Freezing Kyrgyzstan to sell its gas company to Gazprom

Mon Dec 24, 2012 5:29am EST

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By Olga Dzyubenko

BISHKEK, Dec 24 (Reuters) - Kyrgyzstan will sell its state gas company to Russia's Gazprom early next year, to ease a crippling energy crisis, its president said on Monday.

Gas supplies to Kyrgyzstan's north via its leading supplier Kazakhstan have sputtered due to mounting unpaid bills. Tens of thousands of residents of the capital Bishkek have suffered night temperatures at minus 20 Celsius (minus 4 Fahrenheit).

Russia, which like the United States runs a military air base in Kyrgyzstan, is keen to strengthen its economic foothold in the mountainous country neighbouring China.

Simmering popular discontent and opposition criticism of the fledgling cabinet of Prime Minister Zhantoro Satybaldiyev pose a threat to the fragile peace in the impoverished nation of 5.5 million which has seen two presidents deposed in violent revolts since 2005.

"If in the first quarter of next year Gazprom becomes the owner of Kyrgyzgas, we will have no stoppages of gas supplies," President Almazbek Atambayev told his annual news conference, referring to the Kyrgyz state-run gas company.

"As a citizen and president, I do not cling to Kyrgyzgas. I only need affordable, uninterrupted and inexpensive gas supplies to our towns."

Kyrgyzstan also wants the Russian gas giant to invest no less than $500 million in modernising its gas transportation network and prospect for natural gas, Atambayev said.

"Gazprom accepted all these conditions and said: 'We want to buy the entire 100-percent stake (in Kyrgyzgas)'," he said.

Atambayev said the state and its social fund, which is in charge of pensions and other welfare, jointly held 87 percent in Kyrgyzgas. "So I told them (Gazprom) that they would have to buy out the remainder from minority stake holders."

In September, Moscow agreed to write off nearly $500 million in Kyrgyz debts in return for a package of military and energy deals with Bishkek.

In October, Atambayev took part in a ground-breaking ceremony in northern Kyrgyzstan, where Russian state-controlled power producer RusHydro will build four power stations by 2016 .

In a clear reference to his nationalist opponents at home who fear Russia's growing role, Atambayev said: "We should not behave like a dog in the manger. We only want our citizens to have gas, electricity and heating in their homes."

Local media had quoted Kyrgyz government and state officials as saying that Kyrgyzstan was prepared to sell its gas company to Gazprom for a nominal price of just $1 in order to get a strong investor for the decrepit sector.

"I don't know where they took this figure of $1," Atambayev said. "In fact, Gazprom will have to pay more ... because Kyrgyzgas owes around $40 million to Kazakhstan alone."

Kazakhstan supplies 50,000 cubic metres of natural gas per hour to Kyrgyzstan at $224 per 1,000 cubic metres. Next-door Uzbekistan supplies 8,700 cubic metres per hour to southern Kyrgyzstan, charging $290 per 1,000 cubic metres. (Writing by Dmitry Solovyov, editing by William Hardy)

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