UZBEKISTAN COMMERCIAL NEWS UPDATE

Date: November 2006

Author: Jahangir Kakharov, BISNIS Representative, Tashkent, Uzbekistan

NOTE: THIS COMMERCIAL UPDATE IS DRAWN FROM THE UZBEK PRESS AND OTHER OPEN SOURCES AND SHOULD NOT BE INTERPRETED AS OFFICIAL U.S. GOVERNMENT INFORMATION

Hyundai says talks on Uzbek plant break down

TASHKENT. October 30 (Uzreport) - Hyundai Motor Co., South Korea's top auto maker, said on Monday talks have broken down with the government of Uzbekistan over a sale of a former Daewoo Motor factory in the Central Asian state. Hyundai said in a filing with the Korea Exchange that the negotiations had fallen apart due to disagreements over price and other terms. In October 2005, an Uzbek industry official said the country had bought the 50% stake held by Daewoo in their joint venture but had yet to decide if it would seek a new foreign partner.

The plant, with a capacity of 200,000 cars a year, was estimated to be worth US$650 million and its charter capital was worth around US$200 million. Analysts have said overseas production is crucial for Hyundai as a rising won dents profits earned abroad, although some are concerned that the company's overseas expansion plans are too aggressive.

In 1996, the venture in Uzbekistan, UzDaewoo Auto, launched the conveyor assembly of Daewoo cars at a plant located in Asaka, in Uzbekistan's eastern Andijan region. Daewoo collapsed during the Asian economic crisis in the late 1990s, and General Motors Corp. and partners took a majority stake in some of its assets in 2002.

Hyundai, which is the world's No. 6 auto maker by sales volume along with affiliate Kia Motors Corp., sells about three-quarters of its cars overseas.

Uzbekistan to produce Japanese buses - report

TASHKENT. October 30 (Uzreport) - Uzbekavtosanoat (Uzbek Car Industry) joint stock company signed a memorandum on supply of spare parts to assembly of micro buses at Samarkand-based SamKocAuto, Pravda Vostoka reported. The report said the Uzbek plant will be able to produce over 500 Isuzu micro buses in near future. It added that the financial conditions of the enterprises will be improved. KOC Holding of Turkey and UzAvtoProm, state-run company, launched SamKOC Auto with the cost of US$64 million in 1999. The venture should produce 4,000 buses and trucks annually, but failed to market its products. The venture produced only 60 buses and trucks annually. SamKOC Auto is the second Uzbek automobile project. In 1996, Uzbekistan launched UzDaewoo Auto in Asaka, Andijan region. Last year, UzAvtoProm acquired 50% stake of Daewoo Motor and now the company fully controlled by UzAvtoProm.

Uzbekistan plans to build three new cement plants

TASHKENT. October 30 (Uzreport) - UzStroyMateriali (Uzbek Construction Materials) association plans to build three large enterprises on production of Portland cement. Pravda Vostoka reported that the plants will be located at Karakalpakstan, Surkgandarya region and Jizzakh region. Total capacity of these plants will be 2.5 million tonnes of Portland cement per year. According to preliminary estimates, the cost of these three plants equals to US$w50 million.

Tender for Zarafshan-Newmont may be announced in mid-November

TASHKENT. October 31 (Interfax) - A tender for the Uzbek-American gold mining Zarafshan-Newmont JV assets, which has been declared bankrupt, may be called in mid-November, Interfax reports, referring to the JV's legal manager, Aleksandr Lolak. According to him, the estimation of the JV's property will be completed by the end of this week. According to its results a meeting of creditors will take a decision on sale terms and conditions. "At least, a month should pass after declaration on the competition. Therefore, most likely, the competition itself will take place in mid-December", Aleksandr Lolak said. He noted that "a meeting of creditors should make a decision whether foreign companies would be permitted or not to take part in the competition". At present such a decision has not yet been made. According to the estimations of independent experts, it is most probable that the Zarafshan-Newmont JV's basic assets, connected with the technological process, will be purchased by one of the co-founders of the joint venture – an enterprise with 100% state capital, Navoiy mining and metallurgical combine. Commenting on this point of view, A. Lolak said: "Who will have more money that will purchase the joint venture, our task is to sell the enterprise as more expensive as possible in order to satisfy all claims of creditors".

It was reported that in October 2006 Navoiy Regional economy court delivered a verdict about bankruptcy of the Uzbek-American gold mining Zarafshan-Newmont joint enterprise, 50% of which belongs to the American Newmont Mining (one of the largest gold mining companies in the world). Three months were allotted to liquidate the enterprise.

