Ukraine Boosts Trade With Iran

by Gordon Feller

Ukraine has won Iranian industrial orders worth $52 billion after a week-long visit by an Iranian delegation headed by the country’s industry minister, Reuters reported on Feb. 9. Tehran ordered metallurgy products worth $26.5 million and railway locomotives and carriages worth $25.5 million. Kiev officials said Ukraine wants to buy Iranian oil and gas to ease its dependency on Russian imports, but because of a shortage of pipelines and terminals, the deal has not been signed. Ukrainian Foreign Minister Hennadii Udovenko said last week that Ukraine, in trading with Iran, would not violate international restrictions and complained of excessive speculations on Ukraine’s ties to Iran.

Azeri-Iranian Oil Cooperation

Azerbaijan is inviting Iranian participation in oil exploration and drilling in the Caspian, reported Compass news on Friday, citing the official Islamic Republic News Agency (IRNA). Natik Aliyev, the head of Azeri state oil company SOCAR, told Iranian Ambassador to Baku Alireza Bigdeli during talks Friday that Azerbaijan was ready to cooperate with Iranian companies to produce oil from Caspian Sea fields. Aliyev specifically mentioned the Shah Deniz field, according to IRNA. He added that the two countries could exchange technical expertise on the subject of oil drilling.

EBRD Supports Uzbekistan Private Sector

On Feb. 12, 1997 it was announced that a second medium-term credit line facility to support the continuing development of Uzbekistan’s private sector is being extended by the European Bank for Reconstruction and Development (EBRD) to two Uzbek banks. The first to participate in the $120 million (ECU 96 million) facility will be the National Bank of Uzbekistan (NBU) and Asaka Bank.

“The number of small and medium-sized private enterprises in Uzbekistan has grown significantly since 1993 when the EBRD provided its first credit line,” said Ron Freeman, the EBRD’s first vice president. “The successful use of this line demonstrates the rising level of good investment projects that are being generated in the country. This second facility will further this process as well as promote competition within the local banking sector.”

Of the new credit line, $60 million (ECU 48 million) will be lent by NBU and $30 million (ECU 24 million) by Asaka Bank. The remaining $30 million (ECU 24 million) will be extended to other Uzbek banks as they join the program.

The first EBRD credit line for $60 million (ECU 48 million) was lent to small and medium-sized enterprises by NBU and was fully committed after three years of operation. To date, the EBRD has committed $410.1 million (ECU 354.6 million) to Uzbekistan. Four of the investments are in the financial sector.

Uzbekistan’s Fergana Refinery Is Upgraded With EBRD Finance

A $90 million (ECU 71 million) loan from the EBRD will enable the National Corporation for Oil and Gas Industry of Uzbekistan, Uzbekneftegas, to upgrade the Fergana Refinery located in the far east of the country. This will allow the refinery to process domestic crude oil with a high sulphur content as well as improve the refinery’s safety system and reduce environmental pollution. In order to coordinate the implementation of the project, the EBRD has signed a co-lenders’ agreement with the Export-Import Bank of Japan (JEXIM).

At the signing ceremony in London, EBRD first vice president Ron Freeman said: “By processing domestic crude oil, Uzbekistan can achieve a greater level of self-sufficiency in the hydrocarbons sector. The improved processing of domestic crude oil with its high sulphur content will provide Uzbekistan with top quality oil products processed at the refinery. The improvements will also put the Fergana Refinery in compliance with international environmental and safety standards.”

Ibrat Zainutdinov, deputy chairman of Uzbekneftegas, said: “Modernizing the Fergana Refinery as well as completing another refinery in Bukhara will mean that all domestically refined products will be of high enough quality to significantly increase exports.”

The refinery has changed its raw material from Russian crude oil, with a low sulphur content, to local crude extracted from the recently developed Kokdumalak oil field, which has a high sulphur content, and from other domestic sources. The proceeds of the loan will be used to purchase and install a desulphurisation unit, among other improvements.

Uzbekneftegas is a fully integrated, state-owned oil and gas company responsible for managing the entire oil and gas industry of Uzbekistan. The total cost of this project is $195.5 million (ECU 155.3 million). The EBRD is co-financing for the first time in countries of the former Soviet Union with JEXIM, which is lending in yen an amount equivalent to nearly $89 million (ECU 70.7 million). The balance is coming from Uzbekneftegas.

In Kyrgyzstan Both GDP and Inflation Rise

For the first time since gaining independence five years ago, the Kyrgyz Republic achieved an annual increase in GDP, based on rising industrial and agricultural output. The budget deficit fell both in real figures and as a percentage of GDP. The amount of capital investment exceeded the value of the preceding year, with foreign investment constituting almost two-thirds of the entire volume.

At the same time, inflation was higher than in 1995, the som devaluated considerably, and the trade deficit soared. The official unemployment rate decreased slightly, but one-fifth of the country’s factories, operating sporadically, had their workers on leave-without-pay status.