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Books on Kazakstan
REPUBLICAN REFERENCE
Area (sq.km)
2,717,300
Population
15,143,704
Principal
ethnic groups
Kazaks 44.3%
Russians 35.8%
Ukrainians 5.1%
Germans 3.6%
and many others
Capital
Astana
(formerly Akmola)
Currency
Tenge
President
Nursultan Nazarbayev
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Update No: 305 - (30/05/06)
The West is on side
Kazakstan's president, Nursultan Nazarbayev, like his Azeri counterpart, Ilham
Aliyev, is an exemplar of the kind of corruption and autocracy that has
dominated Central Asia since even before the collapse of the Soviet Union in
1991. He received Dick Cheney on one of the vice president's extremely rare
ventures outside US borders in late April.
Nazarbayev, whose election to a third seven-year term with 91 per cent of the
vote last December was denounced by Western observers, has ruled Kazakstan since
1989. His security services, if not he personally, have been implicated in the
professional murders of two opposition leaders since the elections.
Cheney, among other things, renewed a standing invitation to Nazarbayev to the
White House. But then Kazakstan has a very great deal of resources, notably two
commodities long dear to the former head of Halliburton, as to his boss - oil
and gas.
The Kazak energy colossus - outside OPEC
Cheney made democratic reform his calling card throughout his just-completed
overseas trip -- everywhere except Kazakstan, a land judged poor in human rights
but rich in oil and gas.
"Obviously Kazakstan is important given their considerable resources,"
the vice president told reporters aboard Air Force Two on the way home.
"It's one of the few places where we're going to see an increase in oil
production from a non-OPEC state over the next few years."
It was a statement of fact in an era of increasing demand for energy, always the
US priority in foreign relations.
Just briefly, Cheney touched on political reform in public remarks in Astana,
the Kazakstan capital. "The way forward is clear. Continued democratic and
economic reforms, the rule of law, fighting corruption, accountability of
institutions and sound security policies," the vice president said at a
news conference with President Nursultan Nazarbayev.
Contrast that with the verbal slap a day earlier when he spoke in Lithuania
about Russian President Vladimir Putin.
Opponents of reform in Russia "are seeking to reverse the gains of the last
decade," Cheney said. "In many areas of civil society -- from religion
and the news media to advocacy groups and political parties -- the government
has unfairly and improperly restricted the rights of her people," he added.
"No legitimate interest is served when oil and gas become tools of
intimidation or blackmail ... and no one can justify actions that undermine the
territorial integrity of a neighbour or interfere with democratic
movements."
Cheney, as well as other officials, insisted repeatedly that the remarks had
been measured, fully vetted, carefully crafted. And each time the vice president
said so, he reinforced his original point.
Officials said Nazarbayev had promised Cheney to make his country more
democratic, and to work with the leaders of the political opposition within the
framework of a government-sponsored democracy commission.
Some in the administration claim the most recent election in Kazakstan had been
better than the one before and that is the dubious line taken by Kazakstan's
professional PR spokesmen in the west.
True or not, international organizations deemed it flawed. And more broadly, the
US State Department's most recent report on human rights said this of Kazakstan:
"Legislation enacted during the year seriously eroded legal protections for
human rights."
In particular, it said one law "encroached on political rights, freedom of
the press, freedom of religion, and other human rights."
Gas to Turkey
A proposed gas pipeline from Central Asia across the Caspian Sea to Europe
received an important boost when Cheney met Nazarbayev on May 6th.
Cheney enrolled Nazarbayev's support for a scheme to bring Kazak gas to
Azerbaijan to join a new line to Turkey - ending Russia's stranglehold on gas
export routes out of landlocked Central Asia.
During talks with Nazarbayev, Cheney gave a "big nudge" to oil and gas
corridors linking Kazakstan with Europe, while "planting a big American
flag in central Asia," said Glen Howard, the head of the Jamestown
Foundation think-tank. "We are flexing our muscles a little bit," Mr
Howard added.
The plan is one of a flurry of new pipeline schemes spanning Central Asia and
the Caucasus. They are the counters in a geopolitical chess game playing out
between the US, Russia and China for control over one of the world's last
undeveloped oil and gas basins.
