Monochrome by Centil Law: Set your house in order

Central Asia tries to tighten the grip on things to contain the alarming rise in numbers of COVID-19 cases, all while trying to set the economic affairs in order.

Presidents Mirziyoyev, Tokayev and Rakhmon were among heads of state who flew to Moscow to take part in the 75th anniversary of end of WWII (the Great Victory Day Parade). President Jeenbekov decided not to partake when two members of the Kyrgyz delegation tested positive for COVID-19 on arrival. President Berdymukhamedov declined due to concerns over the pandemic his upcoming birthday next week.

Coca-Cola Ichimligi Uzbekistan returns on the government-led privatisation list, as the state company for the food and beverage industry prepares for the sale of its 57.1% stake in the JV. These plans were first discussed with the European Bank for Reconstruction and Development in 2018. This year, the Coca Cola Company also intends to invest $31m in its Uzbek joint venture.

Kazakhstan issued a decree to temporarily restrict subsurface digging and exploration, to compensate for its oversupply of oil in May. In a commitment to the OPEC Agreement, the country will reduce oil production by 23% in July, 21% in Aug-Sept and 18% in Oct-Dec. If true, Kazakhstan’s total supply in 2020 would be 86m tonnes, 4% less than its initial goal of 90m tonnes.

In contrast, NC KazMunayGas announced an oil discovery at the Bekturly Vostochny exploration block with a daily flow rate of up to 100m³. The block is operated by Becturly Energy Operating LLP, with ownership split equally between NC KMG and Kokel Munay. As of recently, the country’s commitment to OPEC Agreements was patchy, and we are yet to see how long this new commitment will hold.

Tajikistan secured a $50m grant from the Asian Development Bank to finance its response to the social and economic consequences of COVID-19. This comes in timely as the government claims to provide social aid, amidst 51,7 thousand unemployed citizens. To date, the country benefited from a total of $193.42m of aid from the IMF, the USAID, the Aga Khan Foundation, the EU and the UN FAO.

Similarly, the ADB extended a $1bn assistance package to Kazakhstan and a $500m one to Uzbekistan, issued for 15 years with a 3 year grace period at a +0.5% 6 months LIBOR rate, which is at 0.46 this week. The funds, provided by the ADB's $20bn COVID-19 Response Package, will be credited to the countries' anti-crisis funds to finance the healthcare, economic and social sectors.

In preparation for privatisation, Uzbekistan’s Ipoteka-Bank secured a $35m loan from the International Finance Corporation and UzPSB received $40m from the EBRD to improve their investment attractiveness. In the past few months, the IFC had already issued a $10m trade-finance guarantee package to Ipoteka, while the EBRD extended $220m to both banks.

Additionally, Kazakhstan's largest microfinance organisation KMF received a $40m local currency loan from the EBRD, to support the liquidity of KMF’s micro- and SME clients. This is the second loan in Kazakhstan under EBRD's Solidarity Package in response to Covid-19. Back in March, the country received $244m from the bank.

Uzbekistan's Ministry of Energy is negotiating the construction of a $1.8bn gas-fired power plant of 1.5GW capacity with the Russian Altmax Holding Ltd. Rumor has it, VTB and Gazprombank could co-finance the project. Given the plant's location near the southern border, parties also explore the potential export of electricity to the neighboring Tajikistan, Turkmenistan and Afghanistan.

Kyrgyzstan sentenced former president Atambayev to over 11 years in prison for several charges, including the much criticised release of a crime lord and business deals during his time in office. Last year, his arrest during a police raid caused a violent clash between his supporters and the authorities. The court also ruled the confiscation of his property, his corporate shares and securities.

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