Caspian Business Journal

Weekly Round-Up: November 30 – December 4

A weekly review of events in the Caspian region. This week: Uzbekistan withdraws from the Central Asian energy grid and the EBRD funds a methanol plant in Azerbaijan. Tajikistan’s attempts to raise funding for the Rogun Dam raise eyebrows once again, while Kyrgyzstan announces plans to join the customs union, and Kazakhstan’s hosts it’s Council of Foreign Investors.

Azerbaijan: Blair, Methanol, Cosmetics and Telecommunications

According to Itar-Tass, the European Bank for Reconstruction and Development (EBRD) has granted a loan worth $120 million to Azerbaijan for the construction of a plant for methanol production. Former UK Prime Minister Tony Blair arrived in Baku to attend the signing ceremony on Tuesday, during which an agreement was inked by EBRD and Azerbaijani Methanol Company AzMeCo. Earlier in the day, Blair also met with President Ilham Aliyev to discuss prospects for economic cooperation between Britain and Azerbaijan.

Report Buyer has released a new report outlining growth in the cosmetics and toiletries industry in Azerbaijan. The report notes that the market is currently dominated by imported brands, with demand for natural ingredients underpinning growth in many products. An increase in access to cable television has also resulted in a wider awareness of cosmetic products on the market, with advertisements reaching a larger audience.

There have also been a number of developments in Azerbaijan’s telecommunications sector this week. Wireless Federation reports on a joint plan by Russian company C-Ring Telecom, Iran’s Telecommunication Infrastructure Company (TIC) and Azerbaijan to develop a new fibre-optic ring around the Caspian Sea, and improve internet service in the Caspian region.

Trend news also reports that phone operator Azerfon will launch a 3G commercial network for company subscribers later this month.

Tajikistan: Bicycles and Financing the Rogun Dam

Indian Express reports on the untapped potential of Tajikistan’s bicycle industry. With every household in Tajikistan owning two or three cycles, the country could offer a substantial new market for Indian produced vehicles.

The Tajik President has once again raised the possibility of financing the construction of the Rogun hydropower plant through public contributions. In a speech, quoted on the government website, President Emomali Rahmon stated that the $600 million necessary for the first stage of construction could be gathered in a very short amount of time. He said that each family, with the exception of the extremely poor, should purchase shares to the value of 3,000 somoni ($688).

Some have questioned the likelihood that enough money can be raised, and have voiced concerns about whether the population can afford such initiatives. The Times Online notes that the average monthly wage in the country is around $50.

Kyrgyzstan: Joining the Customs Union

Kyrgyzstan’s Prime Minister Daniyar Usenov has confirmed that the country is interested in joining the new customs union, and will discuss the potential move at a EurAsEC meeting in mid-December. An expert group has been created in order to bring Kyrgyzstan’s customs tariffs in line with other members of the union, reports Itar-Tass.

According to news agency 24.kg, a new motorway has opened in the Kyrgyzstan, funded by the Asia Development Bank. The road runs between Osh and Gulcha, in the south of the country.

Uzbekistan: Withdrawal from Central Asian Energy Grid

Disputes over Central Asia’s electricity system seem to be finally coming to a head with Uzbekistan’s official exit from the regional grid on Tuesday. In recent years, both Uzbekistan and Kazakhstan have been working to increase their independence from the Soviet-era network. The integrated grid functioned according to the premise that upstream countries – Kyrgyzstan and Tajikistan – would supply surplus electricity from their hydropower plants to the downstream countries – Uzbekistan, Kazakhstan and Turkmenistan – in summer. These three countries would then deliver gas and electricity in winter.

Tashkent’s move will deprive Tajikistan of much needed power, during the winter months. While TOL argues that Tajikistan will respond by limiting water supplies to Uzbekistan during the summer months, the Jamestown Foundation suggests that Dushanbe does not currently have the capacity to realize such a threat.

Kazakhstan: EBRD and Council of Foreign Investors

According to SRI, the EBRD has urged Kazakhstan to further diversify it’s economy and ease the country’s reliance on commoditites.

The Kazakh President Nursultan Nazarbayev has pointed to a number of different investment opportunities in Kazakhstan, during a session of the Council of Foreign Investors this week. According to Kazakhstan Today, Nazarbayev suggested that foreign investors make use of Kazakh land to grow agricultural products. He noted that China has asked for 1 million hectares to cultivate soya and rape seed.