Cheney's visit to Kazakstan, coming hard on the heels of a trip to the White
House by Ilham Aliyev, the president of Azerbaijan, underscores the strategic
importance to the US of Central Asia and the Caucasus at a time of increasingly
strained ties with Russia. Kate Hardin, Cambridge Energy Research Associates
director, said that "Europe and the US took a second look at the map"
in central Asia after the crisis in January when Gazprom, the Russian natural
gas giant, temporarily shut off gas supplies to Ukraine, a move that, it is now
clear, was a colossal mistake by Moscow, almost certainly made by Putin himself.
Aliyev spent three days in Washington, stressing the importance of Azerbaijan as
a reliable, secular Muslim ally that could offer oil and gas to Europe without
being beholden to Russian transit routes. The US promoted construction of
parallel oil and gas pipelines from Azerbaijan across Georgia to Turkey. Both
will start up this year, marking a major strategic gain for the US in the
Caspian energy arena.
Limited marketing opportunities exist in Turkey which has committed itself to
import more gas than it needs from various sources, including Russia. But the
broader plan is to establish Turkey as a transit highway to Europe, where
Caspian gas will compete head-on with Russian supplies.
Gazprom's strategy is identical - and it is ahead in the game. Vladimir Putin,
Russian president, last November announced plans to expand a pipeline Gazprom
built across the Black Sea to Turkey in 2003 that could provide extra supplies
to southern Europe and Italy. Gazprom's new advance from Turkey, combined with
another planned export route across the Baltic to northern Europe, would create
a ring of pipelines around the continent that Gazprom's detractors regard as a
noose.
With oil and gas export routes now established from Azerbaijan that exclude
Russia, the US is shifting its focus to trying to offset Russian dominance over
exports from Kazakstan.
This is the second US attempt to bring central Asian gas into Europe. Lengthy
negotiations over a scheme to pipe gas from Turkmenistan across the Caspian to
Azerbaijan broke down in the 1990s mainly because Saparmurat Niyazov, the
authoritarian Turkmen leader, kept changing the terms. US energy officials now
regard Turkmenistan, the central Asian republic with the biggest gas reserves,
as "a lost cause."
But there were other barriers to the Turkmen project that could rear their heads
again. Russia claims Caspian subsea pipelines are environmentally unacceptable.
Azerbaijan is reluctant to share access to the limited Turkish market with
competitors from central Asia.
However, investors' misgivings about the high cost of offshore pipeline
construction have evaporated against a backdrop of record oil and gas prices and
frenzied concern about energy security.
Jonathan Stern, director of gas research at the Oxford Institute for Energy
Studies said: "With US$60 oil these pipelines are affordable. If you don't
build a pipeline you are not in the game."
A trans-Caspian gas pipeline would fit with Mr Nazarbayev's strategy to
diversify Kazak energy export routes. But the president is expected to keep all
options open rather than commit to a project that would tip the delicate balance
of Kazakstan's energy relations with the US, Russia and China.
Russia would object to any pipeline that eroded its monopoly over central Asian
gas export routes. Gazprom's strategy is to import growing volumes of central
Asian gas to feed its low-price domestic market, thereby freeing up its own
production for sale to more lucrative European customers.
China is also competing for Central Asian gas and is willing to commit huge sums
to pipeline projects. Kazakstan proposes to build a gas line to China that could
eventually serve as a transit hub for central Asian exports moving east to feed
the world's fastest growing energy consumer.
Privately, Kazak energy officials admit that the appearance of alternative gas
pipeline proposals on the board may coax more generous export terms out of the
Russians.
Investment Gateway to Central Asia
The real point is that Kazakstan, with an average GDP growth over the past
five years of roughly 10%, has always been the most attractive investment
destination in Central Asia.
But when the World Economic Forum, in its annual 2005-2006 ranking of the most
competitive nations in the world included Kazakstan for the first time,
introducing it at 61st amongst the 117 countries covered, Nazarbayev, took
particular notice and made it a benchmark to further accelerate the growth and
global integration of his nation.
In his annual address to the people of Kazakstan in March 2006, Nazarbayev
focused on economic reform. He set a vision and detailed strategy to make
Kazakstan one of the 50 Most Competitive Countries of the World within the next
ten years.
