News Bulletin
Released weekly by the Embassy of the Republic of Kazakhstan


No 14 October 31, 2007

Amendments to the legislation on subsoil have been signed into law
Bringing fight against corruption to a new level
Russia values its partnership with Kazakhstan
Indo-Kazakh cooperation on dynamic rise, says envoy

Kazakhstan’s Government readjusts 2007 GDP growth forecast
Kazchrome to launch chrome pellet plant in 2009

Kazakhstan target Astana success at Tour de France


Amendments to the legislation on subsoil have been signed into law

Last week President of Kazakhstan signed amendments to the Law on Subsoil Use. The amendments have been initiated by Kazakh MPs after a substantial debate focusing on the protection of economic interests of Kazakhstan in situations when foreign partners in major deals persistently do not live up to their commitments.

There were a lot of controversial speculations about the amendments in the energy community implying that the measure would impair the investment climate in Kazakhstan. But Kazakhstan’s Prime Minister and Energy Minister have made it very clear that the main target of the amendments are those foreign operators in Kazakhstan who ignore legitimate economic interests of the country and do not stick to their contractual obligations. Both officials have unequivocally confirmed that the Government continues to be fully committed to the principle of sanctity of contracts.

First of all, the amendments will apply only to a limited number of strategically important oil blocks where subsoil user’s malpractice could seriously damage economic interests and national security of Kazakhstan. The Government will identify such oil blocks in a special list.

Secondly, the amendments in no way affect one of the main principles and clauses of the Subsoil Law (Article 45-2) which provides for the parties to negotiate situations which affect the balance of economic interests. Should they fail to do so then the court ruling will prevail with full market compensation to the affected party if a contract is ruled as terminated because of a malpractice by an operator.

Thirdly, the protecting clause of the Law which fixes the right to a court appeal for an operator remains fully intact.

The Government has made it very clear that by promulgating the amendments it has switched on the protection mechanism for situations when the nation’s strategic economic interests could be seriously endangered.

The best way to avoid application of the amendments is to operate and do business as per contract, strongly recommends the Government. The amendments will apply only to those who violate undertaken commitments.  

Bringing fight against corruption to a new level

Kazakhstan’s Secretary of State Kanat Saudabayev chaired a regular session of the Commission under the President of the Republic of Kazakhstan on the Fight against Corruption in Ak Orda (Presidential Palace) on October 29.

The session focused on the work of state bodies in fighting corruption during the nine months of 2007; raising the quality of anti-corruption expertise of existing and new legal acts; strengthening financial discipline in state organs and legal entities with governmental participation; and introducing criteria for rating the levels of corruption in state bodies. The Commission heard reports on the issues from Sarybai Kalmurzaev, Chairman of the Agency on the fight against economic and corruption related crimes, Zagipa Baliyeva, Minister of Justice, and Omarkhan Oksikbayev, Chairman of the Accounting Committee for control of the execution of the national budget. Sergei Zlotnikov, Executive Director of Transparency Kazakhstan, also took part in the meeting.

Opening the session, Secretary of State Saudabayev said the introduction of an effective system of anti-corruption expertise for legal acts, as well as the adoption of effective measures on strengthening financial discipline in budget expenditures will lead to a more effective fight against corruption. “We need to exclude any possibility for corruption at the drafting stage of laws and sub-law acts at both central and local levels. At the same time, we must toughen the responsibility of managers of budgetary programs for non-prescribed, and therefore illegal, use of people’s money,” Kanat Saudabayev said.

At President Nazarbayev’s instructions, the Commission adopted a decision to introduce a system of rating the levels of corruption in state bodies from January 1, 2008. The system, developed taking international experience into account, will serve as a mechanism to objectively diagnose the volumes of corruption in different areas of public interaction and take timely measures against it.

Concluding the meeting, Secretary Saudabayev said: “During the years of independence, President Nursultan Nazarbayev has been leading the fight against corruption without compromises, on a systematic and continuous basis. Our Commission, which is the President’s most important tool in this area, has today adopted major principled decisions. It is now the task of executives of government bodies of all levels to ensure these decisions are unwaveringly and effectively implemented. That will be the indicator of their civic and professional responsibility. As we implement the strategy of making Kazakhstan one of the most developed and competitive countries of the world, the President demands from all of us a qualitative improvement in state services for our citizens, and the most convincing testimony of that is the real reduction of corruption in our country.”

Russia values its partnership with Kazakhstan

According to Russian Foreign Minister Sergei Lavrov, Russia highly values its partner relations with Kazakhstan, the Embassy of Kazakhstan reports referring to a news article by the ITAR TASS news agency.

“Today, we can rightfully claim that these relations are model,” Minister Lavrov stated at the conference entitled “15 Years of the Establishment of Diplomatic Relations between Russia and Kazakhstan: Results and Prospects of Cooperation” held in Astana on Tuesday.

“As good friends and neighbours, Russia and Kazakhstan respect each other’s interests in  political, economic, military and other” dimensions, Lavrov said.

He cited the energy sphere as an exemplary element of bilateral relations.

With the increased role of energy in their foreign policy, “Russia and Kazakhstan are increasingly active in their cooperating in the development of fuel and energy complexes. This fact is also important as far as “providing energy security in Eurasia and on global scale, as well as energy supplies to world markets” are concerned.

“Our countries are reliable partners in this area, and they consistently meet all their obligations,” Lavrov said.

