Identifier
Created
Classification
Origin
07ASTANA1994
2007-07-24 05:01:00
UNCLASSIFIED
Embassy Astana
Cable title:
KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, JULY 8-21, 2007
how-toVZCZCXRO0532 RR RUEHDBU RUEHLN RUEHVK RUEHYG DE RUEHTA #1994/01 2050501 ZNR UUUUU ZZH R 240501Z JUL 07 FM AMEMBASSY ASTANA TO RUEHC/SECSTATE WASHDC 0160 INFO RUCPCIM/CIMS NTDB WASHDC RUCPDOC/DEPT OF COMMERCE WASHDC RUEATRS/DEPT OF TREASURY WASHDC RUCNCIS/CIS COLLECTIVE 0224 RUEHAK/AMEMBASSY ANKARA 2073 RUEHBUL/AMEMBASSY KABUL 0340 RUEHNE/AMEMBASSY NEW DELHI 0468 RUEHAST/USOFFICE ALMATY
UNCLAS SECTION 01 OF 03 ASTANA 001994
SIPDIS
DEPT FOR SCA/CEN (O'MARA)
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
SIPDIS
E.O. 12958: N/A
TAGS: ECON EIND ENRG EPET EFIN KZ
SUBJECT: KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, JULY 8-21, 2007
ASTANA 00001994 001.2 OF 003
UNCLAS SECTION 01 OF 03 ASTANA 001994
SIPDIS
DEPT FOR SCA/CEN (O'MARA)
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
SIPDIS
E.O. 12958: N/A
TAGS: ECON EIND ENRG EPET EFIN KZ
SUBJECT: KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, JULY 8-21, 2007
ASTANA 00001994 001.2 OF 003
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.
-- Amendments to Budget 2007 Signed
-- Amendments to Budget Code Approved
-- Government Seeks to Curb Inflation
-- The Railroad Gathers Steam...
-- ...And KamAZ Trucks Along
-- KazAtomProm to Purchase 10% of Westinghouse
-- KazAtomProm to Set up Three New Facilities
-- KZ/RU Consortium Wins Tender for 51% of Turkish Petrochem Co.
-- Kazakhstan Welcomes Oil Cooperation with Croatia
-- Bogatyr Access Komir Names New Director General
Amendments to Budget 2007 Signed
--------------
2. Amendments to the national budget 2007 were approved by
President Nazarbayev. The document raised the projected 2007 budget
deficit from 1.2% to 2.2% of the GDP. The amendments also increased
the annual inflation forecast from the range of 5-7% to 7-9% and
adjusted the projected annual GDP growth from 8.6% to 9.7%. The
projection for 2007 GDP now stands at 12,464 billion KZT (approx.
$102.4 billion). (Interfax-Kazakhstan, July 5)
Amendments to Budget Code Approved
--------------
3. President Nazarbayev has signed amendments to the Budget Code.
According to the president's press service, this law aims to
introduce a more comprehensive definition of "budgetary oil
revenues" and ensure their timely transfer to the National (Oil)
Fund (NF). The term "oil revenues" currently covers the
government's revenues from exploration, production and sales of oil
and gas condensate. The new law creates additional income sources
for the NF by classifying as "oil revenues" such government revenues
as penalties charged for delays in fulfillment of contractual
liabilities or non-compliance with rules governing oil production
technology. (Interfax-Kazakhstan, July 2)
Government Seeks to Curb Inflation
--------------
4. Consumer Price Index (CPI) rose by 0.8% during the month of
June. This is the highest monthly inflation rate for any June since
1997. Growth of food prices was responsible for 54.5% of inflation,
services - 26.6% and non-food products - 18%. According to Anvar
Saidenov, Chairman of the National Bank, growth of money supply and
a doubling of credit volume were the main causes of accelerating
inflation. In response, the Government asked the National Bank to
tighten controls over money supply and called on various state
agencies to continue its policy of stock exchange development and
encouragement of industrial growth through higher labor
productivity. As of June 2007, the year-on-year rate of inflation
was 8.1%. (Izvestiya-Kazakhstan newspaper, July 17, Press-Release
of the National Bank, July 3)
The Railroad Gathers Steam...