If all goes according to plan, Kazakstan will achieve 350 per cent growth by
2015 over the 2000 GDP level. With abundant mineral, oil and gas resources (the
world's second largest gas field is in Kazakstan) as its basis, and the dramatic
recent reforms including a strong diversification drive and foreign investor
confidence measures, the above economic targets should not be considered
unrealistic, experts say.
Reforms have started to show concrete signs of progress. Last year Kazakhmys, a
Kazak company and the world's largest copper producer was listed on the London
Stock Exchange as a sure sign of global market confidence. Its banking system is
already considered the best amongst the whole of the former Soviet Republics.
Star amongst its banking sectors is the privately owned Kazkommertsbank (KKB)
which has recently been recognized as the best Kazakstan bank eight years in a
row by international magazine, Global Finance. It was also rated as the most
reputable company in Kazakstan by E&Y Kazakstan. The role of this maturing
private sector is another feather in the cap of an open and business friendly
environment.
In his address to the nation, Nazarbayev laid out Kazakstan's strategy to
integrate into the world economy by making WTO accession a key driver. As
reported by Interfax News Agency, Nazarbayev said WTO accession would open
"vast opportunities for strengthening Kazakstan's competitiveness."
Foreign Minister Kasymzhomart Tokayev stated in mid March that Kazakstan aimed
to join the group in 2007.
Nazarbayev also signalled the belief that fostering strong regional cooperation
is the key to the realization of the country's ambitious goals. While he laid
out specific focus on the relationship with Russia and China amongst other
countries, he also addressed building stronger ties with the Muslim world.
"Kazakstan's active participation in the structure of the international
cooperation and cultural exchange with the Islamic states is quite natural. The
country expands mutual benefit and mutual enriching ties with the majority of
Islamic countries as well," President Nazarbayev said.
Similarly it has set out to become a leader amongst the Central Asian states
including making serious efforts in improving Kazakstan-Uzbekistan ties. This
was made evident during President's recent trip to Uzbekistan where tangible
steps were taken to improve trade ties.
Promising Sectors for Investment
Kazakstan's continuous moves to reduce its reliance on the energy sector to
drive growth are opening up tremendous investment opportunities.
Renat Bekbolatov, a Kazakstan native working as an investment banker in the US
and seeking to connect Muslim investors to opportunities in Kazakstan,
identifies many opportunities.
"Depending on the scale of the investment, investors can choose different
areas. For example, if they want to invest big, then energy and mineral sectors
look attractive. For smaller capital, they can enter areas such as: information
technology, medical supplies, retail stores, entertainment, heavy machinery
manufacturing, and for some creative investors willing to invest more than just
cash, areas like tourism and jewellery looks potentially promising. There are
plenty of investment opportunities in Kazakstan, and the growth of business is
set to continue," Mr. Bekbolatov said.
Almaty, the largest city, is already vying to be a major financial centre in the
region and even working for the right to hold Winter Olympic Games. Director of
Municipal Department of Business and Industry Yerbol Shormanov, stated in an
Interfax interview that, "In the current year, 23 innovative projects to
the amount of about KZT 42 billion will be implemented in Almaty. Production
will be competitive, with high added value and oriented for export. It
absolutely accords with the President's tasks." One such project being
implemented is the International Center of Technologies Transfer in the Almaty
Technological Park (Technopark).
The ECO to the fore
When President Nazarbayev spoke of strategy towards the Muslim world, he
termed the relationship as only 'natural.' Today there are concrete signs
towards strong economic engagement. Kairat Kudaiberghenov, Vice Foreign Minister
of Kazakstan pointed out in a recent briefing in Astana that "in early May
there will be a summit of the Economic Co-operation Organization (ECO) that has
Muslim countries as its members in Baku and a high ranking delegation from
Kazakstan will participate in it (as reported by Kazakstan Today and Gazeta.kz)."
The ECO which is comprised of Pakistan, Iran, Turkey, Afghanistan and the five
Central Asian Republics (Kazakstan, Kyrgyz Republic, Turkmenistan, Tajikistan,
and Uzbekistan, plus Azerbaijan), has so far focused on infrastructure projects
such as railroad, road lines and other infrastructure projects to facilitate
trade investments.
He also added that "a number of bilateral meetings between Kazakstan and
the Islamic world including Arab states are planned. During this year the
President is going to visit some of these states and we are waiting for high
standing delegations from these countries to visit us."
