Potential foreign and local investors in Kazakhstan’s oil and gas sector say they are undeterred by Prime Minister Nurlan Balgimbaev’s announcement that Kazakhstan was "suspending" privatization in the energy sector. (February 16) Balgimbaev announced on February 10 that the government wanted more time to choose a strategic partner for the Kazakhoil national oil company and alternative routes for pipelines to world markets. He stressed that the decision was only temporary, and said it had President Nursultan Nazarbaev’s full support. (Western agencies, February 10; Delovaya nedelya, February 12; Panorama, February 13)
Although Kazakhstan was, in 1991, the first Soviet successor state to launch a privatization program, the program did not get off the ground until late 1993. Since then, privatization has consisted of three strands: a case-by-case program to attract strategic investors into large firms, a mass privatization program using vouchers and a small-scale program in which small firms have been auctioned off. Case-by-case privatization is being used for Kazakhstan’s blue-chip industries, to which several of the Republic’s major oil and gas companies belong. These tenders have either persuaded foreign firms to take on management contracts or have sold a majority stake in enterprises. In most cases in the oil and gas sector, the latter has applied.
The case-by-case sale of firms to strategic investors picked up under former Prime Minister Akezhan Kazhegeldin in 1996 and 1997 with a series of government decrees pertaining to oil and gas and former defense industries. Of the 213 enterprises selected, 29 were in oil and gas, and of these 22 had been sold by mid-1997. Those sold include the extraction companies Mangistaumunaigaz and Aqtobemunaigaz, and the three oil refineries of Atyrau, Pavlodar and Shimkent. (GKP-GKI State Privatization Committee Bulletin, No. 5, August 1997) Privatization in the oil and gas sector accounted for most of the $739.7 million privatization revenues of 1997. (Reuter, February 16)
With few energy companies now left for sale, it is hardly surprising that Balgimbaev should tread cautiously with the sale of what remains. This includes not only the outstanding state shares in the above key companies and others (usually at around 30 percent of the company’s total shares) but also majority stakes in the strategic companies of Kazakhoil, Tengizneftegas and Embaneftegaz. Although Balgimbaev did emphasize that this was merely a pause in, not a cessation of privatization, the tone of his press conference suggests a period of consolidation after the multiple privatizations under Kazhegeldin. No date was given for the resumption of privatization through tenders, but some of the outstanding state shares are planned to be auctioned off at Kazakhstan’s Stock Exchange this autumn.
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