Kyrgyzstan Approves Sale of Gas Network to Russia
Kyrgyzstan’s parliament voted to pass a controversial deal to sell the national gas company to Russian giant Gazprom for the knockdown price of $1 on December 11, local media reported.
Under the deal Gazprom snaps up the company and its property and gains rent-free use of land any facilities stand on. In exchange it takes on Kyrgyzgaz’s estimated $38 million debt and pledges some $600 million to improve Kyrgyzstan’s crumbling gas grid. That could in the long-term help streamline energy supplies and ease the dire power shortages the country experiences every winter.
Some parliamentarians had opposed the deal, agreed in July, seeing it as tantamount to handing a strategic national asset over to former colonial master Russia for a song, but Kyrgyzgaz CEO Turgunbek Kulmurzayev said there was “no other choice” than to sell to Gazprom, since the company is effectively “bankrupt.”
Kyrgyzstan is in any case doomed to gas dependence: It meets just 2 percent of its gas needs from domestic output and relies on imports from neighbors Kazakhstan and Uzbekistan, leverage that Tashkent sometimes uses to bully Bishkek by cutting off supplies.
The agreement contains a clause protecting Gazprom against expropriation and nationalization – important given Kyrgyzstan’s volatile investment climate. Parliament’s ratification of the Gazprom deal contrasts with its rejection of an agreement with the Kumtor gold mine, over which the government and the mine’s Canadian operators and co-owners Centerra Gold have been at loggerheads.
In October parliament voted down a deal that would have seen the state increase its stake in the mine from 33 percent to 50 percent, demanding that the government negotiate no less than a 67-percent share.
As the Gazprom deal passed, there were signs that another crucial agreement with Russia faces trouble. First Deputy Prime Minister Djoomart Otorbaev told a working group on December 11 that a roadmap for Kyrgyzstan to join the Customs Union free trade zone with Russia, Kazakhstan, and Belarus “is not in line with Kyrgyzstan’s interests” and “absolutely does not suit” the country, Knews.kg reported.
Otorbaev, who had said two days previously that the deal should be signed during President Almazbek Atambayev’s visit to Moscow later this month, complained that the roadmap had been drawn up by the Customs Union’s regulatory body “without the participation of the Kyrgyz side."
Economy Minister Temir Sariyev said last year that Kyrgyzstan hoped to join the Russia-led free trade zone in 2014, but Bishkek has since blown hot and cold over membership.
Frustrations with the union have been evident elsewhere lately: Kazakhstan’s President Nursultan Nazarbayev recently railed against unfair barriers to trade and a lack of consultation within the union, and Russian President Vladimir Putin was greeted with protests when he visited candidate country Armenia earlier this month.