On programs relating to the business to business interaction, an example is
Pakistani investors being wooed to setup base in Special Economic Zone (SEZ)
" Outustik," which was established in July 2005 as one of the initial
steps towards creation of cotton-textile cluster in the South Kazakstan oblast
(region) (SKO). Gali Shaimakov, commercial counsellor, embassy of Kazakstan in
Pakistan has been meeting with Pakistani textile business associations for that
matter.
He said more than 15 spinning, weaving and sewing units are expected to be setup
in the SEZ. He said the SEZ " Outustik " offers favourable conditions
for potential investors also given that Kazakstan has high demand for cotton
yarn. Textile companies working with the SEZ would be exempted from corporate
income tax, land tax and property tax and partly from value added tax. He said
certain simplification of the customs procedures was also envisaged for the
investors.
Further engagement with Pakistan was explored on April 6th, when the Kazakstani
Institute of Strategic Studies (KISS) held an international round table on
"Relationship between Kazakstan and Pakistan: current state and
perspectives" in which it was noted that the current annual volume of trade
between the two countries of US$10 million could quickly be raised to US$100
million per annum. In the roundtable Pakistan's geographic affinity was noted by
the fact that Almaty is closer to Islamabad geographically than to the capital,
Astana.
Turkey as a base
Amongst the OIC member countries, Turkey has always maintained the strongest
relations with the Central Asian Republics, including Kazakstan. Turkish
companies have been investing in CA for years due to strong geographic, cultural
even language affinities with investments focused on sectors such as food,
beverages, oil industries, banking, retailing and tourism in Kazakstan. This
relationship is one, many others from the Muslim world can look to leverage.
In early March, Dubai Bank inked an agreement with Daruma Corporate Finance of
Turkey to develop and market Shari'ah compliant corporate finance and merchant
banking services, which would also be marketed to Turkey's Central Asian
neighbours including Kazakstan. This partnership is reflection of Turkey's
strength as a partner in helping launch many businesses into the Central Asian
markets.
In 2000, the trade volume reported between Kazakstan and Turkey was US$465
million which was highest amongst Turkey's trade with the CA countries. Alarko
Holding, a Turkish conglomerate is one of the biggest foreign infrastructure
contractors in Kazakstan Republic. They also Chair the Turkish - Kazak Business
Council run under the auspices of DEIK (Foreign Economic Relations Board) a
non-profit private sector organization. The Council serves to remove trade
bottlenecks amongst the two countries as well as disseminate information on
business opportunities in Kazak market.
Even with such strong relations, the feeling amongst the Turkish business
community seems to be that much more is desirable. Yakup Kocaman, a Turkish
business journalist comments that, "Even though the Central Asian countries
have got very good relationship with Turkey, many here say that Turkey has not
realized the full potential of CA Republic opportunities." Perhaps,
partnering with other Muslim world investors to enter the Kazakstan market is
just the impetus that is needed to boost the trade relations here
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CREDIT RATINGS
S&P calls for more progress in banking system
Banks in Kazakstan (local currency BBB/Stable/A-3, foreign currency
BBB-/Stable/A-3) are entering a critical period in their development, said
Standard & Poor's Ratings Services in a report, "Bank Industry Risk
Analysis: Republic of Kazakstan" on April 10th, New Europe reported.
"The continued favourable macroeconomic environment in Kazakstan, good
progress in developing a legal and regulatory framework, and gradual business
diversification have improved domestic banks' commercial pro-files,
profitability, and creditworthiness," said Standard & Poor's credit
analyst Ekaterina Trofimova. "But fresh impetus, including further
regulatory enhancements, is needed to maintain progress in the Kazak banking
system." Kazak banks are fast outgrowing current domestic owners' ability
to make fresh capital infusions, which are crucial to support growth. Standard
& Poor's said owners are reaching a watershed, and will soon have to
consider loosening control and opening up bank capital to outside investors.
Since the early part of this decade, the Kazak banking system has benefited from
Kazakstan's robust economic growth, fuelled by a solid revival in domestic
demand and strong output across all business sectors, as well as government
commitment to economic reforms. With 35 banks, Kazakstan is overbanked for a
population of 15 million in a country the size of Western Europe. Standard &
Poor's expects to see only gradual consolidation over the long term, however.
