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RR RUEHLN RUEHVK RUEHYG
DE RUEHTA #0474/01 0710148
ZNR UUUUU ZZH
R 110148Z MAR 08
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 1940
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RUEATRS/DEPT OF TREASURY WASHDC
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RUEHAK/AMEMBASSY ANKARA 2146
RUEHBUL/AMEMBASSY KABUL 0381
RUEHNE/AMEMBASSY NEW DELHI 0494
RUEHAST/USOFFICE ALMATY 0290

UNCLAS SECTION 01 OF 03 ASTANA 000474 
 
SIPDIS 
 
DEPT FOR SCA/CEN (O'MARA) 
DEPT PASS TO OPIC - BALLINGER 
DEPT PASS TO TDA FOR STEIN, EXIM FOR GLAZER 
DEPT PASS TO AID - EE-PHILLIPS/RUSHING 
TREASURY FOR OASIA/VELTRI 
USDOC FOR 4231/ITA/MAC/MLONDON, 4201/BISNIS 
USDOC FOR 6110/ITA/TD/BI/RHALPERN 
ANKARA FOR CFC 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EIND ENRG EPET EFIN KTDB KZ
SUBJECT:  KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, FEBRUARY 2 - 22, 
2008 
 
 
ASTANA 00000474  001.2 OF 003 
 
 
¶1.  Summary:  This information is drawn primarily from the 
Kazakhstani local press, and has not been verified for accuracy. 
 
-- Bilateral Talks with Canada Completed 
-- New Head of Samgau Holding Appointed 
-- General Electric Begins New Era of Cooperation 
-- EBRD to Invest over $1 Bln in Kazakhstan 
-- Agricultural Sector News 
-- Results of Kazyna in 2007 
-- State To Acquire Stake in Ekibastuz GRES-1 
-- Greenoak Group Might Manage Batumi Oil Terminal for KMG 
-- KMG To Build Gas Refinery 
-- Government's Initiatives on Subsoil Use Issues 
-- Energy Statistics for January of 2008 
 
Bilateral Talks with Canada Completed 
------------------------------------- 
 
¶2.  A protocol completing bilateral talks between Canada and 
Kazakhstan for WTO accession was signed.  According to the 
Vice-Minister of Industry and Trade Aitzhanova, Kazakhstan had to 
compromise by reducing import tariffs for such goods as aircraft, 
whisky and tobacco.  At the same time, she pointed out, Kazakhstan 
managed to protect the interests of agricultural producers. 
(Kazakhstan Today News Agency, February 13) 
 
New Head of Samgau Holding Appointed 
------------------------------------------- 
 
¶3.  Replacing Azamat Abdymomunov, former presidential aide Serik 
Burkitbaev was appointed the new CEO of the national scientific and 
technological holding company Samgau.  Samgau was established in 
2007 with the goals of creating a modern communication 
infrastructure and unifying existing national information and 
communication resources.  Samgau is comprised of 12 companies 
including "Katelko" (national broadcasting company), "KazTeleRadio" 
(TV and radio company), KazPost (national postal service), and 
KazSatNet (satellite technology.) (Interfax-Kazakhstan, February 
15) 
 
General Electric Begins New Era of Cooperation 
---------------------- ----------------------- 
 
¶4.  The government of Kazakhstan and General Electric International 
(GE) signed a partnership memorandum on February 21.  In the words 
of the President and CEO of General Electric International, Nani 
Beccalli-Falco, this is a new era in the partnership between GE and 
Kazakhstan.  The memorandum outlined many priority sectors of 
cooperation including oil and gas transportation, power generation, 
bio-fuels and alternative energy, mining, uranium enrichment, 
investment management, the development of the transportation 
infrastructure, and machine building.  (Interfax-Kazakhstan, 
February 22) 
 
EBRD to Invest over $1 Bln in Kazakhstan 
---------------------------------------- 
 
¶5.  "I think that in 2008 we will sign new projects worth over $1 
billion, with approximately half of the sum to go to the banking 
sector," Andre Kuusvek, the EBRD country director for Kazakhstan, 
told a news conference at the Interfax office in Almaty.  The EBRD 
will continue to operate loan programs for small and medium business 
in the country, he said, adding that some five Kazakh commercial 
banks will take part in the program this year.  In addition, the 
EBRD "will try to open the market of syndicated loans for Kazakh 
banks" in the second half of 2008.  (Central Asia General Newswire, 
February 19) 
 
Agricultural Sector News 
------------------------ 
 
¶6.  The Government of Kazakhstan (GoK) lifted and decreased import 
tariffs for agricultural equipment.  According to the GoK's 
regulation, import duties were significantly reduced for seeders 
(from 5% to 0%) and caterpillar tractors (from 15% to 5%.)  A zero 
 
