Kyrgyzstan’s nationalization plans are threatening to unseat Mina Corp as the purveyor of fuel for the Manas Transit Center outside Bishkek.
 
For now, Mina Corp, an affiliate of Red Star Enterprises, is continuing to make deliveries of TS-1 jet fuel to Manas. The provisional government backed down from a June 20 deadline to re-introduce a value-added tax and excise duties on fuel imports. Under the terms of previous basing agreements, US contractors were exempt from paying Kyrgyz taxes and customs. [For background see EurasiaNet’s archive].
 
But at the very least storm clouds are gathering in Bishkek for Mina Corp, which is already the subject of a congressional probe in Washington into the possible illicit supply practices. [For background see the Eurasia Insight archive].
 
On June 9, Roza Otunbayeva, the head of Kyrgyzstan’s provisional government, unveiled plans to nationalize Aalam Services, the main fuel storage depot at Manas airport.  On June 22, Otunbayeva issued instructions to establish a state-owned company called “Fuel Filling Complex Manas” to participate in the supply of fuel to the Manas facility, a key logistics hub for US and NATO operations in Afghanistan. [For background see EurasiaNet’s archive].
 
Supplies for Manas, where routine air operations consume about 12 million gallons of jet fuel per month, will come from Russia, sources in both Washington and Kyrgyzstan tell EurasiaNet.org.
 
Representatives of Mina Corp dispute the idea that the company is about to be cut out of the fuel-supply equation. “We have not heard that the interim government will not work with Mina Corp,” a spokesman for the company said on June 24. “While this may be the view of some individuals in the interim government, this position has not been communicated to Mina Corp. We do not believe that this [nationalization] is the official view of the Kyrgyz interim government.”
 
There’s a strong impression among Kyrgyz players, however, that the bell is tolling for Mina Corp. Both Bazarbai Mambetov, the head of the Oil Traders Association and the provisional government’s national coordinator for matters relating to the Eurasian Economic Community and the Commonwealth of Independent States, and Taalaibek Okenov, the President of the Association of Civil Aviation Airlines, said Mina Corp’s days in Kyrgyzstan are numbered.
 
“I know for sure that companies like Red Star and Mina Corp will not operate and will go away because only state-owned companies will be doing fuel deliveries,” said Okenov.
 
Mambetov added: “The provisional government established Fuel Filling Complex Manas to exclude corruption and attract finances to the budget. There will be no more foreign companies at work [in fuel supplies]. At the moment the government is doing everything necessary to procure large volumes of jet fuel,” Mambetov said.
 
Russia is among a number countries being looked at as suppliers, Mambetov stressed.
 
Nur Omarov, a Kyrgyz political commentator, suggested the provisional government’s nationalization move is setting a bad precedent, adding that such action is likely to be challenged in an international court. “I don’t see any pluses of having a state company involved in this because the provisional government, under the guise of nationalization, is stealing property,” Omarov told EurasiaNet.org on June 24.
 
The plan to give Russia is major fuel-supply role has understandably upset some in the American defense community. Critics contend that the new supply arrangement, as currently envisioned, can compromise US security interests. “The supply of fuel to US aircraft is the responsibility of the US government.  It should not be relinquished to Moscow where, on a whim, the faucet may be turned off,” said Ronald Uscher, a lawyer representing IOTC, a competitor to Red Star and Mina Corp.
 
“The United States and Kyrgyzstan have agreed the United States will refuel US forces.  We've seen Moscow delay and stop natural gas deliveries when it suits their interests,” Uscher continued. “Such an agreement with Russia at Manas would send a dangerous message to US allies in Central Asia and Eastern Europe that even America is dependent upon Russia for energy supplies. US troops should not be subjected to these risks and dangers.”
 
A source close to the development of the Northern Distribution Network (NDN), in which the Manas air base plays a central role, said Kyrgyz or Russian involvement in supplying fuel to the base was “risky from a strategic point of view,” but added that there was a “bigger picture and an upside” to having both Moscow and Bishkek involved in Manas operations.
 
Fuel supplies to Manas have in recent months become mired in accusations of graft. [For background see EurasiaNet’s archive]. Andrei Grozin, director of the Central Asia Department at the CIS Institute in Moscow, said a US-Russian fuel deal could lead to greater transparency, at least compared to how Manas operated under previous Kyrgyz administrations. [For additional information see EurasiaNet’s archive].
 
“There are lots of questions, but it could create transparency and, to some extent, help avoid corruption. It’d benefit Russia because the United States pays cash and they pay well. They are good partners. Plus, all this could happen against the backdrop of a re-set in relations. For the United States there are benefits too. It’s a hassle to deal with Kyrgyz companies because they always want to raise the price, or impose a tax.
 
“People in Washington are tired of that, but it’s really a question of whether or not America wants some transparency,” he added.