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Identifier
Created
Classification
Origin
06ALMATY1210
2006-04-04 08:56:00
UNCLASSIFIED
US Office Almaty
Cable title:  

KAZAKHSTAN ECONOMIC AND ENERGY UPDATE

Tags:   ECON  EIND  ENRG  EPET  EFIN  KZ  ECONOMIC 
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						UNCLAS SECTION 01 OF 03 ALMATY 001210 

SIPDIS

DEPT FOR SCA/CEN MUDGE
DEPT PASS TO OPIC - BALLINGER
DEPT PASS TO TDA FOR STEIN, EXIM FOR GLAZER
DEPT PASS TO AID - EE-PHILLIPS/RUSHING
TREASURY FOR OASIA/VELTRI
USDOC FOR 4231/ITA/MAC/MLONDON, 4201/BISNIS
USDOC FOR 6110/ITA/TD/BI/RHALPERN
ANKARA FOR CFC

E.O. 12958: N/A
TAGS: ECON EIND ENRG EPET EFIN KZ ECONOMIC
SUBJECT: KAZAKHSTAN ECONOMIC AND ENERGY UPDATE
March 19 - April 1, 2006



1. Summary: This information is drawn primarily from the
Kazakhstani local press, and has not been checked for
accuracy. The opinions and policies expressed in this
report are those of the authors, not the U.S. Government.

-- New Refinancing Rate
-- FSA to Toughen Requirements for Second-tier Banks
-- Law on State Support of Innovation Activity
-- Kazakhtelecom to Cut Tariffs
-- Economic Statistics
-- Kazakhstan Plans to Export Electricity to China
-- First Concession for Power Line Construction Signed
-- GOK, Subsoil Users Sign Memo on Procurement
-- Expansion of Aktau Seaport
-- Oil & Gas Statistics


New Refinancing Rate


--------------------------





2. The National Bank of Kazakhstan raised the annual
refinancing rate from 8% to 8.5%, starting on April 1, 2006.
Last February the annual rate of inflation reached 8.7%, the
highest level since June 2001. According to the National
Bank, inflationary forces, such as an influx of foreign
currency, an increase in gross demand, and credit expansion,
will be evident in the coming months. The Bank's decision
aims at countering these pressures. (Press-Service of the
National Bank, March 20)

FSA to Toughen Requirements for Second-tier Banks


--------------------------



--------------------------





3. According to the Financial Supervision Agency (FSA)
Chairman Arman Dunayev, the government is concerned about
growing foreign borrowing from commercial banks, and the FSA
will likely make regulatory measures tougher. "Our agency
will revise the norms and ask the National Bank to revise
minimal reserve requirements and limits of foreign exchange
positions. In fact, we have already started doing that, and
I think that appropriate regulatory actions will be taken
after proper coordination and approval," Dunayev said.
(Interfax - Kazakhstan, March 29)

Law on State Support of Innovation Activity


--------------------------





4. On March 23 President Nazarbayev signed into law the act
"On State Support of Innovation Activity." For the fist
time, the law defines goals and principles of state support
for innovation activity and rules of accreditation and
functions of technological business-incubators and techno-
parks; outlines the institutional infrastructure of
innovation activity; classifies innovation grants; and
outlines the sequence of project implementation.
(Kazakhstanskaya Pravda, March 30)

Kazakhtelecom to Cut Tariffs


--------------------------





5. "Currently, the domestic internet market is filled with

providers that produce tough competition, compelling our
company to constantly upgrade the quality of its services
and offer favorable rate plans for consumers," reads
Kazakhtelecom's press release. Starting April 1, 2006, the
night rates for internet access will be cut 25%, monthly
fees for fixed-line telephone calls will be reduced 4%, and
rates for international calls will be lowered for users of
new telephone cards: Tarlan-Germany, Tarlan-Turkey and
Tarlan-China. (Interfax - Kazakhstan, March 29)

