Gazprom set to seal Kyrgyzgaz acquisition

By bne IntelliNews February 20, 2013

bne -

Kyrgyz officials said on February 19 that an agreement to sell national gas distribution company Kyrgyzgaz to Russia's Gazprom is imminent, with the company's growing debt to supplier Kazakhstan putting pressure on Bishkek to close the deal.

The sale of a controlling stake in Kyrgyzgaz was one of the issues discussed during a round of Russian-Kyrgyz talks in Moscow on February 18 and 19, as First Deputy Prime Minister Djoomart Otorbaev discussed the acquisition with Gazprom's Deputy Chairman Valery Golubev, reports state news agency Kabar. According to the report the deal could be sealed during a planned inter-governmental meeting in March.

Gazprom offered to buy a 75% stake in heavily indebted Kyrgyzgaz for $1 last year. The Russian company also said it would invest into rehabilitating Kyrgyzstan's dilapidated infrastructure, and pay off the company's debt for gas imports, which amounted at the time to around $40m.

Kyrgyz Prime Minister Zhantoro Satybaldiyev told journalists in Bishkek on February 15 that "if we agree [to the sale] almost $500m will be allocated for the development of the industry. He added that "with all the debts, to outline the cost of Kyrgyzgaz would be purely symbolic."

The hope is that selling Kyrgyzgaz to Gazprom will resolve the country's chronic gas shortages, which is causing no little discomfort for the population and hampering 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 had its gas 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 says that the Russian state giant has promised uninterrupted supplies.

President Almazbek Atamabaev said 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, this month KazTransGas again threatened to suspend gas exports.

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