Monochrome by Centil: Leverage

China's efforts to court the Stans last week were not in vain as it used its generosity as leverage to achieve its tactical goals. Yet, the region made room for more players.

This week, two countries announced the continuation of gas exports to China. Uzbekistan was the first to do so, after a brief interruption, and already transferred $90.5m worth of gas last month. Turkmenistan followed suit and announced plans to increase gas exports to the PCR. Currently, an agreement has been reached to lay the fourth gas pipeline between Ashgabat and Beijing, which will increase supplies to 65 bn cubic meters per year.

This does not exhaust the bonuses that China has up its sleeve. One such perk was the organization of logistics centers on the border territories of Uzbekistan. In addition, the Chinese side is planning to create a joint venture with Uzbekistan Railways for container transportations. Uzbekistan also announced the completion of the feasibility study for the Uzbekistan-Kyrgyzstan-China railway construction project.

China's gifts also extended to Kyrgyzstan, and included a $42.6m grant to implement priority projects in the framework of technical and economic cooperation between the two countries. Dushanbe also received one such gift - a nice grant of $57m in non-repayable assistance for the implementation of projects agreed upon by the parties.

However, regional leaders still managed to leverage their relative neutrality to dilute the concentrate of Chinese money, by focusing on Singapore. In particular, this meant $275m in agreements with Kazakhstan that were reached at the Kazakhstan-Singapore Business Forum during the first visit of Singapore President Halimah Yacob to Central Asia. One of the most important agreements was the creation of a joint venture to promote the Trans-Caspian international transport route.

After leaving Astana, Yacob set off to Tashkent, also on a state visit, during which bilateral cooperation documents were signed between the governments - with the Interior Ministries, Ministries of Justice, and Ministries of Culture of the two countries. An agreement was also signed between the finance ministries on cooperation in entrepreneurship development, joint activities in the green economy, and attracting foreign investment.

The most noteworthy deal was related to the support from Singapore's Changi Airports International (CAI) in developing the feasibility study for the construction of a new airport in Tashkent. The company will also provide consultation for optimizing the operation of the existing airport in terms of aviation and non-aviation activities. The Uzbek side assured CAI that Tashkent has a significant potential as an international hub capable of linking Europe and Asia.

Yet, for Uzbekistan the streak of hot deals continued. For example, Uzbekneftegaz struck an investment deal with America's Air Products, which leveraged its tech expertise to stake a $1bn investment deal for the development of the gas chemical complex in Kashkadarya, under Uzbekistan GTL. The contract implies that Air Products will own and operate several "take or pay/fixed fee" based plants with Uzbekneftegaz.

In solar news, the provisional winner of a tender for the construction and operation of a 300 MW solar power station in Kashkadarya was announced. The spoils went to Emirati Masdar, which leveraged its impressive scale and offered an attractive financial bid of $0.03 per kWh tariff, which valued the project for a total $249.5mln. Under the contract, Masdar will design, finance, and operate the solar power station for 25 years. The project will be implemented with the support of the ADB.

ADB also published a five-year partnership strategy for Kazakhstan, with a plan to focus on addressing climate change and decarbonization, promoting inclusive economic growth, and strengthening governance. Leveraging the track record, Kazakhstan also tapped in development prospects with the EU, and agreed on the financing of the EU-Kazakhstan cooperation mechanism for the implementation of economic projects worth $9.7m.

To put a cherry on top of this issue, Georgia's TBC Bank completed the acquisition of the remaining 49% stake in Uzbek fintech company Payme. The payments leader leveraged it’s growth to sell the remaining stake for a whopper of $55.7m, reaching a valuation of $113.6m. TBC, in turn, is leveraging its leadership in the space to create a leading fintech ecosystem in Uzbekistan. Kudos to Centil's team for leading the deal from early in 2018, when the 51% stake was acquired for $5.5m all the way to the end. Hip hip hooray!

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