Economic Statistics


--------------------------





6. According to the Financial Supervision Agency,
Kazakhstan's commercial banks made a net profit of KZT 12.1
billion (about $92.1 million) in the year to February 2006,
a year-on-year increase of 112.3%. Gross equity capital of
the banking sector amounted to KZT 655.4 billion (about $5
billion) as of March 1, a 2% increase. Gross assets were
KZT 4,655.5 billion (about $35.4 billion), up 3.2%. Total
revenues of the second-tier banks increased by 72.1% over
the reporting period, amounting to KZT 104.8 billion (about
$798 million). (Interfax - Kazakhstan, March 29)



7. As reported by the FSA, in January-February Kazakhstani
insurance companies collected a total of KZT 17 billion
(approximately $129.4 million) in premiums, a 27.9% year-on-
year increase from 2005. Within the overall volume of
premiums, the contribution of mandatory insurance comprised
KZT 1.8 billion (about $13.7 million), a 24.1% year-on-year
growth; voluntary private insurance was KZT 1.5 billion
(about $11.4 million), up 56.2%; and voluntary property
insurance stood at KZT 13.7 billion (about $104.26 million),
up more than 25.9%. (Interfax - Kazakhstan, March 29)

Kazakhstan Plans to Export Electricity to China


--------------------------

--



8. Kazakhstan and China have agreed to construct a coal-
generated power station in Ekibastuz, Director of Electric
Power and Coal Industry Department of Kazakhstan's Energy
Ministry Bertisbayev reported. A bilateral working group
has begun a feasibility study. The station, with a
projected capacity of 7200 megawatts, will export about 40
billion kilowatt-hours annually to China. The length of the
power line is to be 3,600 - 4,800 kilometers. China
estimates the project's costs at $4.5 billion, and
Kazakhstan at $6-7 billion. China will be responsible for
finding a source of financing. (Izvestia Newspaper -
Kazakhstan, March 30)

The First Concession for Power Line Construction Signed


--------------------------



--------------------------





9. The first concession for the construction of the 500 -
kilometer inter-regional "North Kazakhstan - Aktobe Oblast"
power line has been signed, Kazakhstan's Energy Ministry
reported on March 28. The cost of the project is about $122
million. The Parliament approved amendments to the Law on
Power Industry, which allow the use of both private
investments and pension funds' assets to construct power
industry objects. (KazInform - Kazakhstan, March 28)

GOK, Subsoil Users Sign Memo on Procurement


--------------------------





10. On March 30, Minister of Industry and Trade Shkolnik,
representatives of Halliburton, and representatives of the
national oil company KazMunayGaz, signed memorandums "On
Implementation of Extractive Industry Transparency
Initiative Concerning Procurement" and "On Development of
Local Content on Service Market of Subsoil Users".
According to Shkolnik, these agreements will serve to meet
World Trade Organization requirements prohibiting host
legislation from compelling the use of local goods and
services. (Kazakhstan Today - Kazakhstan, March 30)

Expansion of Aktau Seaport


--------------------------





11. Planned expansion of the Aktau international seaport
(Mangystau Oblast) will double the total volume of cargo
transit through the port to 23 million tons, the Prime-
Minister's press-service reported. Mobilex Oil Terminal
company will undertake the expansion project. Prime-
Minister Akhmetov gave relevant ministries 10 days to
outline the administrative procedures for creating an "Aktau
Seaport free economic zone." (Kazakhstan Today - Kazakhstan,
March 29)

Oil & Gas Statistics


--------------------------





12. In January - February, 1.8 million tons of oil were
refined in Kazakhstan, 14.1% higher than during the same
period in 2005, the GOK reported. According to the Energy
Ministry, oil processing in 2006 will amount to 12 million
tons, 8% higher than in 2005; in 2010 - 15.7 million; and in
2012 - 18 million. (Oil Review - Kazakhstan, March 27)

ORDWAY