--------------
5. The national railway company Kazakhstan Temir Zholy (KTZ) has
declared a $177.6 million profit in 2006 after a $129.5 million loss
in 2005. The company stated that its assets soared from $5.1 billion
in 2005 to $6.35 billion in 2006, while equity capital increased
from $3.9 billion to $4.35 billion. KTZ is wholly owned by the
Samruk State Holding Company. (Interfax-Kazakhstan, July 11)
...And KamAZ Trucks Along
--------------
6. KamaAZ-Engineering, a Russian-Kazakhstani joint venture auto
assembly plant (located in Akhmolinskaya Oblast in northern
Kazakhstan),reported a sharp year-on-year increase in output. In
January-June 2007, the company assembled $52.7 million worth of
ASTANA 00001994 002.2 OF 003
trucks, compared to $21.1 million the year before.
KazAtomProm to Purchase 10% of Westinghouse
--------------
7. Kazakhstani national atomic company KazAtomProm (KAP) is in
talks to purchase 10% of the stock of U.S.-based nuclear reactor
manufacturer Westinghouse Electric Co. from Toshiba Corp., which
holds a 77% stake in Westinghouse. According to KAP President
Dzhakishev, the $486-million deal is to be finalized by autumn 2007
and will be financed by the company's own assets. The deal is to be
coordinated with the U.S. authorities, said KAP President.
Observers speculate that the deal may stem from Toshiba's interest
in obtaining access to Kazakhstan's uranium. In turn, Kazakhstan
may gain access to Japan's uranium enrichment technologies and a
distribution channel for its uranium production. (Interfax -
Kazakhstan, July 18)
8. Four U.S.-based non-governmental organizations (NGOs) have
called on the Bush administration to reject Kazakhstan's bid to
acquire a share in Westinghouse. According to the NGOs, the deal
would undermine non-proliferation efforts and hand over sensitive
nuclear technologies to the Kazakhstani regime, which they described
as cruel, repressive and undemocratic. (RIA Novosti - Russia, July
19)
KazAtomProm to Set up Three New Facilities
--------------
9. Ulba Mill (a division of KazAtomProm) has launched three
projects, with a total value of $848 million, under the aegis of the
Kazakhstani Government's (GOK's) "30 corporate leaders" program.
The projects aim to create the complete cycle of nuclear fuel
production in Kazakhstan. The project on production of uranium
hexafluoride and fuel assemblies will ensure fuel supply for
third-generation reactors. Ulba is also implementing a beryllium
project to provide feedstock for nuclear fusion reactors and space
engineering. The third project is production of tantalum, which
would be employed in manufacturing of super-light condensers with
the use of nanotechnologies. (Interfax - Kazakhstan, July 3)
KZ/RU Consortium Wins Tender for 51% of Turkish Petrochem Co.
-------------- --------------
10. On July 8, "TransCentralAsia Petrochemical Holding" consortium
won the tender for 51% of Turkish petrochemical company "Petkim
Petrokimya Holding" with a $2.05 billion bid. The shareholders of
the consortium are the Russian bank "Troika Dialog," the Kazakhstani
investment group "Eurasia" (controlled by TuranAlemBank Head Mukhtar
Ablyazov) and the "Caspi Neft" company, a Kazakhstani subsidiary of
the U.S.-based "Transmeridian Exploration Incorporated." However,
Turkey's Privatization Ministry has requested a national security
review of the consortium shareholders due to "negative comments
among the Turkish community." Furthermore, the trade union of
Turkish petrochem specialists declared its opposition to the deal.
(webside nomad.su/Kazakhstan - July 18)
Kazakhstan Welcomes Oil Cooperation with Croatia
-------------- ---
11. Kazakhstan is interested in exporting its hydrocarbon resources
to Croatia and, via Croatia, to western Europe, Kazakhstani
President Nursultan Nazarbayev said at a joint press conference with
Croatian President Stjepan Mesic on July 3. According to President
Nazarbayev, Kazakhstani companies are interested in developing
Croatian oil and gas pipelines, and they also seek to become
shareholders of European-based (or -linked) oil refineries and
seaports.