Indo-Kazakh cooperation on dynamic rise, says envoy

Bilateral cooperation between Kazakhstan and India, especially in the energy sector, would see a dynamic rise in the immediate future, said Dr. Kairat Umarov, Kazakhstan's Ambassador to India.

Addressing a select group of media persons, academics and experts at the Embassy of Kazakhstan on the occasion of the 10th anniversary of Kazakhstan 2030 and the celebration of its Republic Day, Ambassador Umarov said: "Our bilateral cooperation is on the dynamic rise."

"In 2006, the trade turnover between the two countries has increased by 74 per cent, reaching the 210 million dollar mark. Last year, Indian investment to Kazakhstan has increased to 16 million dollars," he added.

Appreciating India's constant support to Kazakhstan's overall development and economic progress, Dr. Umarov said Kazakhstan would make it possible to reach the next height of progress in 2030.

Energy-deficient India is keenly looking towards Kazakhstan as one of the countries that it would like to tap to meet its domestic demands.

India's energy demands are expected to reach nearly 3.5 million barrels per day (mbd) by 2010.

Kazakhstan, that is the nearest energy rich country, could be a significant source for India to meet its future energy security. According to a report released by the Washington-based Energy Information Administration, Kazakhstan has proven oil reserves of 13.8 billion barrels and 68.5 trillion cubic feet of natural gas deposits.

In the first half of the twenty first century, India will be one of the top five consumers of energy. Currently, most of India's import comes from the Persian Gulf region, but to enhance its energy security India needs to look at an alternative source of energy. In this respect the Caspian region can be an alternative source for India since this region is considered to have the proven reserves of 25 to 30 billion barrels of oil.

Extract from a news article by Ashok Dixit published on www.dailyindia.com on Oct. 30


Kazakhstan’s Government readjusts 2007 GDP growth forecast

The Government of Kazakhstan expects GDP growth of 9.7 per cent this year, reports the Embassy of Kazakhstan referring to a news article by the Interfax-Kazakhstan news agency.

The GDP will total 13,315.2 bln tenge.

Originally, the government forecasted economic growth of 8.6 per cent in 2007. The figure was revised in May as 9.7 per cent and adjusted in September (9.9 per cent).

Meanwhile, the Government left unchanged its forecast for growth in 2008 (9.6 per cent, 15,249.4 bln tenge in total) and 2009 (9.2 per cent, 18,145 bln tenge).

Kazchrome to launch chrome pellet plant in 2009


Kazchrome, the world's third-largest ferro-chrome producer, is spending $111 million to build a new plant to produce 700,000 tonnes a year of chrome ore pellets, its parent company said on Tuesday.

"The launch of the plant is planned for the second quarter of 2009," Eurasian Natural Resources Corp said in a statement.

Finnish mining equipment maker Outotec will also participate in the project and supply the technology, ENRC said.

Kazchrome is the world's single largest chrome ore miner and already operates a 600,000-tonne-per-year pellet plant in the town of Khromtau in the northwestern Kazakh region of Aktobe.

The new plant, which is expected to be running at full capacity by the end of 2009, will supply most of its pellets to Kazchrome's ferro-alloy smelters in Aksu and Aktobe.

Kazchrome posted a net profit of $266 million in 2006. Annual production of ferro-chrome, used to make stainless and special steels, is more than 1 million tonnes.

The company is one of the main assets of ENRC, a mining and metals group that accounts for about 5 percent of Kazakhstan's gross domestic product and has annual sales of over $3 billion.

The group also controls Aluminium of Kazakhstan, Zhairem GOK and the Sokolov-Sarbai Mining and Production Union, the main supplier of iron ore to Russia's Magnitogorsk Iron and Steel Works.

Shareholders in ENRC include the Kazakh government and copper miner Kazakhmys Plc.


Kazakhstan target Astana success at Tour de France


Kazakhstan hopes to use its newly revamped Astana cycling team to win next year's Tour de France, the head of the Kazakh Cycling Federation said on Wednesday.

"We, the Astana team, must win the Tour de France next year. We will win. It's our main goal," Danial Akhmetov told Reuters in an interview.

Astana has changed its team structure after becoming embroiled in a series of doping scandals this season. This month the team signed Tour de France winner Alberto Contador to ride for the new-look squad over the next two years.

"I am convinced that certain difficulties that have emerged within the team are already behind us. The best managers, the best athletes believe in Astana's future," said Akhmetov, who also heads the Ministry of Defence.

Former Discovery Channel team manager Johan Bruyneel, whose teams won eight Tours de France in nine years, has agreed to take charge of the Astana project, bringing Contador as well as this year's third-place finisher American Levi Leipheimer.

Astana is a Swiss-registered team backed by some of Kazakhstan's largest industrial companies. The national railroad, a government-owned airline, a state-run natural gas company and a state mining company all feature on the team kit.

The team was forced to pull out of the Tour de France in July after Alexander Vinokourov tested positive for a homologous blood transfusion following his victory in the stage 13 time trial on July 21.

Vinokourov denies any wrongdoing. Compatriot and teammate Andrey Kashechkin also tested positive for a homologous blood transfusion while on holiday in Turkey in August.

"Of course what happened to Kazakh riders has made me very sad," Akhmetov said.

"We believe in the anti-doping charter and will abide by it strictly. Any athlete caught doping should be punished. This is what stands behind the integrity of this sport."

News Bulletin of the Embassy of the Republic of Kazakhstan
Contact person: Zhanbolat Ussenov
Tel.: 202-232-5488 ext 104; Fax: 202-232-5845
E-mail: zhan@kazakhembus.com
Web-site: www.kazakhembus.com  

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