ALMATY/ANKARA: Some foreign companies in Turkmenistan are struggling to make sales and collect payments as economic pressures mount in large part because of a sharp drop in the Central Asian nation’s crucial gas exports.
There is little economic data beyond official statistics that paint a picture of sustained growth, but some foreign executives say hard currency shortages have crippled the state-dominated economy.
Turkmenistan, with the world’s fourth-largest gas reserves, is still awarding contracts to foreign and domestic firms, but some projects have stalled and the International Monetary Fund says it should cut spending or devalue its currency, the manat.
“The government has run out of financial resources, and it hasn’t been paying for finished contracts, let alone being able to pay for new ones,” said Oguzhan Cakiroglu, board member at Cakiroglu Grup, a Turkish metals and construction company that has now stopped operating in Turkmenistan.
Ashgabat’s problems began in 2016 when Russia, its main gas buyer, stopped buying, citing pricing disputes and shifts in the global energy market.
Exports to China have failed to offset the loss of Russian sales and the country’s total export revenue dropped to $8.0-8.5 billion in 2016-17, about half of what it was receiving between 2000 and 2014.
In response, the government of President Kurbanguly Berdymukhamedov has gradually tightened foreign exchange controls to conserve hard currency for priority projects.
On the black market, the manat has fallen to 17-18 per dollar from 13-14 at the beginning of this year and 7 in late 2016. The official rate is 3.5 per dollar.
Private local companies such as importers of consumer goods receive only a fraction of the dollars they request, Turkmen entrepreneurs say.
And, according to Cakiroglu, the government itself has trouble paying foreign contractors.
“The government has not been paying companies for more than three years, and it’s pushing the market into a more troubled situation, with a shortage of dollars pushing black market prices to 3-4 times the official exchange rate,” he said.
“We have pending payments of around a few million dollars, but we have been waiting for 4-5 years for this payment,” Cakiroglu said.”So we’ve stopped operating completely in Turkmenistan.” He declined to say what reasons the government had given for delaying payment.
Another Turkish contractor, Polimeks, which in 2016 completed a $2.3 billion air terminal shaped like a giant white falcon in Ashgabat, has stopped work on a highway to connect the capital to the Caspian port of Turkmenbashi.
Polimeks declined to comment on its relationship with Turkmenistan, which has since made no official announcements on the highway project.
The foreign ministry and the Turkmen embassy in Ankara did not reply to questions about the government’s debt to foreign companies.
Instead of providing investment figures as it does for other countries, a page on Turkmenistan on the website of Turkey’s Economy Ministry reads like a warning. — Reuters
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