Bishkek promises Kyrgyzgaz sale to Gazprom within three weeks

By bne IntelliNews March 13, 2013

bne -

The Kyrgyz government hopes to finally seal an agreement on the sale of national gas distribution company Kyrgyzgaz to Russia's Gazprom within the next three weeks or so, the prime minister said on March 12.

The sale of the Kyrgyz company is expected to be agreed by the end of March, Prime Minister Zhantoro Satybaldiyev told Reuters. "The process of negotiations is under way, and I hope that during March we will finish it ... Only technical issues remain to be resolved," the PM said in an interview.

Kyrgyz and Russian officials are due to meet in Kyrgyzstan on March 18-19, and may decide then on the sale of the heavily indebted company, which has been under discussion for more than a year. Bishkek is desperate to strike a deal in a bid to start solving the country's chronic gas shortages, and has regularly claimed a deal is imminent in recent months.

In 2012, Gazprom offered to buy a 75% stake in Kyrgyzgas for $1, under a deal that would also see the Russian company invest up to $500m to rehabilitate Kyrgyzgaz' dilapidated infrastructure. The purchaser would also pay off the company's debts, with the Kyrgyz national gas company in the hole for around $40m to Kazakhstan and Uzbekistan for imports.

Those unpaid bills have contributed to the shortages, which have caused no little discomfort for the population and hampered industry. In April, even the eternal flame on Bishkek's Victory Square was temporarily extinguished after the city failed to pay its gas bill.

Most of north Kyrgyzstan was cut off during a cold snap across Central Asia in December, and Kyrgyzgaz's arrears to the Kazakh and Uzbek gas transportation companies did little to aid its hope of receiving uninterrupted supplies. Such events have seen the government facing increasing political pressure. Satybaldiyev said in February, when he last claimed a deal with Gazprom was imminent, that the Russian state giant has promised uninterrupted supplies.

President Almazbek Atamabaev said earlier this year that in order to get Kazakhstan to reopen the taps, Astana was promised that the Russian company will clear the outstanding debt. "Our Kazakhstan partners have been notified that these debts will be paid off by Gazprom ... Both the president and prime minister of Kazakhstan know it," Atamabaev said. However, in February KazTransGas again threatened to suspend gas exports.

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