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Kazakhstan Infrastructure Report Q1 2010Published by: Business Monitor International Published: Jan. 18, 2010 - 69 Pages Table of Contents
AbstractThe overall economic forecast for Kazakhstan remains mixed, with BMI expecting that the economy will shrink by 1.9% for the year, slightly more optimistic than the IMF, which expects a 2.2% contraction. However, there were no surprises when the IMF Mission to Kazakhstan at the end of October 2009 reported that credit availability was still slow to expand and that the construction and manufacturing sectors remain relatively dormant. As a result, BMI expects the construction sector to decline by 1.56% in 2009 to reach US$10.6bn. Although this is less than the slump witnessed in the construction sectors of many other countries in the region, it still represents a sizeable fall from the double-digit growth experienced in 2005-2008 in the country. However, Kazakhstan’s economic decline seems to have bottomed out with healthy bank liquidity in place, continuing stimulus-spending, increased oil production and a crucial rebound in commodity prices. Still, recovery in the construction sector will only be partial in 2010, with real growth projected to reach 2.7%. From 2011 onwards, the picture will look a little more positive. BMI forecasts that the average annual growth for the 2011-2014 period will stand at 7.5%. One of the most important infrastructure developments this quarter was the inauguration of Kazakhstan’s second north-south transmission line in September 2009. The US$290mn line should provide a permanent solution to chronic power shortages in the south and remove impediments to industrial growth, including petrochemicals. Kazakhstan Electricity Grid Operating Company (KEGOC)’s launch of the 500MW line brings the capacity of the existing transmission infrastructure to 1,350MW, sufficient to make Kazakhstan independent of electricity imports from Tajikistan and Kyrgyzstan, who suffer from their own power deficits. Although the project, whose construction began in 2004, finished some months ahead of schedule, it has come too late to contribute to any year-end economic pick-up and in any case the additional capacity has reportedly arrived at a time when industrial power demand has slumped. Nonetheless, the extra capacity and reliability is well-placed to contribute to Kazakhstan’s expected recovery in 2010.Kazakhstan’s oil and gas sector remains a key driver of infrastructure development. Indeed, Italian oil and gas company Eni and Kazakhstani state-energy company KazMunaiGaz (KMG) signed a deal in early November 2009 worth up to US$50bn in upstream and downstream investments, in both oil and gas sectors. The deal, signed during President Nursultan Nazarbayev’s visit to Italy, includes the construction of Kazakhstan’s first natural-gas sweetening facility. Meanwhile, in September 2009, the International Finance Corporation and the Kazakhstan Public-Private Partnership Centre signed an MoU to co-operate on strategies to expand private investment in Kazakh infrastructure, including transport, energy, telecoms, water and sanitation. Such agreements, however, highlight the necessity of incorporating PPP mechanisms into Kazakh legislation and regulation if private investment is to play a serious role in Kazakhstan’s recovery. Get Full Details About This Report >> |
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