The president of Turkmenistan is due visit Moscow on November 1 for talks with Russian President Vladimir Putin against the backdrop of a worsening domestic economic crisis.
Turkmenistan’s Foreign Ministry announced the trip in an uninformative one-line statement, so there is no immediate insight into what the focus of the encounter will be. The Kremlin’s own statement on the meeting was not much more helpful.
“Key areas in bilateral cooperation will be the main subject of discussion at the talks. The two presidents are also expected to exchange views on current regional issues,” the Kremlin said.
That cryptic statement suggests there is every chance that Turkmen leader Gurbanguly Berdymukhamedov will be seeking to whet Russia’s appetite for resuming its purchases of Turkmen gas.
The countries have over the years signed more than 100 bilateral agreements covering a range of areas of cooperation. A key document was the April 23, 2002, Friendship and Cooperation Treaty.
Russian business are actively involved on the Turkmen market in sectors such as auto and industrial machinery, telecommunications, and in the oil and gas business. Around 190 companies working with Russian capital operate in Turkmenistan. In 2009, Russia’s ATERI, previously operating under the ITERA brand, signed a production sharing agreement with Turkmenistan over an offshore sector of the Caspian Sea.
But nothing ever quite superseded direct gas sales for importance.
Russia bought 45 billion cubic meters of gas from Turkmenistan in 2008, but that has through a series of commercial and diplomatic vicissitudes dwindled to nothing. Russian gas behemoth Gazprom definitively ceased its gas supply agreement earlier this year.
Internet connections have been down in large parts of Turkmenistan following a reported fatal explosion at an oil refinery in the western city of Turkmenbashi.
Alternative News of Turkmenistan cited unnamed sources in a report on June 25 as saying that the blast occurred at fuel reservoir and may have killed seven people.
ANT linked the reported explosion with possible poor maintenance work on the fuel tank ventilation system.
On the day of the claimed explosion, ANT reported the internet being cut off in several places in the Balkan region, where Turkmenbashi is situated. Mobile users elsewhere in the country could not be reached on June 27, suggesting that the government has put an information blackout in place.
Chronicles of Turkmenistan, another foreign-based news and advocacy website, reported that some online messaging services have become unavailable. The Line messaging app has been performing poorly since June 26, but issues with Skype seems to have predated the reported blast by a couple of weeks.
“It is not clear if the connection problems are related to technical faults or if the block on messaging services has been implemented purposely to control the flow of information in the country,” the website said.
Information blackouts are standard procedure in Turkmenistan and state media has made no references to any incident in Turkmenbashi.
The president of Turkmenistan has in candid remarks admitted to the pervasive corruption hobbling the country’s energy sector, but his solutions appear so far limited mainly to the usual threats and targeted dismissals.
Gurbanguly Berdymukhamedov said during a Cabinet meeting broadcast on television on March 5 that state auditors and prosecutors have recently been running checks on energy enterprises and uncovered irregularities “causing the government serious losses.”
Corruption has become a recurring theme in Turkmenistan as authorities seek to explain away the economic malaise gripping the country.
Berdymukhamedov said that former deputy prime minister Baymyrat Hojamuhammedov, who was dismissed from his role overseeing the energy sector for health reasons in November 2015, was directly involved in the corruption.
“After the investigations, he returned $1.5 million that he received in bribes from various people,” Berdymukhamedov said.
Also on March 5, the president fired the head of the State Statistics Committee, Akmyrat Mamedov, who stands accused of fiddling the figures to enable graft.
Anybody who has ever in good conscience scrutinised the sparse statistical information made available online by Turkmenistan’s authorities will have questioned their reliability years ago. And yet those are the same figures that international financial organisation invariably rely upon when formulating their rosy economic forecasts, which should probably raise some questions about their practices.
Mamedov has been in his job since March 2010.
Dismissals among senior economic officials have been coming fast and furious of late.
In February, Berdymukhamedov removed one of his key aides, Palvan Taganov, from his post, again for suspected wrongdoings in the oil and gas sector.
Turkmenistan has fired the starting pistol on the ambitious TAPI natural gas pipeline, a 1,735-kilometer route intended to supply markets in Afghanistan, Pakistan and India.
