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ASTANA (TCA) — Five Kazakh men have been imprisoned over a bus fire that killed 52 Uzbek citizens in Kazakhstan in January, RFE/RL’s Kazakh Service reported.
ASTANA (TCA) — The government of Kazakhstan is planning to privatize state-owned stakes in a number of major companies, including the national uranium company. We are republishing this article on the issue, written by George Voloshin:
Kazakhstan’s national uranium company Kazatomprom said, on October 15, that it was ready to go public by selling a portion of its issued shares on the London Stock Exchange and on the trading platform of the Astana International Financial Center (AIFC). The AIFC was officially launched without much fanfare in January 2018. It was later inaugurated by Kazakhstani President Nursultan Nazarbayev on the eve of his birthday and the 20th anniversary of the founding of his country’s current capital, Astana, both of which fall on July 6. The Astana International Exchange has a few registered members but no shares are currently traded, with all trading in equity and bonds taking place on the Almaty-based Kazakhstan Stock Exchange, instead. In 2015, Nazarbayev signed into law a special piece of legislation granting AIFC residents long-term tax breaks, hassle-free work permits and other perks. The brand-new financial center has a court of arbitration and a court of appeal, each staffed with Western-born judges and using English common law in what is the first extraterritorial application of foreign laws in Kazakhstan (Kursiv.kz, October 15; Mir24.tv, July 5; Sputniknews.kz, January 1).
If Kazatomprom becomes a public company, it will be only the second major uranium miner in the world, after Canada’s Cameco, to obtain such a status. Kazakhstan’s sovereign wealth fund Samruk Kazyna, whose assets account for about 60 percent of national GDP, intends to dispose of up to a quarter of all shares outstanding (issued shares minus those held in treasury). Regardless of how many shares are eventually subscribed, it will remain the majority shareholder and will continue to exert effective control over company operations. According to further announcements made on October 31, Kazatomprom’s management values the whole company at between $3 billion and $4 billion. Initially, it plans to sell not more than 15 percent of the shares offered under the IPO to outside investors, including at least one fifth within the AIFC. The trading of global depository receipts (GDR) in London should commence on November 13, to be followed by the start of trading in GDRs and common stock in Kazakhstan several days later (Kazatomprom.kz, Informburo.kz, October 31; Kapital.kz, October 24).
The global uranium sector is a highly concentrated industry, and Kazatomprom just happens to be the world’s largest producer of uranium, a strategic metal used for both civilian and military purposes. Last year, its output from wholly and jointly owned enterprises reached 12,100 tons, equivalent to 20 percent of the world total. Unlike most other producers that rely on good relations with foreign governments for continued access to their reserves, Kazatomprom has its entire resource base of approximately 300,000 tons located in Kazakhstan alone. In 2017, it had total sales of $907 million, down from $1.1 billion the year before, although its net profit rose year-on-year from approximately $300.8 million to some $375.2 million. Kazatomprom CEO Galymzhan Pirmatov confirmed in mid-October that his firm would pursue a transition from volume-based to value-based, market-driven production as a way of enhancing shareholder value. In December 2017, the company made public its decision to slash output by a fifth over a three-year period amid global uranium glut weighing heavily on profitability (Kazatomprom.kz, October 31, 2018; Total.kz, October 15, 2018; abctv.kz, December 21, 2017).
The partial privatization of Kazatomprom is part and parcel of a major state asset sale program that started taking shape during 2015. The Kazakhstani government had previously unsuccessfully tried to attract ordinary citizens into public markets through the so-called People’s IPO initiative (see EDM, March 3, 2011). The state-owned oil transportation company KazTransOil, a subsidiary of the national oil and gas operator KazMunayGas, became the first participant in late 2012 by selling a 10 percent stake. However, the People’s IPO had been definitively terminated by 2016 because of limited popularity with retail investors and steady losses incurred by the courageous few. In early 2018, National Economy Minister Timur Suleimenov reiterated plans to sell government-owned stakes in both Kazatomprom and the national air carrier, Air Astana, by 2019. No updates have been available of late, though, with regard to either Air Astana or other flagship companies slated for partial privatization, such as Samruk Energy, Kazakh Railways or Kazakhtelecom (Abctv.kz, July 5, 2018; Zakon.kz, March 26, 2018; Forbes Kazakhstan, November 15, 2015).
To most market watchers, the overdue privatization saga is a purely economic matter reflecting the Kazakhstani authorities’ desire to lessen the financial burden of clunky industrial giants while replenishing state coffers with overseas investors’ money. Besides the usual number crunching and fine-tuning of estimates of expected returns, foreign buyers are obviously attentive to domestic political developments. Recent reports of Royal Dutch Shell’s refusal to acquire a minority stake in KazMunayGas ahead of its own IPO currently scheduled for 2020—based on an analysis of the presidential son-in-law’s informal influence over the company—were a cold shower for the Nazarbayev administration. Another factor to take into account, however, is neighboring Russia, which has its own powerful uranium industry.
