Business & Economy - The Times Of Central Asia

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Kazakhstan’s Home Credit Bank Stops Working with Russian VTB Bank

Kazakhstan's Home Credit Bank has stopped its cooperation with the Russian VTB Bank because of the risk of secondary sanctions, Home Credit has reported. “In connection with international sanctions imposed on JSC DO Bank VTB Kazakhstan (VTB Kazakhstan), JSC 'Home Credit Bank' has decided to cease cooperation with VTB Kazakhstan to exclude the risks of secondary sanctions. In this regard, any transfer operations in tenge and foreign currency on customers' accounts to/from VTB Kazakhstan will be stopped,” the bank's statement read. VTB remains the only Russian bank with a subsidiary structure in Kazakhstan. Earlier, Sberbank and Alfa Bank sold their subsidiary banks in the country. The US, EU, and UK are enforcing sanctions on VTB. As of July 1, 2024, VTB Kazakhstan ranked 18th in assets among the country's 21 banks. Home Credit Bank Kazakhstan was previously owned by Home Bank, but fully exited the asset at the end of 2022. Home Credit Bank CEO Kirill Bachvarov explained that this was necessary to restore the bank's rating, as the link to the Russian shareholder negatively affected its position. In July 2024, the U.S. Treasury tightened sanctions against Russia, adding to the list of companies whose work with Russia could lead to risks of secondary sanctions, including VTB Kazakhstan.

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Work Begins on Afghan Section of the TAPI Gas Pipeline

Turkmenistan and Afghanistan have now begun construction of the Afghan section of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) natural gas pipeline. To mark the launch of work on the pipeline’s Serhetabat-Herat section, Chairman of the Halk Maslahaty (People’s Council) of Turkmenistan, Gurbanguly Berdimuhamedov, and Mullah Mohammad Hassan Akhund, the Prime Minister of the Taliban-led Afghan government, attended a ceremony at a checkpoint on the Turkmen-Afghan border on September 11. The staged installation of the TAPI pipeline, already completed in Turkmenistan, will eventually transfer 33 billion cubic meters of Turkmen natural gas annually to Afghanistan, Pakistan, and India. At an estimated cost of $10 billion, the TAPI pipeline will span 1,814 kilometers. With 816 kilometers running through Afghanistan, the project will meet the country's gas needs, generating around $450 million in annual transit fees, before continuing on to Quetta and Multan in Pakistan and Fazilka in India. Gas-rich Turkmenistan currently exports natural gas to China and Russia but once completed, the TAPI project will enable the country to diversify its export routes and help realize far-reaching plans to transport its gas across the Caspian Sea to Azerbaijan, Turkey, and Europe. Mullah Mohammad Hassan Akhund stated that the commencement of work on the TAPI project on Afghan soil would strengthen relations between Afghanistan and Turkmenistan, whilst speaking from Ashgabat via videoconferencing, Turkmenistan President Serdar Berdimuhamedov, announced, "The commencement of the TAPI project [on the Afghan territory] and other projects is beneficial not only for Afghanistan but also for the countries in the region." In addition to TAPI, the ceremony opened a 177-meter-long railway bridge at the Turkmen-Afghan border on Serhetabat-Turgundi railroad, launched the construction of the Serhetabat-Herat (Afghanistan) fiber-optic communication line, a warehouse complex in the dry port of the Turgundi railway station at the Turkmen-Afghan border, and the Turgundi-Sanabar section of the Turgundi-Herat railway. The event also marked the commission of the Nur-el-Jahad power plant in Afghanistan's Herat province, as part of the first phase of the Turkmenistan-Afghanistan-Pakistan (TAP) power transmission line project.