To the applause of ministers, President Gurbanguly Berdymukhamedov announced he had ordered the beginning to construction on November 6 during the weekly Cabinet meeting.
The work on the Turkmen section will be done by state-run gas company Turkmengaz, which was named project consortium leader for TAPI Pipeline Company Limited in August, and energy infrastructure construction division Turkmenneftegazstroi.
The pipeline is designed to transport 33 billion cubic meters of gas annually for a period of three decades. Work is formally due to start in December, according to the government decree signed by Berdymukhamedov, but substantial construction is not expected to get underway until next year. The completion date has been set for December 2018.
Turkmenistan currently exports gas to China, Russia and Iran. But relations between Turkmenistan and Russia, which this year reduced the volume of its gas purchases to 4 billion cubic meters, took a turn for the worse after Ashgabat in July accused Russia's Gazprom of failing to pay for fuel supplied this year.
It was not all good news on the energy front at the Cabinet meeting though.
The long-serving minister for oil and gas, Baymurad Khodjamukhamedov, asked Berdymukhamedov if he could step down for reasons of ill-health, in effect a resignation, which was promptly accepted by the president.
Khodjamukhamedov, who had occupied his post since 2009, will be replaced by Yagshigeldy Kakayev, who is now the head of the presidential State Agency for the Management and Use of Hydrocarbon Resources. Kakayev will continue to perform his current job on top of taking on ministerial duties.
Pakistani Prime Minister Nawaz Sharif rounded off an energy-themed jaunt across Central Asia on May 22 in Bishkek, where he spoke about electricity exports to his energy-starved nation two days after visiting Turkmenistan to discuss a troubled gas-pipeline project.
The trip demonstrated Pakistan’s limited leverage in its dealings with Central Asia and, publicly at least, did not produce much of substance.
In Ashgabat, Sharif called on partners to “intensify work” on the long-stalled Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline. In his meeting with Turkmenistan President Gurbanguly Berdymukhamedov on May 20, Sharif called TAPI a “project that would bring benefits to the entire region.”
But the pipeline, which would traverse Afghanistan and has been on the drawing board since the mid-1990s, may cost over $10 billion. With no commercial investor so far, initiative rests with both Turkmenistan, the would-be-supplier, and the main export market, India. Delhi must decide if its own energy deficit warrants pushing a link that many see as risky and expensive.
Neither president mentioned either the hoped-for 2017 TAPI completion date, or the more pessimistic projection of 2020 mentioned in late April by Afghan President Ashraf Ghani. (Many say both timelines are still pipedreams.)
Azerbaijan’s status in a prominent international transparency organization has been downgraded. Representatives of the group cited Baku’s ongoing crackdown on individual liberties as the reason for the demotion.
Azerbaijan had been a member of the Extractive Industries Transparency Initiative, or EITI, since 2003. The organization comprises companies, governments and civil-society groups and is dedicated to promoting greater transparency about state revenues earned from energy extraction and mining operations. Also inherent in membership is a commitment by member states to uphold basic liberties, in particular freedom of the press and broad access to information.
On April 14, EITI’s board deemed Azerbaijan was falling short in fulfilling the group’s obligations and downgraded the country from full member to candidate. To have its membership restored, Baku needs to “ensure that civil society in Azerbaijan can participate in the EITI in a meaningful way,” the Norway-based group’s chairperson, Clare Short, said.
Azerbaijan’s troubles with the EITI date back to 2013, when some organization representatives expressed concern about a crackdown on government critics, and launched a probe into the country’s commitment to the transparency standard.
Proponents of a controversial plan to build a high-voltage electricity export line from Tajikistan to South Asia argue that the connection – known as CASA-1000 – will not be used in winter, when the country’s own citizens suffer debilitating electricity shortages.
But a senior Tajik official has undermined that promise, arguing that no matter how little it has for itself, Tajikistan must export electricity year-round lest any transmission equipment be looted.
Most regions of Tajikistan are currently receiving about 12 hours of electricity per day; some areas get less than 10 hours and, as anyone in remote areas can attest, the current is often so weak that it cannot charge a cell phone.
Despite these extended blackouts, Tajikistan increased its electricity exports to Afghanistan through existing lines from 30 million kWh in January 2014 to 55 million kWh last month, Asia-Plus reported on February 17, citing the State Statistics Agency.
