Monday , July 6 2020
Breaking News
Home / World Business / Foreign companies queue up to sue cash-strapped Turkmenistan
Foreign companies queue up to sue cash-strapped Turkmenistan

Foreign companies queue up to sue cash-strapped Turkmenistan

ALMATY: A deal for Russia’s Gazprom to resume gas purchase from Turkmenistan came not a moment too soon for the Central Asian state because it is so short of foreign currency that a number of foreign companies have taken it to court over unpaid bills.

Turkmenistan’s economy had boomed until 2015, supported by high energy prices and gas exports, and the government awarded megaproject contracts for new factories and highways.

After energy prices crashed and Russia, one of the two main gas buyers, halted all purchases from Turkmenistan, foreign contractors started complaining about non-payments.

Now, some are taking the government of President Kurbanguly Berdymukhamedov to arbitration in an attempt to collect money they say is owed to them by the nation of six million people.

Turkmenistan’s foreign ministry, which handles media relations on behalf of the government, did not reply to requests for comment on the lawsuits.

Persistent foreign currency shortages, caused by a drop in export revenue, have prompted many international businesses, which had previously flocked to Ashgabat, to stay away.

The official exchange rate of the Turkmen manat is 3.5 per dollar. On the black market – the only place where one can realistically buy foreign currency – the greenback trades at 18.6 manat per dollar.

Although small and short-term, the Gazprom deal could be a sign larger sales may be negotiated that will provide badly needed hard currency to purchase equipment and material for Turkmenistan’s industrial megaprojects.

Belgorkhimprom, a state-owned company from fellow autocratic ex-Soviet republic Belarus – the world’s third-biggest producer of potash fertiliser – said last month it had filed a lawsuit for more than $150 million against Turkmenistan. Belgorkhimprom said in a statement Ashgabat had failed to pay in full for the construction of the Garlyk potash factory completed in 2017 and seized equipment worth over $7 million.

Turkmenistan, in turn, has filed its own lawsuit to the same arbitration institute in Stockholm, accusing the Belarussian firm of not meeting its contract obligations, according to government statements.

The factory which was supposed to help diversify Turkmen exports produced just 2.3% of the planned volume in the first nine months of 2018 and both sides blame each other for the failure to reach the designed capacity. A Belarussian government source said Minsk believed Ashgabat’s actions reflected its financial situation.