US sanctions on Uzbekistan’s biggest tax payer Akhangarancement worry the government

By bne IntelliNews May 5, 2023

The Uzbek government is worried after Department of the US Treasury's Office of Foreign Assets Control (OFAC) slapped sanctions on the country’s biggest tax payer, Akhangarancement cement plant, and its founder Akkermann Cement CA, which is affiliated with Uzbek-born tycoon Alisher Usmanov.

Uzbekistani central bank chairman Mamarizo Nurmuratov announced on May 4 that a special working group has been created to resolve the issue of US sanctions. These affect the cement company’s dollar transactions, but not its local currency business. Despite the sanctions, the plant's operations in soum and with local bank services are still permitted and Uzbekistan remains a net importer of cement, although it plans to export as well.

The central bank chairman noted that the uninterrupted operation of the plant is important for the country's economy, as it provides employment for more than 10,000 people and is one of the largest taxpayers in the country.

The US OFAC has issued a licence to wind down transactions involving several companies on the new sanctions list, including Akkermann Cement CA, up until July 11. The licence allows the companies to wind down their operations and limit the impact of the sanctions.

In May 2021, a Cyprus-based company, Lamanka Enterprises, acquired an 84.197% stake in the Akhangarancement plant. The value of the transaction was then estimated at UZS557.6bn ($49mn). However, in January 2022, Lamanka Enterprises and Giacinttar from the British Virgin Islands announced the sale of their shares in Akhangarancement for UZS1.88 trillion to Akkermann Cement CA, which is owned by Usmanov's USM holding.

The US has also imposed sanctions against Digital Invest, which owns a stake in Ucell and operates a labelling system in Uzbekistan, which is also owned by Usmanov. In addition, OFAC has sanctioned Alfa Beta Creative and GFK Logistic Asia, which are controlled by other Russian oligarchs that are based in the country. The restrictions also affect citizens and natives of Uzbekistan.

Nurmuratov said the Uzbek government is working with the US Treasury Department and OFAC to resolve the issue, as Uzbekistan tries to find a balance between maintaining its crucial business ties with Russia and avoiding bring down secondary sanctions on itself. The government is hopeful that a resolution to the problems caused by Akhangarancement will be reached soon, as the plant's continued operation is vital to the local economy.

Related Articles

Uzbekistan’s watermelon exports surge

The hot summer weather arrived in Uzbekistan a week earlier than usual, giving the country the opportunity to start the export of watermelon in the first 10 days of May, around a week earlier ... more

Fitch assigns Central Asia's United Cement Group First-Time 'B+' IDR

Fitch Ratings has assigned Cyprus-based Central Asia’s largest group of cement producers ... more

Second high-level EU-Central Asia meeting held in Kyrgyzstan

President of the European Council Charles Michel on June 2 met with four of the five presidents of Central Asia as well as with Turkmenistan’s deputy chair of the cabinet in Cholpon-Ata, ... more