Kyrgyzstan: sharing out of “black” gold
About 70 coal deposits grouped in 4 basins: South Fergana, Uzgen, North Fergana, Kavak are located in the territory of Kyrgyzstan. Deposits of Kara-Keche coal, mined by open way, attract special interest. The Ministry of Energy and Industry again suggests separating Kara-Keche branch from Kyrgyzkomur state enterprise and creating of two joint-stock companies. Nevertheless 51 percent of Kara-Keche shares will belong to Kyrgyzkomur and the rest of shares will be proposed to Bishkek Heating and Power Plant and local communities. This tidbit warns authorities and artisanal miners who, obviously, work together.
From seizure till nationalization
Kyrgyzkomur State-Owned Enterprise has a license for development of "Central" section of Kara-Keche coal deposit. From 1984 till 2010 it was developed by local projects on three areas. At present Sredazugol and Ak-Ulak open pit are flooded and their slopes are collapsed.
Besh-Sary-K LLC developed "Central" area, belonged to former deputy Kamchybek Zholdoshbayev, until April, 2010. After April events at the request of local residents mining works on this section were suspended, there was formed a working group, which revealed project violations endangering life and health of workers. Due to it Besh-Sary-K LLC was revoked a license. Then it was given to Kara-Keche SOE. Komur and Kara-Keche state enterprises were transformed into Kyrgyzkomur in 2010 and the license for development of "Central" area of Kara-Keche coal deposit automatically switched to a new state enterprise.
It should be recalled that after March 24, 2005 the deposit was seized by followers of the self-appointed coal king Nurlan Motuev. He bossed the deposit and virtually ruled over Dzhumgal district, not obeying the local administration. In 5 years boomerang returned to him and he began complaining that Kara-Keche was seized by local residents.
Shortly before the revolution of 2010, the Head of the Government Daniyar Usenov stated that this deposit is planned to be nationalized. At this time 13 private firms were engaged in Kara-Keche development. Several years passed, but division of the deposit continues. But for this time not private companies divide it, but heads of the state coal enterprise.
Carve-up of pie
Checking business activities of Kyrgyzkomur State Enterprise for six months in 2012, the Chamber of Accounts revealed financial violations responsible for which was the Director Asanbaek Moldokeev, who paid for it with his post. Narynbek Satybaldiev took his post. The Chamber of Accounts recommended him to increase coal production up to 4 million tons per year by 2015 in order to cover needs of Kyrgyz population. In the nearest future coal need will amount to 2 million tons and 1.1 million of them is necessary for the operation of Bishkek Heating and Power Plant. The development of coal-mining industry depends on construction of Balykchy-Kara-Keche railroad with further access to China and Jalal-Abad - Torugart.
Demand for local coal increases every year because gradually Bishkek Heating and Power Plant is switching to Kara-Keche fuel. After the modernization Shabyrkul coal won't be in demand at all. That is why at present it is necessary to direct all efforts for development of coal industry and stop dealing for own purposes.
The Parliament knew about tense situation on the deposit and required put it in order. "When finally Kara-Keche issue will be removed? Local residents die, bandits are active. If we do nothing, all people will die out. What kind of coal mining? And why do we need Kyrgyzkomur enterprise? Isn't it easier to give it to private sector?" the Chairman of the committee on fuel and energy complex and subsoil use Kozhobek Ryspayev inquired.
Recall that one of the last incidents happened on December 10, 2013 when certain people entered the mine and tried to load coal without permission. There happened a cave-in, three people died and machines were left underground.
It should be noted that in March Kozhobek Ryspayev stated that investors are ready to put $39 million to Kara-Keche deposit. According to him, the committee received a letter from the administration of Kyrgyzkomur SOE that it can't fulfill the development of the "Central" area in full. "Fir achievement of technical reequipment Kyrgyzkomur agreed with Shin Hwa Resoyrse Co Ltd South Korean Company having great experience in coal-mining industry, exploitation of coal deposits in Korea, Mongolia, Thailand and Indonesia, on creation of KSH LLC joint venture. Modern technologies and methods of coal mining will be applied within the operation of the enterprise. The Korean party will cover all expenses for procurement and supply of equipment. It is also ready to invest development of coal-mining industry in Kyrgyzstan at the amount of $12 million," the message notes.