ASTANA 00000474  002.2 OF 003 
 
 
percent import duty has also been established for other large farm 
machinery including cultivators, ploughs, and harrows.  The GoK 
believes that this measure will boost import of agricultural 
equipment from non-CIS countries.  The Customs Union formed by 
Russia, Belarus and Kazakhstan will also continue to enjoy duty-free 
imports of agricultural machinery.  (Interfax-Kazakhstan, February 
8) 
 
¶7.  The GoK increased state subsidies for several crops.  According 
to the Agriculture Minister Yesimov, subsidies per hectare were 
raised from 1,200 tenge ($10) to 4,800 tenge ($39.7) for oilseeds, 
from 10,174 tenge ($84.2) to 50,000 tenge ($414) for sugar beet, and 
from 9,000 tenge ($74.5) to 12,000 tenge ($99.3) for melons and 
vegetables.  He also announced about a new subsidy of 1,500 tenge 
($12.4) per hectare for potatoes.  (Interfax-Kazakhstan, February 
18) 
 
Results of Kazyna in 2007 
------------------------- 
 
¶8.  According to Kazyna Chairman Arman Dunayev, the Kazyna 
Sustainable Development Fund earned a 4.86 billion tenge (around 
$39.657 million) profit in 2007.  This was achieved as a result of a 
significant reduction in expenditures, Dunayev said.  The 
accomplishment marks a significant turnaround for Kazyna, whose 
losses totaled 4.636 billion tenge (around $36.78 million) in 2006. 
(Interfax-Kazakhstan, February 12) 
 
State To Acquire Stake in Ekibastuz GRES-1 
---------------------- ------------------- 
 
¶9.  Prime Minister Karim Masimov ordered the state-owned company 
Samruk Energo to conduct negotiations with Kazakhmys PLC to acquire 
a 33-50% stake in Ekibastuz GRES-1, a coal-fired power plant in 
Pavlodar province.  On February 5, 2008, Kazakhmys signed an 
agreement to buy Ekibastuz GRES-1 and the Maikuben West open coal 
mine from AES Corporation.  (Panorama newspaper, February 8) 
 
Greenoak Group Might Manage Batumi Oil Terminal for KMG 
--------------------------------------------- ---------- 
 
¶10.  Kazakhstan's national oil and gas company KazMunayGas (KMG) 
plans to hand its management rights on the Batumi Oil Terminal to 
Danish-led Greenoak Group.  On February 6, 2008, KMG acquired a full 
stake in the terminal from Greenoak and its partners.  (Interfax - 
Kazakhstan, February 8) 
 
KMG To Build Gas Refinery 
------------------------- 
 
¶11.  By April of 2008, KMG intends to complete a technical 
feasibility study and an economic cost analysis for building the 
Karachaganak-based Aksai Gas Refinery with an initial transit 
capacity of 5 billion cubic meters of gas a year.  Karachaganak gas 
shipped to the Aksai Gas Refinery will meet domestic demand, while 
gas transported to the Orenburg Gas Refinery will be exported. 
(Interfax - Kazakhstan, February 12) 
 
Government's Initiatives on Subsoil Use Issues 
---------------------- ----------------------- 
 
¶12.  Prime Minister Karim Masimov ordered Kazakhstan's Holding for 
State Assets Management "Samruk" to create a national mining and 
metals company that will manage state stakes in all mining and 
metals projects similar to KMG representing state interests in the 
oil and gas industry.  (Interfax - Kazakhstan, February 8) 
 
¶13.  Emergency Minister Vladimir Bozhko notified Prime Minister 
Masimov that he warned Arcelor Mittal Temirtau that its mining 
license will be revoked if the company does not improve its labor 
safety standards. Masimov proposed to amend the subsoil use law to 
strengthen labor safety requirements in subsoil use contracts. 
(Kazakhstan Today, February 19) 
 
Energy Statistics for January of 2008 
 
ASTANA 00000474  003.2 OF 003 
 
 
------------------------------------- 
 
¶14.  According to the National Statistics Agency, in January of 
2008, Kazakhstan produced 4.903 million tons of crude (5.4% more 
than in January of 2007) and 1.058 million tons of gas condensate 
(15.4% more year-on-year.)  Coal production in Kazakhstan rose 11.2% 
to 10.17 million tons.  Electricity production grew 9% to 8.196 
billion kilowatt-hours.  (Interfax - Kazakhstan, February 13) 
 
 
ORDWAY