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The Motley Crew And Freaky Show, Or Why Does The Turkmen Economy Need So Many Ukrainian Bankrupts?

Thursday, December 8, 2016 - 01:40

The Ukrainian public relations experts do not skimp on the loud slogans and striking comparisons. The high self-esteem they showcase in their advertising is absolutely breathtaking. For example, let's consider the advertising of the achievements of the local agricultural industry. This is simply a gem!

 

“...Our walnuts suffice for baking half a billion cakes! Ukrainian chicken is enough to feed the whole of Israel. Rape is one more reason to be proud! In the future, Ukraine will fill the world with corn...” It does not matter whether the God-chosen people want to feast upon Ukrainian chicken and if the whole world is ready to eat Ukrainian corn, does it? The main thing is, all this creates the illusion of unprecedented achievements of Ukrainian producers.

 

Ashgabat's stable desire to work with Ukrainian companies can be called nothing else but a strong advertising hassle and unconditional faith towards loud statements. How else could we explain the presence of several Ukrainian industrial associations in the Turkmen market, even though these associations are mired in debt and division of assets, while also being on the verge of bankruptcy?

 

A new story began even before the concrete in the airport of Turkmenabat had enough time to harden. Worth recalling, the Ukrainian FPG “Altcom” was removed from the construction project with a scandal.

 

The worldwide web has often witnessed the announcements that employees of yet another company “with its headquarters located in Ukraine” have not been receiving any wages for more than six months. This is “Interbudmontazh,” which is a protege of former Ambassador of Ukraine to Turkmenistan Vadym Chuprun. “Interbudmontazh” promised to save the Turkmen capital from the effects of floods, and to protect the urban communications from aggressive groundwater. However, it eventually set a new record in terms of protracted construction. Thus, back in 2001, the association began to drill the drainage and communication tunnel, as commissioned by the Ashgabat mayor. The construction was followed by missed deadlines and multiple complaints – first from president Saparmurat Niyazov, and then from G. Berdymukhammedov. Not until November 2016 – that is, 15 years later – the newspapers reported that the project was finally completed. Hopefully, workers will receive what they have earned.

 

Another Ukrainian bankrupt partner of the Turkmen government is oligarch V. Pinchuk and his company “Interpipe.” It delivered pipes for the Kazakh oil and gas industry in the Karakum.

 

For some reason, it is not advertised anywhere that in 2015 the “Interpipe” factories cut the production volumes of their main products – pipes – by at least 24 percent. The company's problems affected the Nyzhnyodniprovsky Pipe Factory the most – here the volume of production fell by 45 (!) percent, due to which “Interpipe” has fired 3,000 employees and is currently frantically trying to avoid bankruptcy.

 

Moreover, exactly one year ago, the international agency Fitch has given this company the long-term rating “RD” (restricted default). This assessment has hit hard on the image of the company, and in October 2016, its management decided to stop participating in the Fitch rating process. However, no one doubts that “Interpipe” will try to start supplying its products for construction of the TAPI gas pipeline, as well as for the planned forth gas pipeline in China.

 

We wonder whether the Turkmen authorities are adequately assessing the degree of risk related to the partnership with another bankrupt?

 

No less risky appears the party played out with “Kryukov railway car building plant” (KVSZ). In 2016, it delivered to Turkmenistan 750 rail cars for the railway built along the TAPI gas pipeline. The company's management does not hide that they expect to receive a similar contract soon; however they modestly fail to mention that the financial condition of the enterprise is far from stable. Thus, in 2015, the plant reduced the manufacture volumes of freight cars by 83 percent and produced not a single passenger car! During the first eight months of 2016, the enterprise's shops assembled 1,023 freight cars, (of which 750 units were made by the Turkmen order), and no passenger cars once again... It turns out that the KVSZ managed to go back from the verge of bankruptcy only thanks to Ashgabat. Worth noting, the company completed the year 2015 with a loss of UAH400 million (according to the current exchange rate, this sum amounts to about $15 million).

 

One more fact remains unadvertised: Russia conducted a testing that involved ultrasonic flaw detectors, and it showed that KVSZ rail cars may contain defective castings. In 2011 and 2012, the JSC “Russian Railways” refused from using the KVSZ products after several accidents caused by the poor casting carried out at the PJSC “Kremenchug Steel Mill.” This cast is used in the KVSZ cars. In 2013, the Russian Service for Supervision of Transport banned the operation of nearly 300 cars produced by the KVSZ due to the poor quality of the spare parts assembly.

 

We should note, the product quality problems were identified long before the crisis between Moscow and Kiev, so it is meaningless to imply political context here.

 

It would seem that there is nothing more reliable than the old and trusted partner of the Turkmen government: the “Sumy NPO of MV Frunze,” whose majority shareholder is Ukrainian oligarch K. Grigorishin. The company has for many years successfully participated in reconstruction of the Turkmen chemical enterprises “Maryazot” and “Turkmenabat chemical plant.”

 

However, the fortune turned away from this official partner of Ashgabat as well. The customers at the “Malay” field had serious complaints regarding the quality of the delivered equipment produced by the Frunze NPO. Despite this fact, the Sumy company is still trying to obtain new orders for supply of equipment for the Turkmen gas pipeline “East-West” and the new lines to be built in the Chinese direction.

 

It is hoped that the Turkmen side has enough caution and common sense, because no one is under no illusions about the “decency” of the enterprise's owner. Worth recalling, in 2015, K. Grigorishin tried to sell the transformers overpriced to receive UAH2.5 billion from “Ukrenergo” and UAH2 billion from “Energoatom.” However, due to the publicity, the tender results were canceled. As a result, the transformers were purchased at two times as low prices. It is not worth talking about the financial stability of the company: it completed the year 2015 with a net loss of UAH1.755 billion, which is 25.5 percent more than in 2014. The unstable financial situation of the Sumy enterprise is compounded by the war for control over the company between A.K. Grigorishin and the other major shareholder Vladimir Novinsky, which intensified in the second half of 2016.

 

All these facts do not beautify the “portrait” of the old friend but raise questions about this old friend's reliability...

 

And it should be quite separately said about the “dark horse” in the Turkmen market – the company Petro Gas LLP, which is registered in the United Kingdom. It has subsidiaries in the United Arab Emirates, Turkmenistan, Russia and Ukraine. The owner of the company is a citizen of Ukraine, Vadym Antonets. Despite the fact that Petro Gas LLP is a small company, with the patronage of the former Deputy Prime Minister Boris Hodzhamuhammedov (who was arrested earlier this year on charges of corruption), it still managed to obtain quite a few large orders from the Turkmen state oil and gas structures. In particular, it received contracts for the construction of the crossing over the Amu Darya for the new gas pipeline that runs to China.

 

The company is also involved in the construction of the compressor stations at the fields “Malay,” “Bagtyyarlyk” and others. It seems that the Turkmen side is not confused at all by the experts' comments, which mark the little experience and low-skilled engineering staff of the Petro Gas FZE do not suffice for implementation of such complex oil and gas projects.

 

Summing up, it would be reasonable to ask: why does the Turkmen government need so many unreliable partners in the strategic sectors? Are there some reasonable economic rationales? Or is it just someone's strong personal interest? When the republic is on the verge of launching major resource projects, why do they need to gather in its economic arena a motley crew of oligarchs, who have discredited themselves on all sides?



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http://easttime.info/analytics/turkmenistan/motley-crew-and-freaky-show-or-why-does-turkmen-economy-need-so-many-ukrainia