"Despite some improvements, Kazak banks' creditworthiness remains
constrained by nontransparent ownership, a corporate sector in need of
restructuring, rapid lending growth, high loan concentrations by industry and
individual borrower, and a large proportion of foreign currency lending,"
Trofimova said.
Lending growth accelerated to almost 70 per cent in 2005 after an average annual
growth rate of 50 per cent in the five previous years. The high growth pace,
particularly in fast-developing retail banking, is likely to continue in 2006
and 2007, but is not sustainable in the long term. "Indebtedness of
households and companies in non resource-based industries is growing fast,
increasing credit risk for Kazak banks," Trofimova said. "Although
lending expansion has augmented revenues, internal capital generation has
trailed growth in risk assets, constraining capitalisation," she said.
Banks have been increasingly financing rapid lending growth through
opportunistic foreign funding, leading to repayment concentrations and
refinancing risks. Despite remaining, albeit lessening, economic and industry
risks in Kazakstan, there is a potential for future ratings upgrades on Kazak
banks in the short to medium term.
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ENERGY
China wants another Kazak-Chinese oil pipeline
China is interested in constructing a second branch of the Kazak-Chinese oil
pipeline, said Kazak Foreign Minister, Kasymzhomart Tokayev. "An oil
pipeline with a capacity of 20 million tonnes has been built from western
Kazakstan to China, and now the Chinese are raising the issue of building
another branch of the pipeline to Chinese territory," Tokayev, who was on
an official visit to Beijing, said recently, New Europe reported.
Tokayev recalled that China and Turkmenistan signed an agreement on supplies of
Turkmen natural gas to China during Turkmen President Saparmurat Niyazov's
recent visit to that country. Under the agreement, China is entitled to choose
transit routes. "This involves a number of aspects to be negotiated as
regards the future supplies of gas to China, a country that urgently needs
energy resources," the Kazak minister said. "This issue (the transit
of Turkmen gas through Kazakstan) was also touched upon during the current
negotiations. This subject calls for careful consideration at the level of
experts before an appropriate decision is made at the political level," he
said.
EU, Kazakstan discuss energy sector cooperation
The Kazak Minister of Energy and Mineral Resources, Baktykozhy Izmukhambetov,
and Belgium's Chairman of the House of Representatives, Herman De Croo, on April
10th discussed cooperation between Kazakstan and the European Union in the
energy sector, a ministry spokesman said, New Europe reported.
Izmukhambetov informed De Croo about the prospects of development of the oil and
gas industry and electric power complex of Kazakstan. "In 2005, the
republic produced over 61 million tonnes of oil and of gas condensate. By 2010,
we will be producing almost 100 million tonnes. Kazakstan's current yearly
production of gas is 26-27 billion cubic metres and it will grow to 40-45
billion cubic metres by 2010," Izmukhambetov said. Growing oil production
is connected with the development of the Kazakstan sector of the Caspian Sea.
De Croo noted that the European Union was interested in diversification of
energy supplies. "We want to have more than one supplier of energy
resources to ensure energy security," he said.
Belgium's chairman of the House of Representatives also advised that the
European Parliament would hold a high level seminar "Strategic Partnership
of the European Parliament and Kazakstan in Energy Sector" on June 20.
Belgium is also interested in cooperation with Kazakstan in the use of
alternative energy sources, namely, wind energy. The country has a great
experience in new energy generating technologies. According to the ministry of
foreign affairs, the turnover of goods between Kazakstan and Belgium in 2005 was
154.71 million dollars (export - 9.92 million, import - 144.79 million), in 2004
- 118.8 million (export - 10.7 million, import - 108.1 million), and in 2003 -
66.9 million (export - 8.8 million, import - 58.1 million).
The mutual trade has grown by 30.2 per cent since 2004. According to the
statistics provided by the National Bank of Kazakstan, Belgian investment in
Kazakstan economy for the period from 1993 to the third quarter, 2005 totalled
US$186,300.
Exports to Belgium include non-ferrous metals, wool, textile, clothes, basic
metals and basic metal items, chemical and related products. Imported from
Belgium are machinery and equipment, mechanisms, electrical equipment, mineral
products, optic, photo- and other instruments and devices, textile goods, food
products, tobacco, chemical and associated products.
