Turkmenistan has in an attempt to slash its expenditures scrapped the state company responsible for building oil and gas-related infrastructure.
State newspaper Neutral Turkmenistan reported on July 8 that President Gurbanguly Berdymukhamedov stated in a decree that the move was taken to “further optimize the activities of the oil and gas sector.”
The main functions of Turkmenneftegazstroy will instead now be taken over by state gas monopoly Turkmengaz, which has taken the lead on the planned construction of the Turkmenistan-Afghanistan-Pakistan-India gas pipeline. Work on this route, known as TAPI, officially began in December 2015 and is intended to provide gas to an energy-poor region while giving Ashgabat an urgently needed alternative market.
Turkmenistan sits on the fourth-largest reserves of gas in the world, but that has done little to avoid the country slipping into a crippling economic crisis. On the contrary, its excess reliance on a commodity of diminishing value and its failure to diversify its buyers beyond China — to which it owes billions of dollars — is actually in large responsible for causing the trouble in the first place.
This is not the first time Turkmenistan has taken to eliminating areas of the energy sector, and thereby laying off workers, to save money. Last year, it scrapped the Oil and Gas Ministry and the presidential State Agency for the Management of Hydrocarbon Resources, which issued operating licenses.
Berdymukhamedov has gone beyond energy this time around.
In another cost-cutting wheeze, he ordered the merger of state-run retail lenders Prezidentbank and Halkbank. In addition, he demoted the State Tax Service to a department within the Finance Ministry.
Mukhametguly Mukhamedov was fired as finance minister on his third anniversary in the position, on July 7, and was replaced by Gochmyrat Myradov, who has been No. 2 at the ministry for only one month.
Having economized in one area, Berdymukhamedov proceeded with his regular announcements of salary increases. As of January 1, 2018, state workers will see a 10 percent increase in their salaries, and pensions and other benefits will grow by a similar amount.
With the value of the national currency taking hits and prices for staple groceries on the rise, however, such largesse is likely of limited efficacy for the now-shrinking number of people that stand to benefit. What is more, those hikes will likely be partly or entirely eaten up as a result of Berdymukhamedov’s recent decision to scrap the decades-long policy of granting households free electricity, gas, salt and water.
Again hewing to a well-worn script, Berdymukhamedov declared that the economy had grown by 6.4 percent in the first half of the year. But in a slight concession of gloom, the president admitted that not a single state program to usher in import substitution, nurture a domestic electronics sector and create joint state-private enterprises that would provide new jobs had been “implemented fully.”
Sign up for Eurasianet's free weekly newsletter. Support Eurasianet: Help keep our journalism open to all, and influenced by none.