12. National oil and gas company KazMunayGas plans to take part in
the privatization of Croatian oil company INA, 44% of which is owned
by the Croatian government, Kazakhstani Energy Minister
Izmukhambetov said after his meeting with INA Executive Director
Petrovic. "The sides agreed that after the Croatian side provides
concrete proposals for the privatization of INA, a Kazakhstani
delegation will travel to Zagreb for further talks," the statement
ASTANA 00001994 003.2 OF 003
said. INA owns about 450 filling stations and two oil refineries in
Croatia. (Interfax - Kazakhstan, July 9)
Bogatyr Access Komir Names New Director General
-------------- --
13. Sergey Opanasenko has been named a new director general of
Bogatyr Access Komir (BAK),a Pavlodar Oblast affiliate of the
U.S.-based Access Industries Inc. Opanasenko, formerly employed by
Russia's electricity transmission company RAO UES, has been with
Access Industries since 2006. Opanasenko replaces Dennis Price, who
became Director General of "Sayran ON", a subsidiary of "Kuat," a
leading Kazakhstani construction company. (Interfax - Kazakhstan,
July 11)
MILAS
SIPDIS
DEPT FOR SCA/CEN (O'MARA)
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
SIPDIS
E.O. 12958: N/A
TAGS: ECON EIND ENRG EPET EFIN KZ
SUBJECT: KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, JULY 8-21, 2007
ASTANA 00001994 001.2 OF 003
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.
-- Amendments to Budget 2007 Signed
-- Amendments to Budget Code Approved
-- Government Seeks to Curb Inflation
-- The Railroad Gathers Steam...
-- ...And KamAZ Trucks Along
-- KazAtomProm to Purchase 10% of Westinghouse
-- KazAtomProm to Set up Three New Facilities
-- KZ/RU Consortium Wins Tender for 51% of Turkish Petrochem Co.
-- Kazakhstan Welcomes Oil Cooperation with Croatia
-- Bogatyr Access Komir Names New Director General
Amendments to Budget 2007 Signed
--------------
2. Amendments to the national budget 2007 were approved by
President Nazarbayev. The document raised the projected 2007 budget
deficit from 1.2% to 2.2% of the GDP. The amendments also increased
the annual inflation forecast from the range of 5-7% to 7-9% and
adjusted the projected annual GDP growth from 8.6% to 9.7%. The
projection for 2007 GDP now stands at 12,464 billion KZT (approx.
$102.4 billion). (Interfax-Kazakhstan, July 5)
Amendments to Budget Code Approved
--------------
3. President Nazarbayev has signed amendments to the Budget Code.
According to the president's press service, this law aims to
introduce a more comprehensive definition of "budgetary oil
revenues" and ensure their timely transfer to the National (Oil)
Fund (NF). The term "oil revenues" currently covers the
government's revenues from exploration, production and sales of oil
and gas condensate. The new law creates additional income sources
for the NF by classifying as "oil revenues" such government revenues
as penalties charged for delays in fulfillment of contractual
liabilities or non-compliance with rules governing oil production
technology. (Interfax-Kazakhstan, July 2)
Government Seeks to Curb Inflation
--------------
4. Consumer Price Index (CPI) rose by 0.8% during the month of
June. This is the highest monthly inflation rate for any June since
1997. Growth of food prices was responsible for 54.5% of inflation,
services - 26.6% and non-food products - 18%. According to Anvar
Saidenov, Chairman of the National Bank, growth of money supply and
a doubling of credit volume were the main causes of accelerating
inflation. In response, the Government asked the National Bank to
tighten controls over money supply and called on various state
agencies to continue its policy of stock exchange development and
encouragement of industrial growth through higher labor
productivity. As of June 2007, the year-on-year rate of inflation
was 8.1%. (Izvestiya-Kazakhstan newspaper, July 17, Press-Release
of the National Bank, July 3)
The Railroad Gathers Steam...
--------------
5. The national railway company Kazakhstan Temir Zholy (KTZ) has
declared a $177.6 million profit in 2006 after a $129.5 million loss
in 2005. The company stated that its assets soared from $5.1 billion
in 2005 to $6.35 billion in 2006, while equity capital increased
from $3.9 billion to $4.35 billion. KTZ is wholly owned by the
Samruk State Holding Company. (Interfax-Kazakhstan, July 11)
...And KamAZ Trucks Along
--------------
6. KamaAZ-Engineering, a Russian-Kazakhstani joint venture auto
assembly plant (located in Akhmolinskaya Oblast in northern
Kazakhstan),reported a sharp year-on-year increase in output. In
January-June 2007, the company assembled $52.7 million worth of
ASTANA 00001994 002.2 OF 003
trucks, compared to $21.1 million the year before.