Many ask the obvious question: Shouldn’t a country’s resources first serve its own people?
After years of speculation, now we have the answer. The head of the state electricity monopoly, Barki Tajik, says that the company must export in winter because it cannot risk allowing existing infrastructure to stand idle. “We keep the voltage in these lines because there is a high probability of equipment theft,” the Asia-Plus article quoted Rustam Rakhmatzoda as saying.
That confession should impact CASA-1000, which has been on the drawing board since 2007.
Russia is behind schedule implementing billions of dollars of critical hydropower projects on the Naryn River.
A top official in Kyrgyzstan has grumbled that Russia is far behind schedule implementing billions of dollars of critical hydropower projects in the energy-starved country.
The giant Kambar-Ata 1 hydropower dam and the Upper-Naryn Cascade of four smaller hydropower dams were supposed to be well on their way to completion by now. Moscow and Bishkek signed deals for their construction in August 2012. As part of the package of related agreements, Moscow secured a 15-year extension on its military facilities in the Central Asian country after the current lease expires in 2017.
But according to Kyrgyz Energy Minister Kubanychbek Turdubayev, nothing much is happening. Speaking at a ministry meeting on February 12, in comments carried by Vechernii Bishkek, Turdubayev said:
We have been barraged with criticism over [energy] projects. People can see no real progress in such projects as [the construction of] two Kambar-Ata hydroelectric power plants and the Upper-Naryn Cascade of hydroelectric power plants. It should be admitted that there are serious omissions. Kyrgyzstan's rights have been violated and there is no progress. […]
Getting reliable economic information out of Turkmenistan is difficult at the best of times, so if the gas-rich country is on the verge of a crisis, the secretive leadership is unlikely to drop any hints.
But a number of recent reports suggest that the effect of falling energy prices is being magnified by limited official information.
Opposition-minded news websites Alternative News Turkmenistan and Chronicles of Turkmenistan have reported long queues stretching out of currency exchange bureaus in recent days. The panic, note both outlets, is based on a rumor that the manat is about to be significantly devalued again.
The manat already fell 19 percent on New Year’s Day, falling from 2.85 to 3.5 manats against the greenback. The rumors point to an alarming 4.5 to the dollar. According to the Chronicles of Turkmenistan:
In recent days queues have been forming at various banks from early in the morning. In the regions, only 40-45 people are able to obtain the dollars at each bank, even though the queues extend to 200 or more people. Then the [people in the queue] are informed that there are no more dollars for the rest of the day.
Passports are required at the point of exchange. Each person can obtain no more than $1,000 in a single day.
Astana has promised to save Kyrgyzstan from near-certain energy crisis this winter, committing to supply over a billion kilowatt-hours of electricity and releasing several Kyrgyzstan-bound oil tankers stuck on the border between the two countries since April. But questions remain about the terms of the deal signed by Kazakhstan’s Nursultan Nazarbayev and Kyrgyzstan’s Almazbek Atambayev on November 7.
Chiefly, how will Kyrgyzstan finance the difference between the cost of the electricity it is buying from Kazakhstan and the low rates its own citizens expect to pay—lower, according to energy officials, than the cost of production?
In other words, Kyrgyzstan has agreed to pay Kazakhstan far more than it charges its citizens per kilowatt-hour. Most of the energy will be subsidized by the impoverished government, Nurbek Elebaev, director of Kyrgyzstan’s State Department for the Regulation of the Fuel and Energy Complex, told Vechernii Bishkek on October 31. (Note: $1 is about 58 soms at current rates.) He said:
It is worth noting that the cost of the imported energy is 5.13 soms for a kilowatt-hour. Accordingly, every kilowatt-hour will be subsidized [by Kyrgyzstan] by around 3 soms. Moreover, 5.13 soms is the cost of electricity up to the Kazakh border. The cost of transit from the border to the consumer will be borne by [Kyrgyzstan’s] energy company. How the company will cover the financial deficit will be decided by the government. The cabinet will need to borrow money. This tariff will apply to 1 billion kilowatt-hours of electricity. A further 400 million kilowatt-hours will be determined by an exchange in kind.