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German Company to Assemble Airplanes in Almaty

The German company "Linding Group" is set to invest about $10 million in assembling airplanes in Almaty, pending necessary permits from the government. Based in the economic zone “PIT ‘Alatau", production will begin in 2026. During the first year, 20 airplanes will be assembled, rising to 50 units annually thereafter. Kazakhstan is already engaged in several joint projects with foreign enterprises in aircraft production. One such project involves the "Russian Helicopters" company. Within the framework of the agreement with Kazakhstan's aircraft repair plant No. 405, a large-unit assembly of Mi-8AMT and Mi-171E helicopters was launched in Almaty, predominantly serving the Ministry of Emergency Situations and the National Guard of Kazakhstan. A further example of international cooperation is the contract between the Ural Civil Aviation Plant and Kazakhstan Aviation Industry (KAI) to produce the Baikal multi-purpose airplane. When fully assembled by the end of this year, the airplanes will be delivered to markets in Europe and Africa. The realization of all of these projects will both strengthen Kazakhstan's aviation industry and increase its presence in international aviation markets.

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Russia to Join Central Asia’s Unified Energy System

Russian Energy Minister Sergey Tsivilev has announced that the Russian and Uzbek energy ministries have agreed to connect the Russian “System Operator” to Central Asia's Unified Energy System (UES). The connection itself is expected to happen soon. Uzbekistan's Minister for Energy, Zhurabek Mirzamakhmudov, has commented that this move will ensure the security and stability of the energy system in the region. These measures are expected to allow prompt response to problems in energy supply and avoid interruptions. In addition, Inter RAO has announced that it is preparing to export electricity to Uzbekistan, with the start of supplies scheduled for this fall. Central Asia's Unified Energy System was created in the 1970s. It is managed by the coordination and dispatch center in Tashkent, and allows the balancing of seasonal fluctuations in demand for electricity and water needs during the irrigation period. It currently includes Uzbekistan, Kyrgyzstan, Kazakhstan and Turkmenistan. In May it became official that Tajikistan would join the system.

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Kyrgyzstan Reports Price Increases for Consumer Goods

According to the National Statistical Committee of Kyrgyzstan, prices for meat, alcoholic beverages, and tobacco products have risen significantly. The largest price increases were observed in Bishkek and the Issyk-Kul region. “Prices for alcoholic beverages and tobacco products, food products, and tariffs for services rendered to the population have increased. At the same time, prices for food products and non-alcoholic beverages decreased,” Deputy Chairman of the Statistical Committee Baktybek Shokenov told a press conference in Bishkek. He said prices fell for fresh fruits and vegetables, cereals, raw milk, eggs, and vegetable oil in the first eight months of 2024. On the contrary, prices for meat, fish, potatoes, salt, rice, cottage cheese, flour of the highest grade, pasteurized milk, sugar, and butter increased significantly. Kyrgyz people have recently complained about a sharp rise in meat prices. Some reports say they have risen by 100 KGS ($1.2) per kilo in six months. The main reason for the sharp rise in meat prices is increased exports; because Kyrgyz meat prices abroad are higher than domestic prices, domestic prices are also rising. Most meat products are exported to neighboring Uzbekistan. Today, a kilogram of beef costs about 650-680 KGS ($8) in the bazaar, although half a year ago, it cost 550-600 KGS ($6-6.5).

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Kazakhstan Makes Strides in Agricultural Machinery Production

China’s Zoomlion Agriculture Machinery Co., Ltd., a leader in agricultural machinery production, is manufacturing tractors in Kazakhstan in cooperation with a local company, QazTehna. The plan is to produce up to 700 tractors per year at a plant in Saran in the Karaganda region, the Kazakh Ministry of Industry and Construction announced. Kazakhstan is one of the world's largest producers of grain crops, with a total sown area of more than 24 million hectares. The country needs sufficient agricultural machinery to ensure agricultural production in such a vast area. The renewal of outdated agricultural machinery remains a pressing challenge for Kazakhstan’s agro-industrial sector. According to the Ministry of Agriculture, there are 149,800 tractors in the country today, but the average wear of the machines is very high. According to the Ministry of Industry, the production capacity of Kazakhstan’s manufacturing plants fully meets the domestic demand for tractors and combines, with more than 80% of all tractors and combines purchased in Kazakhstan in recent years being domestic production. Kazakhstan has eight plants manufacturing more than ten brands and 120 models and modifications of tractors of different capacities, from 11 to 575 horsepower.