Kyrgyzstan: Manas Fuel Supplier Cries Foul

Mina Corp, the holder of a lucrative fuel-supply contract for the strategically important Manas Transit Center in Kyrgyzstan, has accused Kyrgyz authorities of attempting to "disrupt and seize the fuel supply chain" at the base outside Bishkek.

The Gibraltar-registered supplier of aviation fuel to US and NATO forces is claiming to be the victim of illegal raids by Kyrgyz officials, who are conducting an ongoing investigating the company for alleged tax irregularities. Mina Corp representatives insist the company has not broken any laws.

Mina Corp, although currently the main supplier of aviation fuel to Manas, is poised to loose up to 50 percent of its sales to the state-run Manas Refueling Complex following an agreement between the US government and Kyrgyz provisional leaders.

In a statement issued December 17, Mina Corp accused Kyrgyz authorities of trying to "shut down its business."

"Kyrgyz officials blocked access to Mina Corp's premises on December 10 and continued to bar entry for several days," the statement said.

"The offices were unsealed on December 13 after Mina's legal team confronted the authorities about the gross violation of principles of due process and international law, particularly the US-Kyrgyzstan Agreement that guarantees the functioning of the Manas Transit Center and protects US personnel and contractors from interference by local authorities," the statement continued. "However, the Kyrgyz authorities' campaign of harassment and intimidation continues. On December 17, Kyrgyz authorities returned to Mina's offices to try to conduct unlawful 'interrogations' of Mina personnel."

According to Mina Corp, the company is being victimized because it "adhered to a tax regime established by the Kyrgyz parliament under former President Askar Akayev, but which is now disfavored by the current government."

Under the terms of the Manas Transit Center agreement, Mina Corp is exempt from Kyrgyz customs and taxes. Article 7 of the agreement signed last year states that "purchases of goods and services in the Kyrgyz Republic by the US government, or on its behalf to implement this agreement are not subject to any taxes, customs fees and similar payments on the territory of the Kyrgyz Republic."

One of Mina Corp's legal representatives, William Burck -- a partner in law firm Weil, Gotshal & Manges, and a former deputy White House counsel in George W. Bush's administration - asserted that recent action by Kyrgyz authorities "violates the protections accorded to Mina as a US Department of Defense contractor and amounts to an obstruction of its activities."

In May 2010, an attempt by the Kyrgyz interim government to introduce a VAT on aviation fuel used by the Manas Transit Center briefly disrupted operations at the base.

The United States is firmly opposed to excise tax on aviation fuel, and each basing agreement signed since the facility opened in 2001 has expressly stated that fuel, and other services, will be exempt from local taxes.

However, within hours of Kyrgyzstan's first parliamentary coalition being formed between Social Democratic Party, Respublika and Ata-Jurt on December 17, the Ata-Meken party, which now finds itself in opposition, proposed that an excise tax at a rate of $55 per ton of aviation fuel could be used to fund pay raises for public sector workers.

Newly-appointed Prime Minister Almazbek Atambayev said the air base's lease, although renewable annually, would not be the subject of negotiation for at least 4 years. "The US is a great country and we will not spoil relations with her," he said on December 17.

The issue of an excise tax on aviation fuel would be duly considered by a parliamentary committee, he added.