Vice Premier Paid Visit to Kulsary (Updated)

On December 26 the government delegation, headed by Vice-PM Krymbek Kusherbaev, paid a working visit to the city of Kulsary. They were accompanied by Baktykozha Izmoukhambetov, the Governor of Atyrau Oblast, his Deputy - Goumar Dyusembaev and other local officials.

HOT FINNISH SAND

The officials went to see Karashungil LLP mini-plant – the single plant in West Kazakhstan that produces vertical and horizontal reservoirs. Then the delegation visited poultry farm Atyrau-Sauda LLP with the planned full capacity of 150 tons of fowl and 185mln eggs per year. Both companies belong to well-known businessmen -  Balzhigitov brothers from Zhyloy district.

Mirzhan BALZHIGITOV, the director of Karashungil LLP said: “To be frank, due to a long process of payment transfer for the completed orders by the oil companies, we delay the salary payment to our employees for 1-2 months. Local businesses need orders in order to expand the business.”

Since the conversation right from the beginning was around TCO’s unwillingness to work with local manufacturers and suppliers, Kusherbaev remembered similar issues of businessmen when he was the Governor of the West Kazakhstan Oblast:

- I was surprised in number of cases when I learned that foreign companies import sand … from Finland. They told me that our Naryn sands are good, but it doesn’t have an ISO certificate. Mr. Izmoukhambetov, please keep that in mind.  

- Yes, I know this issue very well, - responded Izmoukhambetov. – They (foreign companies) always include into the list of requirements to the local companies a couple of known inexecutable conditions.

– I know: something like, "In fact, we don't like your hair style", – joked Vice Premier.

YOU NEED APPROVAL? - YES!

The agenda of the meeting in Kulsary was the implementation of the comprehensive plan for development of a single-industry town. And the issue that TCO ignores the local companies was raised again, but now in the presence of TCO top-managers.

Anuarbek Dzhakiev, TCO Deputy General Director, advised that within the framework of Igilik program ($20mln annually) the company spent $62mln for complex reconstruction of water supply system in the district:

- Starting from 2013 we will increase the funds of Igilik program up to $25mln per year. The partners are now discussing the issue of increasing this amount even further.

The other social projects (Kusherbaev requested to discuss social issues only) the company ties with new projects, such as Future Growth Project. To recall, the Kazakhstan party raised concerns both over technical design and local content.

- If all state agencies approve the project, then in Atyrau Oblast during the construction stage there will be opened more than 10 000 workplaces. We would like to sign a memorandum with Oblast Akimat on employment of Atyrau Oblast citizens only during the construction stage. After the facility is put into operation, 500 permanent workplaces will be opened. We would like to sign a similar memorandum with the Akimat of Mangistau Oblast for assembling bulk modules. This project envisages the opening of another 5 000 workplaces. We will, certainly, handle the personnel training issues.  

- You are asking the government to support you with the third stage of the project. Is this what you want? – asked Kusherbaev.

Dzhakiev: Yes.

Kusherbaev: Then, please keep in mind, that currently the government is raising the question of principle: about the social element of TCO activity: how to expand taxabale base, to create new workplaces, to solve social issues. And first of all, for the benefit of the people of Atyrau Oblast. And you shouldn’t try to put pressure, using influential states, in order to extend the contract. This will not happen. The destiny of your project will depend on the people who live here. People say: we live on top of oil. When, at last, we are going to see the benefit from it. The Ministry of Oil and Gas assesses your activity based on production efficiency, but the general assessment of your activity is done by the government, and then it reports to the president.

WHITE AND BLACK LISTS

Izmoukhambetov told about the nuances of recent hard negotiations with TCO:

- I know TCO’s work very well from the days when I worked in KMG and in the Ministry of Oil and Gas. Many of our issues are related to the fact that in the contract with TCO right from the beginning many important issues have not been written down. For example, not a single ton of produced oil in Tengiz goes to our refineries. Also, the contract does not provide a single dollar for social projects. And the size of funds under the Igilik program (a voluntary commitment of TCO) remains at the same level - when TCO extracted 12mln tons per year, and now when it produces 25mln tons per year. Secondly, under the terms of Igilik, the unused funds of this year are not transferred to the next year. They “burn”. In 1997, after corruption scandals with application of these funds, TCO announced that it solely will prepare the projects, organize tenders and supervise the construction activities. So, this year, the preparation of the projects and approvals by state expertise were delayed till December. In other words, they won’t have time to conduct tenders, $ 10mln will be burned and projects will not be implemented. At the recent meeting with Tim Miller (TCO General Director) and Dzhakiev I said: if you don’t solve the issue of transferring the unused funds to the next year, you will have problems. My second condition is that the projects should be prepared by us. We should jointly decide on what we would spend the funds. And let them do the construction work attracting local construction companies - the ones that we trust and the winners of tenders.

Kusherbaev agreed with the Governor’s proposals and added the statement about the need to create two lists of contracting companies, “white one” (trusted) and “black one” (charged with corruption).

- We are already working on the black list! - said the Governor.

- You cannot do without it, - nodded in consent Deputy Prime Minister.

The representatives of local companies complained that it’s impossible to get through to TCO’s tenders: the work scopes are distributed among the dozen of “friends”.

- Yes, it is so. Please note, that it is not the managers of Chevron, but Kazakh managers of TCO. You are all aware that the top management of local financial police has been replaced. We will organize the audit, and those charged for corruption will be included into the blacklist. Anuarbek, (addressing Dzhakiev) please let your management know about this, - said Izmoukhambetov to the applauses of local businessmen.

MONEY SCHEDULE

Re. Kulsary development plan as a single-industry town: According to Shakir Keikin, the Governor of Kulsary, for the implementation of the plan in 2013-2015 it is anticipated to spend about 8.7bn tenge, out of which 7.4bn tenge – from the national budget. Breakdown by years: 2.3bn tenge in 2013, 2.5bn in 2014, 3.8bn in 2015.

After the meeting the government delegation flew to Atyrau, where they visited several facilities, participated in the meeting of the fishing industry and the final meeting of the core group.

By Laura SULEIMENOVA

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