Tag Archives: Uzbekistan

Briefing: Region’s economies sputter into life

JULY 22 2016 (The Conway Bulletin) — >>Malaise, downturn recession. What exactly going on in Central Asia and the South Caucasus?

>>All countries in the region are either growing slower than last year or, in some cases, their economies are even shrinking. The crisis is regional, although each country has shown its own specific problems.

>>This is the region-wide problem. I can see but what caused it?

>>The US dollar strengthened so much in 2014 that it triggered a sharp drop in oil and commodity prices. This pulled dollars away from Emerging Markets, like our own patch. As commodity prices sank, Russia fell into a crisis that quickly turned into a recession. The depreciation of the rouble cut the value of salaries earned by migrant workers, triggering a slowdown in remittances to Central Asia and the South Caucasus.

>>Okay, but oil prices picked up again since the 13- year low point in January. Isn’t that good for energy exporters in Central Asia and the South Caucasus?

>>Higher oil prices have helped state-owned oil companies to relax their emergency mode, but they’re still too low to justify the region’s most expensive projects. Think of the Kashagan oil project in Kazakhstan’s sector of the Caspian Sea, or the upgrade of Azeri Chirag-Guneshli oil project in Azerbaijan. Plus there are negative signs for transparency over the re-organisation of government companies and structures in the energy sector in Kazakhstan and Turkmenistan.

>>And what about the other commodities, such as gold and aluminium?

>>Gold is a big component of Kyrgyzstan’s GDP as it depends on the performance of the Kumtor gold mine in the east of the country. This year, operational problems and corporate battles have slowed production, which has significantly hit Kyrgyzstan’s growth figures. It now could slip into a recession. Tajikistan, on the other hand posted a promising 6.6% GDP growth in the first half of 2016 and state-owned smelter TALCO increased aluminium production. But these numbers should be read with caution. TALCO also said that it is currently operating at a loss, as its production costs are 25% higher than market prices.

>>Right, so is it all bad?

>>Not necessarily. Dollarisation, as Georgia’s Central Banker said this week, is still a problem across the region and the currencies continue to be weak. But despite some devaluations and depreciations, most of them have kept steady in 2016, which is a sign that governments want to keep their economies stable and will spend their reserves to prop them up.

>>And for companies looking to do business in the region, how bad is it?

>>If in 2015 we saw scores of international companies running away from projects in Central Asia and the South Caucasus, this year we’ve seen promising developments, such as the final investment decision for the expansion of the Tengiz oil- field in Kazakhstan and the signing of the contract for the construction of the Rogun dam in Tajikistan, both multibillion-dollar commitments. French hypermarket Auchan has also opened up its long-awaited store in Dushanbe. Perhaps confidence is returning or at least a sense of “let’s just get on with it”.

ENDS

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

Tajikistan and Uzbekistan downgrade flights to Pakistan

JULY 19 2016 (The Conway Bulletin) — Both state-owned Uzbekistan Airways and Tajikistan’s Somon Air have downgraded their links to Lahore, in eastern Pakistan, citing security concerns and dwindling consumer interest.

ENDS

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

Kazakhstan’s mobile operator posts Q2 revenues 15% down from 2015

ALMATY, JULY 20 2016 (The Conway Bulletin) — Kcell, Kazakhstan’s largest mobile operator, said Q2 revenues were 15.3% lower than last year because of weak economic conditions and aggressive competition which have driven down prices.

Kcell’s Q2 revenues of 36.4b tenge ($107.7m) represented a slight improvement over the previous quarter, when it posted 35.6b tenge ($107), its worst quarter since an IPO in 2012. Importantly, however, Kcell said that its subscriber base is holding up through an economic downturn.

“In the second quarter we started to see some stabilisation in market prices and subscriber numbers,” the company’s CEO Arti Ots said in a statement.

Increased competition and the depreciation of the tenge currency against the US dollar over the past year have knocked revenues for mobile operators in Kazakhstan.

In April 2016, revenues for all mobile companies in Kazakhstan were down by 21% to 68b tenge ($204m) compared to the same period last year, according to government data.

Sweden’s Telia Company owns a 62% stake in Kcell. It has said that it wants to sell this stake because of reputational damage caused by a corruption probe into bribes it paid to enter the Uzbek market.

ENDS

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

Uzbek PM warns Tajikistan on dangers of Rogun

JULY 19 2016 (The Conway Bulletin) — Uzbek PM Shavkat Mirziyoyev complained to his Tajik counterpart over the signing of a $3.9b contract with Italy’s Salini Impregilo to build the Rogun dam and hydropower station on the Vakhsh river.

Uzbekistan has always opposed the project, which it has said will reduce essential water flow from the Pamir mountains to the Amu Darya river which irrigates Uzbek cotton fields.

For Tajikistan, Rogun carries symbolic value, it will be the world’s tallest dam, and is also economically important.

Mr Mirziyoyev said Tajikistan’s stance will trigger a reaction.

“The persistence with which the Government of Tajikistan seeks at all costs to continue construction of the Rogun hydroelectric power station, cannot but cause anxiety for the possible dangerous and irreparable consequences of such risky steps taken by the Tajik side,” he wrote.

ENDS

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

China to invest in Uzbekistan’s food processing

JULY 19 2016 (The Conway Bulletin) — China’s Xinjiang Silu Changlong Investment said it will partner with Uzbekistan’s ministry of economy to establish a $28.7m food processing, packaging and logistics centre in Bukhara, in the south of the country.

ENDS

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

IS threat worsens in Tajikistan, Uzbekistan, Kyrgyzstan

JULY 15 2016 (The Conway Bulletin) — Russian defence minister Sergei Shiogu said that if countries in Central Asia and the South Caucasus ever sink into Syria-like civil war scenarios, Russia will use its military to intervene. Russia has carried out airstrikes in Syria against the IS extremist group. According to official sources, the number of South Caucasus and Central Asian citizens fighting for IS in Syria is rising.

ENDS

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

Uzbekistan’s GDP grows by 7.8%

JULY 19 2016 (The Conway Bulletin) — Uzbekistan’s Statistics Committee said that the country’s GDP grew by 7.8% in H1 2016, compared to the same period last year. Growth was slightly slower than in the first half of 2015, when GDP grew by 8.1%. Official statistics in Uzbekistan come with a health warning as they are often manipulated by the government.

ENDS

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

Uzbekistan to double fruit and vegetable production

JULY 12 2016 (The Conway Bulletin) — Uzbek PM Shavkat Mirziyoyev said that Uzbekistan aims to double production of fruits and vegetables by the end of 2020. Mr Mirziyoyev said that the country currently produces around 16m tonnes of produce and the government aims to boost output to at least 32m tonnes in the next three years. A word of caution, however. Statistics in Uzbekistan can be easily manipulated for political reasons.

ENDS

(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.

ENDS

(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.

ENDS

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