Seven Belgian companies operate in Kazakstan - Solvay Pharma Kazakstan
(pharmaceuticals), Sarens Group (oil and gas industry infrastructure), Maxx
Intermodal Systems (transport logictics), Ahlers Bridge (sea shipments and
logistics, customs clearance), Atlas Copco (equipment for oil and gas and mining
industry), TD Williamson SA (maintenance of oil and gas pipelines), and Meura SA
(brewery). There are also nine companies with Belgium capital in Kazakstan:
Almaty Greenhouse Company, Erkant LLP, A&A Asia, Westship Agency, Delloitte
& Touche, Check Point Services Ltd., and DHL International.
Kazakstan may build nuclear power plant by 2015
Kazakstan may build its first nuclear power plant since the end of Soviet rule
by 2015, a high official in the Energy and Mineral Resources Ministry told
reporters in Astana on March 28th, New Europe reported.
Nesipkul Bertisbayev, director of the ministry's department of power engineering
and coal industry said a working group led by Prime Minister, Danial Akhmetov,
is considering various aspects of such a project. In January 2006, Akhmetov said
Kazakstan needs its own nuclear power plant. The former Minister of Energy and
Mineral Resources, Vladimir Shkolnik, earlier said Kazakstan "has the
political will to build a nuclear power plant" and noted the availability
of appropriate personnel, the production of nuclear fuel inside the country, and
the selection of a location for a plant near Lake Balkhash in central Kazakstan.
Kazakstan, with more than 20 per cent of the world's known uranium reserves, has
been considering building its own nuclear power capability since the late 1990s.
In a country that has suffered from more than 450 nuclear tests at the former
Semipalatinsk nuclear test site, the issue of peaceful nuclear energy remains
highly controversial.
KPO to increase supplies through CPC by 10% - BG
The Karachaganak Petroleum Operating (KPO) consortium plans to increase
hydrocarbon supplies from the Karachaganak oil and gas condensate field through
the Caspian Pipeline Consortium pipeline to 7.7 million tonnes, to be exported
to Western markets.
BG Kazakstan President, Lewis Affleck, said the company's aim is to increase the
capacity of all units by 10 per cent by the end of this year. The company
currently supplies about seven million tonnes of stabilised hydrocarbons to the
CPC pipeline for export to the West and at the end of the year it plans to
supply about 7.7 million tonnes, he said, Interfax News Agency reported.
Affleck said that along with the project to expand capacities, the consortium
will also implement a programme to drill 16 wells using new technology, which is
used for difficult wells throughout the world. This programme will result in
increasing the recoverability of reserves, Affleck said. He said that at the
moment the consortium has drilled a few of these wells and the results have been
very positive: about 10,000 barrels of hydrocarbons per day.
Both projects were approved by the consortium partners, he said. In addition,
the consortium is considering implementing other projects to increase the
profitability of the Karachaganak field.
These primarily involve the construction of a fourth line to stabilise and de-sulphurise
sulphur the hydrocarbons produced at the field as part of the planned expansion
of the Karachaganak Processing Complex.
This line will increase the capacity of the complex to about 10.3 million tonnes
per year, Affleck said.
He said the consortium is working very actively on this project and that it
thinks that this year the partners and the government will approve it. They said
that the consortium plans to launch the project by 2009.
Affleck also said that KPO plans to carry out a gas project as part of the third
phase of the field's development, which will make it possible to double gas
production to about 16 billion cubic meters per year by 2012.
He said that the company expects the expansion of the CPC to 67 million tonnes
to be completed by the start of the third phase, and that this should take place
in about 2012. The CPC partners have not yet reached agreement on plans to
expand the pipeline system.
Atasu-Alashankou pipeline to cut Aktau seaport traffic
This year the Aktau seaport may lose work due to increased competition. Big
volumes of Kazakstan oil will be transported by the Atasu-Alashankou pipeline,
which will be fully operative in May. This will be a problem since major oil
supplies from the Caspian will not be available until 2012. These problems will
be addressed by a new Programme of Development of Sea Transport of Kazakstan
developed by the ministry of transport and communications. Very soon a new
document by the ministry will be submitted to the government.