KazAtomProm to Purchase 10% of Westinghouse
--------------
7. Kazakhstani national atomic company KazAtomProm (KAP) is in
talks to purchase 10% of the stock of U.S.-based nuclear reactor
manufacturer Westinghouse Electric Co. from Toshiba Corp., which
holds a 77% stake in Westinghouse. According to KAP President
Dzhakishev, the $486-million deal is to be finalized by autumn 2007
and will be financed by the company's own assets. The deal is to be
coordinated with the U.S. authorities, said KAP President.
Observers speculate that the deal may stem from Toshiba's interest
in obtaining access to Kazakhstan's uranium. In turn, Kazakhstan
may gain access to Japan's uranium enrichment technologies and a
distribution channel for its uranium production. (Interfax -
Kazakhstan, July 18)
8. Four U.S.-based non-governmental organizations (NGOs) have
called on the Bush administration to reject Kazakhstan's bid to
acquire a share in Westinghouse. According to the NGOs, the deal
would undermine non-proliferation efforts and hand over sensitive
nuclear technologies to the Kazakhstani regime, which they described
as cruel, repressive and undemocratic. (RIA Novosti - Russia, July
19)
KazAtomProm to Set up Three New Facilities
--------------
9. Ulba Mill (a division of KazAtomProm) has launched three
projects, with a total value of $848 million, under the aegis of the
Kazakhstani Government's (GOK's) "30 corporate leaders" program.
The projects aim to create the complete cycle of nuclear fuel
production in Kazakhstan. The project on production of uranium
hexafluoride and fuel assemblies will ensure fuel supply for
third-generation reactors. Ulba is also implementing a beryllium
project to provide feedstock for nuclear fusion reactors and space
engineering. The third project is production of tantalum, which
would be employed in manufacturing of super-light condensers with
the use of nanotechnologies. (Interfax - Kazakhstan, July 3)
KZ/RU Consortium Wins Tender for 51% of Turkish Petrochem Co.
-------------- --------------
10. On July 8, "TransCentralAsia Petrochemical Holding" consortium
won the tender for 51% of Turkish petrochemical company "Petkim
Petrokimya Holding" with a $2.05 billion bid. The shareholders of
the consortium are the Russian bank "Troika Dialog," the Kazakhstani
investment group "Eurasia" (controlled by TuranAlemBank Head Mukhtar
Ablyazov) and the "Caspi Neft" company, a Kazakhstani subsidiary of
the U.S.-based "Transmeridian Exploration Incorporated." However,
Turkey's Privatization Ministry has requested a national security
review of the consortium shareholders due to "negative comments
among the Turkish community." Furthermore, the trade union of
Turkish petrochem specialists declared its opposition to the deal.
(webside nomad.su/Kazakhstan - July 18)
Kazakhstan Welcomes Oil Cooperation with Croatia
-------------- ---
11. Kazakhstan is interested in exporting its hydrocarbon resources
to Croatia and, via Croatia, to western Europe, Kazakhstani
President Nursultan Nazarbayev said at a joint press conference with
Croatian President Stjepan Mesic on July 3. According to President
Nazarbayev, Kazakhstani companies are interested in developing
Croatian oil and gas pipelines, and they also seek to become
shareholders of European-based (or -linked) oil refineries and
seaports.
12. National oil and gas company KazMunayGas plans to take part in
the privatization of Croatian oil company INA, 44% of which is owned
by the Croatian government, Kazakhstani Energy Minister
Izmukhambetov said after his meeting with INA Executive Director
Petrovic. "The sides agreed that after the Croatian side provides
concrete proposals for the privatization of INA, a Kazakhstani
delegation will travel to Zagreb for further talks," the statement
ASTANA 00001994 003.2 OF 003
said. INA owns about 450 filling stations and two oil refineries in
Croatia. (Interfax - Kazakhstan, July 9)
Bogatyr Access Komir Names New Director General
-------------- --
13. Sergey Opanasenko has been named a new director general of
Bogatyr Access Komir (BAK),a Pavlodar Oblast affiliate of the
U.S.-based Access Industries Inc. Opanasenko, formerly employed by
Russia's electricity transmission company RAO UES, has been with
Access Industries since 2006. Opanasenko replaces Dennis Price, who
became Director General of "Sayran ON", a subsidiary of "Kuat," a
leading Kazakhstani construction company. (Interfax - Kazakhstan,
July 11)
MILAS