ($400,000) in taxes but that was far below what it should have paid.

“The inspections showed that they should have paid twice as much, that is, there was hiding of information and an underestimation of production,” he was quoted as saying by local media.

Junda hasn’t commented.

For foreign investors in Kyrgyzstan, the charges are a worry. They have previously complained that local elite and the authorities have colluded to pressure various businesses into paying more tax, fines or giving up equity stakes in projects.

And the Junda refinery, built by the China Petrol Company for $430m, has seemingly had to deal with a large dose of misfortune since opening in January 2014.

First, protests by locals complaining of poor air quality forced it to stop production, then crude oil supplies dropped so low that it had to limit output.

The authorities said that despite the raid and the arrests, the Junda oil refinery, one of two in Kyrgyzstan, was operating as normal.

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(News report from Issue No. 264, published on Jan. 22 2016)

Russia quits Kyrgyz hydropower project

JAN. 20 2016, BISHKEK (The Conway Bulletin) — Kyrgyzstan started the hunt for a new investor for its $2b Kambar-Ata-1 hydropower project, which was supposed to transform the country into a major electricity exporter, after MPs officially voted to cancel a deal with Russia.

At the end of last month, Kyrgyz President Almazbek Atambayev said that Russia simply didn’t have enough money to finance the project any more. MPs said that they had little choice but to cancel the deal with Russia so that a search for a new investor could begin in earnest.

Dastan Bekeshev, considered a liberal progressive MP, told a Conway Bulletin correspondent that it would be hard to find a new investor at the moment.

“Kyrgyzstan will seek investors, but I am sceptical to this idea because this is an issue of geopolitics and not simply investment from foreign countries,” he said.

The cancellation of the Kambar- Ata-1 project, signed between Kyrgyzstan and Russia in 2008, is a major blow to Kyrgyzstan and one of the biggest casualties of the deepening economic malaise. And, as Mr Bekeshev said, in the current economic climate, it may be difficult for Kyrgyzstan to attract another investor.

China, the most obvious substi- tute, is trying to deal with its own economic slowdown.

Russia’s withdrawal from the Kambar-Ata-1 hydropower project also shows that Russian influence in Central Asia is waning as its economic power dips.

On the streets of Bishkek, opinion was divided on the impact of Russia’s withdrawal from the project.

Aliaskar, 23, said that Russia had promised and failed to build many infrastructure projects in Kyrgyzstan.

“They said they would build gas pipelines and improve infrastructure under the Eurasian economic union, but all these things would be implemented in 50 years from now,” he said.

But Alisher, 24, said the scuppered hydropower project deal wouldn’t damage relations between Kyrgyzstan and Russia. “There are other spheres in the Kyrgyz economy where Russia has positively contributed like importing Russian gas, forgiving debt, providing security in the region and other pillars,” he said.

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(News report from Issue No. 264, published on Jan. 22 2016)