In July, 2006 the tax agencies of Uzbekistan brought a suit against Zarafshan-Newmont joint venture to recover 61 billion-worth debts (about US$49 million) for the years 2002-2006. In early August - after the law court of the first instance satisfied tax claims – the tax agencies arrested the joint venture's assets and prohibited it to dispatch gold. Then the procedure of bankruptcy was declared against the enterprise, and a temporary manager was assigned. In September the Supreme economy court of Uzbekistan left valid the decision of the previous judicial instances on tax claims and dismissed the joint venture's appeal.

Zarafshan-Newmont joint venture was set up in 1992, Newmont Mining from the American party and the State Committee for geology and mineral resources of Uzbekistan and Navoiy mining and metallurgical combine by the Uzbek party. Using heap leaching method, the enterprise is engaged in processing out of balance ore, accumulated in the stock pile of Muruntau open pit – the fundamental gold-ore base of Navoiy mining and metallurgical combine.

In May, 1995 the joint venture commissioned US$225 million-worth heap leaching enterprise.
In 2005 Zarafshan-Newmont joint venture produced 7.7 tons of gold against 12 tons in 2004. The raw-material base of the enterprise is 220 million tons of out of balance ores with the average content of gold 1.4 g/per ton. At its first stage of existence the joint venture received for the processing out of balance ore with the increased (1.6 g/t) content of gold with the coefficient of extraction by 65%. At present the enterprise use for the processing out of balance ore with the lower content of precious metal (1.1 g/t), which caused the decrease in the production of gold.

Uzbek mining companies to switch back to BELAZ equipment

TASHKENT. November 8 (Uzreport) - By 2010 Uzbekistan, according to the agreement signed, will purchase 240 dump trucks from Belarus Automobile Plant (BELAZ). The mining equipment will be supplied in the framework of the five-year programme on modernization of the mining and transportation technology for the mining industry of Uzbekistan, approved in a special Presidential Resolution. Thus, 175 units of quarry equipment will be purchased for the Navoi Mining and Smelting Complex (NGMK), of them 60 are large dump trucks with the load capacity of 136 tons. Another 160 units will be supplied to the Almalyk Mining and Smelting Complex (AGMK), including 130 dump trucks with the capacity of 130 tons. In addition, Uzbekugol (Uzbekistan Coal) Company, using the financing of the Fund of Technical Re-equipment and Modernization of Coal Industry, will procure 30 machines with the load capacity of 30 tons. The implementation of this programme will allow the mining industry of Uzbekistan to switch from Western technology to Belarus machines by 2010. In 2007-2010, in line with the programme on the procurement of Belarus technology, Navoi Machine-Engineering Plant, one of the structural divisions of the Navoi Mining and Smelting Complex, will gradually establish local production of component parts for BELAZ dump trucks. Thus, the Uzbek plant will produce 32 types of component parts for the Belarus equipment. In accordance with the five-year cooperation programme with BELAZ to last until December 31, 2010, all the technology and material-technical resources required for its maintenance to be imported will be free of the customs payments. Around 15 years ago, most of the mining enterprises of Uzbekistan used to work using Belarus mining and transportation equipment only. All the technological processes used were adapted to suit this technology. Now the largest enterprises of the mining industry have decided to switch back from Western technology, an example of which is American Caterpillar, to the technology of a CIS country. Currently, around 600 BELAZ dump trucks of different types are being employed in the country.

NGMK to attract US$32m loan for gold mining complex

TASHKENT. November 8 (Uzreport) - Uzbekistan's Navoi Mining and Metallurgical Combine (NGMK) plans to take out US$32 million loan to construct a gold mining complex, NGMK's General Director Nikolai Kuchersky told reporters. NGMK plans to take out the loan from France's Societe Generale by the end of this year. In particular, the loan will be used to buy equipment from Germany's Engineering Dobersek GmbH to construct the first stage of a gold refinery at Kokpatas and Daugistau gold deposits in the Central Kyzylkum Region of Uzbekistan. The construction project was started in November 2004 and involves two stages. The first stage, worth US$80.5 million to be completed in 2007, involves constructing facilities for enrichment and bio-oxidation of gold-sulfide ore at the Kokpatas field, the company said earlier. This will enable the mining complex to reach its planned capacity of 3 million tons of ore processing and 10 tons of gold output annually in 2008. The second stage, to be completed in 2010 and worth about US$70 million, envisages an increase in the gold mining complex's capacity. NGMK is Uzbekistan's largest gold producer and holds a monopoly in the country in the production and export of uranium. Annual gold output at NGMK has been in the range of 57 tons and 59 tons over the past few years with total gold output in Uzbekistan amounting to about 80 tons per year. By 2010 NGMK plans to increase its gold output by 20%.