Besides, there was made an agreement with the Posit Coal Australian Company on investment of $27 million for development of Kara-Keche in 2013. However by the year-end it was found out that the administration of the company has doubtful reputation and Kyrgyzkomur SOE terminated the agreement unilaterally. At present licenses for the deposit development hold the following enterprises: Kyrgyzkomur SOE ("Central" section), Sharbon CJSC ("Tokson-Teke" right-bank section), Ak Zhol Komur JSC (western section). By the way, the founder of Sharbon is a young entrepreneur Tilek Eraliev. There are the following founders listed: Azhydaar Holidng LLC heade by Aizhan Adamkalyevna Chynybayeva. Adamkalyi Chynybayev in his turn is married to the younger sister of the caretaker president of Kyrgyzstan Roza Otunbayeva - Gulmira.
Black miners
One more fact that deserve attention - criminal showdowns of members of organized crime groups in the coal mine. The last skirmish happened in November of 2013. About 10 armed individuals took part there. Supposedly, there were the members of criminal group headed by Maksat Abakirov nicknamed "Vodolaz" (diver). Supposedly, there was a skirmish with another criminal group headed by the leader Limonti. Allegedly crime groups didn't share influence over the mine. However law enforcement bodies shifted the blame to drivers, who didn't wait for their turn, but couldn't prove the involvement of criminals in the shootout. Dissatisfied with the work of new director of Kyrgyzkomur Narynbek Satybaldiev, coal miners addressed to the Parliament. The Chairman of Dzhumgal Distrcit Council Kalybek Azhygulov explained that the Ministry of Finance was to allocate 650 million soms within two years for development of the deposit with switching to production capacity of 250,000 tons of coal in 2012. However means weren't allotted and the enterprise operated at a loss, there was a lack of means to rent equipment its repair and, as a result, Kara-Keche didn't cope with set task. "At present there is a difficult situation stipulated by out-of-date technology of coal mining. Narynabek Satybaldieyv, as a previous director, demands means from coal companies for maintenance of Kyrgyzkomur SOE personnel - without economic calculations and work completion certificates. He is engaged in intriguing and split of personnel," Kalybek Azhygulov noted.
The letter of the public committee of Kara-Keche protection reports that the security officer Tynchtykbek Mederbekov raises 200 soms from drivers for entry to the field. The Director of Kyrgyzkomur SOE Narynbek Satybaldiyev admitted presence of coal mafia operating till his coming. According to him, the previous director received salary at 45,000 soms and the branch management procedure was changed. "Procurements in Kyrgyzkomur were made at an over-inflated price. Workers of Kara-Keche mine are involved in removal of fuel. They put changes into invoices. It testifies the presence of coal mafia," Narynek Satybaldiyeb stated and asked the steering committee to assist in getting means for development of the deposit.
Together with the Ministry of Energy and Industry there was worked out a business plan of "Central" section development, which stipulates for increase of coal production up to 250,000 tons in 2014, creation of motor transport units in structure of Kyrgyzkomur SOE for direct coal supply to consumers. In effective organization of the process, prime cost of a ton in Bishkek will amount to 1,900 soms. It will give an opportunity to sell coal at not more than 2,500 that is less by 30-35 percent of current price.
For all these coal miners need next to noting $5.5 million of state loan. The committee on fuel and energy complex supported the suggestion to reform Kyrgyzkomur SOE. The Government was given recommendations to allocate state loan with maturity period of 3 years and grace period up to one year for development of "Central" section of Kara-Keche deposit, putting amendments to the law on public-private partnership and introduce a norm in order coal companies to be registered at the location of the deposit.
The Ministry of Energy and Industry should assist in collection of receivables for delivered coal and clarify the situation in Kara-Keche branch. The Government and the Ministeyr of Energy must report on implementation of the committee's decision till March 10.
Instead of postscriptum
In the meantime, Kyrgyzkomur and Endüstriyel Elektrik Elektronik San.ve Tic.Ltd Şti Turkish Company on programs in Central Asia signed up a memorandum on cooperation in organizing joint research of economic and geotechnical potential of coal deposits of the Kyrgyz Republic. The parties created a working group with participation of competent individuals. The Turkish party defrays all financial expenses (travel expenses, costs of samples analysis, acquisition and copying documentation package) connected with implementation of the memorandum.
Recall that this company participated in tender for contract works on joint development of "Central" section on October 18, 2013, where Posit Coal Australian Company with battered reputation won. The Ministry of Energy is going to attract the Turkish Company to sharing of the deposit without discussing with local miners. But do miners know that it is engaged in flour manufacturing?