The initial output of Atasu-Alashankou pipeline is ten million tonnes per year.
As of this year, the Aktau seaport will lose considerable volumes of work of
transporting oil from the Kumkol fields. To compare, this year's transport
volume should be 6.5 million tonnes whereas last year it exceeded 10 million.
And the reduction will continue over the next two or three years, up to 2009.
One of the main reasons for the losses is that the Kazakstan seaport's
livelihood is labour dependent on oil cargo business. The port's problems will
begin when the Atasu-Alashankou pipeline starts operating as it will become a
major competitor. In addition, other oil companies - Karakudukmunai, Kasgermunai,
and Buzachi Petroleum - will partially shut down this year. Major oil supplies
from Kashagan and Tengiz are not expected before 2012. But the new pipeline, it
appears, is not the only reason to blame for the loss of cargo business. New
rail and motor roads, which divert other equally paying cargoes - crops and
metals - from the port, have also been built lately. For example, the grain
terminal in Aktau has already been idle for several years, as Kazakstan grain
growers prefer to ship grain to Iran via the port of Astrakhan instead. As the
Kazak port this year did not renew the discounts for transit shipments of
Russia's steel, there is chance that other countries' existing ports will be in
demand.
Thus, this year the Aktau seaport has found itself unprepared for all these
changes. "You should have conducted marketing studies to be prepared for
any situation and to take adequate measures. It is necessary to diversify your
cargoes, to work out new promising routes," Minister of Transport Askar
Mamin told the seaport leadership at the enlarged industry meeting recently held
in Astana.
Cotton may well diversify the cargoes both from Kazakstan and from Central Asia.
Consumer goods from China, that continue to flow to the West in large quantities
and also aluminium oxide from Kazakstan and Russia, can also diversify the
cargoes.
However, re-orientation to greater volumes of cargo creates another problem of
upgrading of Aktau seaport, which will also be necessary to handle the promising
major oil supplies from Kashagan.
The development of the seaport infrastructure was also the main subject for
discussion by the ministry meeting. Last year, stage two of the Aktau seaport
construction project began. This is due to increase output to 20 million tonnes
for bulk oil cargoes and up to 3.2 million tonnes for dry cargoes. The state is
fully supporting this project and has provided a government guarantee for a
private loan of USD$25 million. However, as the meeting noted, today the project
is almost three months behind schedule. "The construction of government
infrastructure facilities has not started yet. In our opinion, this is a result
of poor coordination and insufficiently strict control over the progress of
implementation of the measures on the part of the seaport management, as well as
of a strange and passive position of the contractor - Mobilex," Vice
Minister of Transport and Communications Zhenis Kasymbek said at the meeting.
"In this connection, it is necessary to expedite the project works.
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FOREIGN RELATIONS
Kazakstan, China boost ties in different spheres
According to an agreement signed by the foreign ministries of Kazakstan and
China, people from Kazakstan get the opportunity to purchase Chinese goods
during one-day visits without visas. As per agreement, officials of both
countries opened a small free trade zone in the border area allowing Kazak
visitors one-day visa-free shopping to buy Chinese goods at Chuguchak City,
several miles into China, reported Interfax News Agency.
About 300 public officials from the East Kazakstan region, including akims
(mayors) of towns and districts, headed by Deputy Akim of the Oblast Magzam
Bayandarov, took part in the official opening ceremonies for the zone early in
March. Kazak officials intend to build warehouses, hotels, highways and other
necessary infrastructure to promote better international trade through Kazakstan.
It is expected that expanded trade between citizens along the borders of
Kazakstan, China and Russia, which meet in this region, will greatly contribute
to development of economies.
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TELECOMMUNICATIONS
GSM Kazakstan to invest 140m Euro in its network
GSM Kazakstan, the country's biggest cellular operator, plans to invest at least
140 million Euro in developing its network in 2006, New Europe reported.
"Company investment in development will not be less than last year, when it
was more than 140 million Euro," Serdar Kanogullari, the company's CEO,
said at a meeting on April 3rd in Almaty.
GSM Kazakstan has invested 550 million Euro in developing its network since
1999, when it started working in Kazakstan. The company is planning to increase
its subscriber base to four million subscribers in 2006 from the current 3.3
million, Kanogullari said.
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