Oxus Gold says Uzbek partners support it

TASHKENT. November 8 (Uzreport) - Oxus Gold plc has received assurances from its Uzbek partners in its Amantaytau Goldfields (AGF) joint venture that the Government of the Republic of Uzbekistan is not targeting AGF for expropriation, the London-based company said in its release. "Despite widespread speculation and numerous media reports to the contrary, at a Supervisory Board meeting of AGF held in Tashkent on October 30, 2006, the representatives of the Uzbek partners in the joint venture strongly rejected any allegation that the Uzbek Government was using a recent tax audit as an excuse to expropriate the assets of AGF," the release said.

The Uzbek members of the Supervisory Board, representing the Ministry of Finance, the State Committee for Geology & Mineral Resources, and the Navoi Mining and Metallurgical Combinat confirmed that they supported the continuation of the AGF joint venture and that they would render any assistance possible to enable AGF to follow the appropriate judicial procedure and appeal to a higher level court a recent judgment handed down against the joint venture by a provincial court.

AGF is owned 50% by Oxus Gold and 50% by the Uzbek State. On 27 October 2006 the Navoi Regional Economic Court issued a ruling, effective after 30 days, against the joint venture claiming some $224 million in taxes, fines and penalties. AGF is appealing the ruling and, with the support of its Uzbek partners, is hopeful that the majority of the claim will be overturned by a higher level court. As the foreign investor in the joint venture, Oxus welcomed the support of its Uzbek partners in this matter.

DAEWOO INTERNATIONAL acquires Uzbek textile company

TASHKENT. November 8 (Uzreport) - National Bank of Uzbekistan for Foreign Economic Activity (NBU) and DAEWOO INTERNATIONAL of South Korea signed an agreement on realization of property complex of Ferghana Textile LLC with creation of new enterprise DAEWOO FERGANA TEXTILE on November 8, 2006. Ferghana Textile LLC, specializing on processing of cotton fiber, was founded in 2005 on the basis of insolvent Kabool-Ferghana Co., with contribution of NBU to charter capital. Ferghana Textile LLC employs over 1,600 people. The capacity of the enterprise is 21,000 tons of combing and card yarn and 12 million meters of gray fabric. The NBU said in its release that the cost of the deal is US$68 million with instalment of date. It is planned that DAEWOO INTERNATIONAL plans to invest US$16 million to create new foreign enterprise and in future to export 80% of ready products.

IFC, Hamkor Bank sign US$3m loan agreement

TASHKENT. November 8 (Uzreport) - International Finance Corporation, the private sector arm of the World Bank Group, today signed an agreement to provide additional financing of US$3 million and a technical assistance package to Hamkor Bank Joint-Stock Commercial Bank. The facility would broaden Hamkor Bank's funding base and support the expansion of its lending operations to private small-and medium-sized enterprises (SMEs). The project is expected to promote further private sector development in Uzbekistan through supporting private SMEs; and support the banking sector of Uzbekistan, through the strengthening of a key private player. As such, the project is expected to have a high developmental impact on private sector growth in Uzbekistan. The loan issued for five years with 1.5 year of grace period.

Hamkor Bank is the largest privately owned bank in Uzbekistan, and an existing IFC client. The Bank, originally founded as a regional bank in the Fergana Valley, is now transforming into a nationwide financial institution, offering not only SME loans but also micro loans, consumer loans and leasing products. Through investment to Hamkor Bank, IFC is continuing its role in the development of Uzbekistan's financial sector and, at the same time, supporting smaller businesses, which are important sources of employment and economic activity in Uzbekistan. Ikrom Ibragimov, chairman of the board of Hamkor Bank, said this is the second tranch, which IFC opened for the bank. He said the IFC issued US$1 million to Hamkor Bank in 2002. He added that the first tranch allowed to finance seven projects and created hundreds of jobs in such sectors as light industry, production of consumer goods and services. Mr Ibragimov said the bank repaid half of IFC credit. He said that the bank is holding talks with two more financial institutions on possibility to open credit line. Head of Uzbek bank said the small businesses need support, in particular in the regions. He expressed hope that the cooperation between the bank and the IFC will be long and reliable. Hamkor Bank's chairman said the share of foreign investors in credit portfolio of the bank comprises only 10% and other part is own resources of the bank. The credit portfolio of the bank made up 50 billion soums as of today and increased by 10 billion soums in nine months of 2006.

