Kyrgyzstan: Parliament Resists Russia’s Purchase of Key Gas Asset
A deal that would see Kyrgyzstan’s heavily indebted gas distribution company sold to Russia’s state-run energy behemoth, Gazprom, appears to be in trouble. A vote in parliament was once considered a formality. But in recent days, parliament’s fractious parties have put the breaks on the transaction. Even members of the ruling coalition have backed away, a major Russian paper reports.Under a July agreement between the government and Gazprom, Bishkek agreed to sell Kyrgyzgaz, the state-run entity that controls Kyrgyzstan’s gas distribution network, for a symbolic $1. In return, Gazprom agreed to invest approximately $600 million into the aging gas grid and assume Kyrgyzgaz’s debt, which was estimated at about $38 million at the time. But the deal had to be ratified by parliament. On November 15, the legislature’s opposition parties rejected the deal.According to a November 20 report in Russian business daily Kommersant, members of the ruling coalition are attempting to use the vote to topple Prime Minister Jantoro Satybaldiyev’s government. The paper quotes deputy Omurbek Abdrakhmanov complaining that the amount of Kyrgyzgaz’s debt is unclear, meaning the deal could be unfair. A deputy from Ar-Namys, also in the ruling coalition, said Gazprom could take control of a parcel of land and sell it to China, Kommersant reported. (The lawmaker’s statement plays on long-existing fears of Chinese domination.) Corruption and aging infrastructure have left Kyrgyzstan’s energy network in shambles and customers regularly in the cold. Even Bishkek, once immune to cuts, suffered last year during a fierce cold spell. Supporters of the sale say it would ensure an uninterrupted supply of gas, while bypassing corrupt local middlemen. Currently, Kyrgyzstan imports almost all its gas from Kazakhstan and Uzbekistan. Uzbekistan, in particular, has a habit of shutting off supplies to bully Bishkek. “We want to have a stable gas supply at any time of the year,” Prime Minister Satybaldiyev told EurasiaNet.org in September, linking the Gazprom deal to Russian President Vladimir Putin’s September 2012 promise to write off Kyrgyz debt over the course of 10 years. The deal would also allow Gazprom to begin tapping two fields in Kyrgyzstan’s south. Kyrgyzstan has limited gas reserves of its own and a lack of investment has left them largely untouched. According to a September 2011 RosBusinessConsulting report, Kyrgyzstan pumps approximately 30 million cubic meters of gas, but consumes close to 750 million cubic meters a year.But critics argue that Kyrgyzstan is trading dependency on its neighbors for vassalage under Russia. The sale of such a key asset to a foreign government was bound to raise questions about sovereignty – and with populists dominating parliament, was bound to run into trouble. Kyrgyzstan is already moving headlong toward joining the Moscow-led Customs Union, despite concerns the body is designed to bolster Moscow at the expense of members’ trade options. Akmatbek Keldibekov, of parliament’s opposition Ata-Jurt faction, said he would rather see Kyrgyzstanis “burn dung” than sell such a strategic asset. (Keldibekov was arrested today on corruption charges, seemingly unrelated to the gas conflict.)The Kyrgyzgaz debate comes only weeks after lawmakers – led by Ata-Meken faction head Omurbek Tekebayev, a member of the ruling coalition – rejected a government-brokered deal to restructure the only major industrial asset in Kyrgyzstan, the Canadian-owned Kumtor gold mine. Tekebayev is now leading a movement to expropriate the mine, which is worth about a tenth of GDP, though few believe Kyrgyzstan has the technological know-how to operate Kumtor. Many observers in Bishkek believe Tekebayev is only brandishing his populist credentials, perhaps with an eye on the 2015 parliamentary elections, by rejecting anything put forward by the embattled prime minister. (Others believe he is trying to push Satybaldiyev’s government to drop an investigation into his alleged role leading a band of looters during political violence in 2010.)Moscow must be growing tired of negotiating with Bishkek for Kyrgyzgaz. Kyrgyzstan’s parliament ratified a deal in 2009 to transfer about 75 percent of the company to Gazprom. That became moot after the toppling in 2010 of President Kurmanbek Bakiyev in a bloody coup. The current 100-percent deal was outlined last December. On November 15, during a visit to Bishkek, the chairman of the Russian State Duma’s Committee for CIS Integration, Leonid Slutsky, urged his Kyrgyz counterparts to ratify the deal. He said Gazprom did not have “commercial” interests in Kyrgyzstan, but merely wanted to help. Later, speaking about Kyrgyzstan’s proposed membership in the Customs Union, he reportedly warned Bishkek to stop begging for cash handouts and to be more modest.
David Trilling is Eurasianet’s managing editor.