Historically, Russia has sought to prevent Kazakhstan from reaching beyond the mere extraction of uranium from the ground. A Kazatomprom operating under the constant scrutiny of markets would likely want to attain a higher valuation through diversification. It is unclear how favorably Rosatom will view such a strategy and to what lengths it may go to crush it in the initial stages (Regnum, October 9).
This article was originally published by The Jamestown Foundation’s Eurasia Daily Monitor
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ASHGABAT (TCA) — The Asian Development Bank’s (ADB) Board of Directors has approved a $500 million loan to reinforce Turkmenistan’s transmission network, improve the reliability of the country’s power supply, and increase electricity exports to neighboring countries, the Bank said on November 8.
The National Power Grid Strengthening Project, which is the first project by any international financial institution in the power sector in Turkmenistan, will cover four of the country’s five regions and help establish an interconnected national transmission grid to improve reliability and energy efficiency of the network. It will also boost Turkmenistan’s capacity to trade electricity with Kazakhstan, the Kyrgyz Republic, Pakistan, Tajikistan, and Uzbekistan, and increase the volume of current electricity exports to Afghanistan.
“Turkmenistan has significant potential for increased electricity exports to neighboring countries, which can help propel its economic growth and development prospects,” said ADB Director of the Central and West Asia Department Mr. Ashok Bhargava. “Hydrocarbon rich Turkmenistan is crucial to address the region’s energy security and alleviate energy poverty in countries like Afghanistan where millions are still without access to electricity.”
Turkmenistan, the least populated country in Central Asia with about 5.7 million people, is one of the most energy rich countries in the world, particularly on fossil fuels. Turkmenistan is the 12th largest natural gas producer in the world and the 10th biggest oil producer in Asia and the Pacific. In terms of natural gas reserves, the country is ranked fourth globally after the Russian Federation, Iran, and Qatar. The government’s plan is to achieve strong and sustainable economic growth on the basis of efficient integration of the country in the world economy, with maximum diversification of its export potential. To meet its strategic objectives, it is essential that a robust, reliable, and efficient power transmission network is in place.
ADB’s $500 million assistance will finance the construction of about 1,100 kilometers (km) of new 110 kilovolt (kV), 220 kV, and 500 kV transmission lines in various areas in Turkmenistan and expand three existing substations. The project will also finance the construction of new substations, including 500 kV substations in Balkan and Dashoguz, as well as 220 kV substations in Ahal, Balkan, and Dashoguz.
“ADB’s assistance will ensure that the country has a strong backbone of power transmission infrastructure as well as technical knowledge and practices consistent with international best practices to support this expansion of electricity exports,” said ADB Principal Energy Specialist for Central and West Asia Mr. Sohail Hasnie. “A modern and strengthened network is the necessary first step for Turkmenistan to become a power house for Central Asia.”
The National Power Grid Strengthening Project will also improve project and financial management capacity of Turkmenenergo, the power utility of Turkmenistan, particularly in incorporating good practices on evaluation, investment decision-making, as well as higher safeguard requirements. A $1.5 million technical assistance from the Japan Fund for Poverty Reduction, financed by the Government of Japan, to improve energy efficiency and capacity will be administered by ADB.
The total cost of the project, which is expected to be completed by the end of 2023, is $675 million, with Turkmenenergo contributing $175 million.
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ASTANA (TCA) — The first meeting of the Partnership Working Group on promoting Sustainable Development Goals (SDGs) under the UN auspices in Kazakhstan was chaired by the Minister of Foreign Affairs of Kazakhstan Kairat Abdrakhmanov on November 7.
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BISHKEK (TCA) — At the international donors’ conference on nuclear remediation in London on November 8, the European Union has announced additional €10 million, in order to support its partners in Central Asia in dealing with toxic and radioactive waste in Kyrgyzstan, Tajikistan and Uzbekistan. This comes on top of the €16 million, which the EU had already contributed to this end.
The EU is leading the implementation of the sustainable remediation programme in the region. For more than 10 years it has worked on feasibility studies and environmental impact assessments, with an initial investment of around €14 million. Work has been carried out in close collaboration with the Governments concerned, the International Atomic Energy Agency (IAEA) and the UN Development Program (UNDP).
Remediation plans are the next phase. They have been endorsed by the relevant Governments and now require urgent action. The estimated one billion tons of hazardous processing waste abandoned in the region represent a threat to the people and the environment.
The programme has identified seven priority sites (see the map) where action must be taken to prevent the pollution of the Fergana valley – the breadbasket of Central Asia – by the Syr Darya river.
The international donors’ conference on nuclear remediation in London is an initiative of the Kyrgyz government and was hosted by the European Bank for Reconstruction and Development (EBRD), which manages the account created to finance environmental remediation projects in Central Asia.
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KHUJAND, Tajikistan (TCA) — At least 22 people, including two guards, were killed when a riot broke out late on November 7 in a prison in Tajikistan’s northern city of Khujand, sources close to local authorities told RFE/RL’s Tajik Service on November 8.
