Foreign companies queue up to sue cash-strapped Turkmenistan

* Arbitration claims against Ashgabat piling up

* Companies from Belarus, Germany, Turkey, Russia have sued

* Some see financial difficulties as reason for non-payment

* Manat worth less than a fifth of official rate on black market

ALMATY, April 17 (Reuters) - A deal for Russia’s Gazprom to resume buying gas 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, has not replied to requests for comment on the lawsuits.

Persistent foreign currency shortages, caused by a drop in export revenue have caused 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 materials 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 percent of the planned volume in the first nine months of 2018 and both sides blame each other for a failure to reach the designed capacity.

A Belarussian government source said Minsk believed Ashgabat’s actions reflected its financial situation.

“We understand all the difficulties our partners are having, but we do not understand why on earth Belarus has got to pay for those difficulties,” said the source who was not authorised to comment publicly.


Among other parties suing Turkmenistan are insolvency administrators of German contractor Unionmatex, who say it went bankrupt because Ashgabat had not paid it 32 million euros, and several Turkish firms.

The two most recent arbitrations, from Unionmatex administrators and Turkey’s SECE İnsaat ve Ticaret A.S., were registered last October, with proceedings in early stages.

The German firm’s administrators said after trying for years to settle the matter out of court, it seemed there was no prospect of convincing the Turkmen government to pay voluntarily.

The lawyers said that while Turkmenistan’s finances may be dependent on commodity prices, its financial situation was never mentioned as a reason for a refusal to settle out of court.

“Turkmenistan’s decisions are not rational, they depend on the mood of the president and the economic situation comes on top of that,” the lawyers said.

Another plaintiff, Russia’s top mobile phone operator MTS , this month doubled its estimated losses from a long-running dispute with Turkmenistan to $1.5 billion.

It was forced to suspend services in the country in 2017 after the state telecoms provider cut it off from its network.

A source close to the company told Reuters it had also experienced difficulties with repatriating profit due to restrictions on foreign exchange purchases and it took a long time to secure permissions from the Turkmen authorities. (Reporting by Olzhas Auyezov and Mariya Gordeyeva; Additional reporting by Caroline Copley in Berlin, Marat Gurt in Ashgabat and Andrei Makhovsky in Minsk editing by David Evans)