Kyrgyzstan: Pentagon to Revamp Manas Fuel Supply Arrangements

The Pentagon plans a major change in the way it supplies aviation fuel to the Manas Transit Center in Kyrgyzstan. The new arrangement is very bad news for the current contract holder, Mina Corp. 

A pre-solicitation notice posted by the Pentagon’s Defense Logistics Agency (DLA) indicates that Mina Corp will not get an automatic extension of the $315-million annual contract that the Gibraltar-registered entity secured last November. Instead, Mina will again have to compete against other companies, including a recently created Kyrgyz-Russian joint venture, Gazpromneft-Aero-Kyrgyzstan. In addition, the notice specifies that just 10 percent of Manas’ fuel requirements will be covered under the new contract. This means that up to a 90-percent supply share is earmarked for Gazpromneft-Aero-Kyrgyzstan, or a supplier favored by the Kyrgyz government, a well-placed source told EurasiaNet.org.

The notice anticipates fuel requirements of 208.05 million US gallons over the course of 12-month contract term. It also provides for the possibility of two 6-month options at quantities of 104.025 million gallons each. Manas is an important logistics hub for the US war effort in Afghanistan.

An industry insider described the proposed terms as “politically expedient” but said the US government had built “a lot of flexibility” into the pre-solicitation to hedge against the risk of supplies being dominated by one supplier, especially one aligned with Moscow. Gazpromneft-Aero-Kyrgyzstan is also an unproven entity with no track record on reliable deliveries.

At present, the Kyrgyz-Russian JV is not supplying fuel to the transit center, even though it could have been doing so for months. Under the terms of the current contract, the firm could have started supplying up to 20 percent of the facility’s fuel needs as of February. “The big question is whether or not the Kyrgyz will be able to get their act together to actually pull any aspect of this opportunity off,” the source said.

In late April, a DLA team arrived in Bishkek to assist Gazpromneft-Aero-Kyrgyzstan in putting together a bid package for the current tender. “It’s the first time you’ve had the US, Russians and Kyrgyz around the table together,” the source said. “But it will probably be at least two months before the Kyrgyz-Russian enterprise is in a position to start supplying fuel to the base. It’s true they are losing millions of dollars for each month that they don’t.”

Mina Corp has fought hard to keep its contract at the fuel-hungry facility. In 2010, the entity was the focus of a US Congressional investigation into allegedly corrupt business practices. The congressional report on the investigation, released in December, found no evidence of corrupt practices, but it did uncover a scheme in which cheap Russian aviation fuel was bought for the air base under the guise that it was for Kyrgyz domestic use.