The game of pass the parcel with one of Tajikistan’s rare industrial success stories has now led to a promising fertilizer plant being taken over by Chinese investors.
The lower house of parliament on December 14 ratified a deal between Tajikistan and China for Henan Zhong-Ya holding group to assume control of OAO Azot in a deal that will require the company to invest $360 million over the coming three years.
All in all, the deal is a sweet one for Henan Zhong-Ya. Azot will enjoy a tax holiday for a six-year period as it gradually ramps up production. The plant specializing in the production of carbamide, or urea, an organic compound used in fertilizer.
The plant has been standing idle since it was nationalized at the expense of Ukrainian tycoon Dmytro Firtash in 2014.
For the first 10 years of resumed operations, the plant will be 51 percent owned by the Chinese, while the remainder will be held by the Tajik government. The general director of the company will be Chinese.
Annual demand for carbamide in Tajikistan is around 360,000 tons, an amount it now imports at a cost of $50 million. The plant, which is situated in the southern Khatlon region, is slated to reach annual output of 200,000 tons of carbamide within the first two years.
Under the bilateral agreement, 30 percent of profits will go to the Tajik state and the rest to the Chinese partner.
There is a requirement, however, that half the employees must be Tajik nationals at the start to operations, and that this number must increase to 90 percent within 18 months.
Firtash acquired a controlling stake of the company, which used to known as Tajik Azot, in 2002. As a result, 75 percent of the company was owned by Firtash, while another 20 percent belonged to the Tajik government and another 5 percent was owned by Hairullo Saidov, the son of now-jailed opposition politician Zaid Saidov.
Firtash has had his own legal problems in his home country and in the West, but this particular episode appears to have had more to do with Tajik politics. In December 2013, then-fledgling opposition leader Zaid Saidov was jailed for 26 years on charges of fraud, corruption, statutory rape and polygamy. Saidov was Industry Minister in 2002 when the Tajik Azot deal was signed, so that opened the avenue for old agreements to be reopened.
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