Gorton De Mond, ICF Regional Representative, said: "We are particularly pleased that our investment and technical assistance will help Hamkor Bank further develop its business in one of the less privileged parts of the region and are hopeful this will contribute to Uzbekistan's further development." Noting that this is the second credit line to Hamkor Bank, IFC official said the bank showed its readiness to work and IFC made sure that this bank can find good clients and render them financial support to develop their businesses. The IFC offers technical assistance to Hamkor Bank, along with credit line, De Mond said. He added that technical assistance includes operation issues, risk management, management of branches and others. De Mond said that the interest rate on credit line is around average rate in CIS. He said that the signed agreement between the IFC and Hamkor Bank is further development of partnership.

The International Finance Corporation, the private sector arm of the World Bank Group, is the largest multilateral provider of financing for private enterprise in developing countries. IFC finances private sector investments, mobilizes capital in international financial markets, facilitates trade, helps clients improve social and environmental sustainability, and provides technical assistance and advice to businesses and governments. From its founding in 1956 through FY06, IFC has committed more than US$56 billion of its own funds for private sector investments in the developing world and mobilized an additional US$25 billion in syndications for 3,531 companies in 140 developing countries. With the support of funding from donors, it has also provided more than US$1 billion in technical assistance and advisory services.

Hamkor Bank Joint-Stock Commercial Bank is a licensed commercial bank headquartered in Andijan. The Bank, established in 1991, has a nationwide network of 24 full-service branches and 41 mini-branches that function as teller/cashier for consumer transactions. Hamkor Bank provides a full range of domestic and international services to SMEs and individual entrepreneurs including lending, international/national payment services and current accounts management.

MTS-Uzbekistan serves over 1.24 subscribers

TASHKENT. November 15 (Uzreport) - Subscribers' base of MTS-Uzbekistan reached 1.24 million people as of October 31, 2006, according to data of MTS (Russia). The Russian company said its Uzbek subsidiary recorded 13.2% growth of subscribers' base in October compared to September 2006. The growth of subscribers' base year-on-year made up 142.8%. MTS-Uzbekistan is the first Uzbek mobile operator, subscribers' base of which reached 1 million-point. MTS-Uzbekistan, earlier rendered services under Uzdunrobita brand, founded in August 1991 and it is the first mobile operator in Central Asia. The company also leads on number of subscribers in Uzbekistan.

UNESCAP to set up 80,000 km long TransAsian railroad network

TASHKENT. November 15 (Uzreport) - Intergovernmental agreement on creation of a TransAsian railroad network was signed in South Korean city Busan as a part of Minister Conference of the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP). UN news service informed that its length would be more than 80,000 kilometers. The railroad network will include Russia, Central Asia and Caucasus. This transportation corridor will join Northern Europe and Persian Gulf. Russia was the initiator of this agreement. The agreement includes 4 international routes that join 28 countries. The document was signed by the representatives of Armenia, Azerbaijan, Cambodia, China, Indonesia, Iran, Kazakhstan, Laos, Mongolia, Nepal, South Korea, Russia, Sri-Lanka, Tajikistan, Thailand, Turkey, Uzbekistan and Vietnam. It is expected that the document will soon be signed by North Korea, Kyrgyz Republic, Georgia, Malaysia, Singapore, Pakistan, and Turkmenistan. The North corridor will go through China, Kazakhstan, Mongolia, Russia, and Korean peninsula. The South corridor will join Thailand and Chinese prefecture Yunnan [transliterated] with Turkey and then go through Bangladesh, India, Pakistan, and Iran. The subregional network consists of South Eastern Asia countries – Brunei, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand and Vietnam.

EurAsEC to adopt concept of unified transport system in 2007

TASHKENT. November 16 (Uzreport) - A concept for a single transport system in the countries forming the Eurasian Economic Community (EurAsEC) may be adopted in 2007, Itar-Tass reported quoting Russian Transport Minister Igor Levitin. "The creation of a single transport union is currently complicated by the absence of a unified regulatory framework and by differences in national transport development standards," Levitin said at inter-parliamentary hearings on a transport union on Wednesday. Among the complicating factors the minister named "the high wear and tear of infrastructure and the absence of a single concept for the development of transport." He said the concept is in the works and will first be considered by the Council on Transport Policy in Moscow on 8 December. After that the document will be sent to EurAsEC member countries for comments and amendments. "I think we will be able to adopt it next year," Levitin said. According to the concept, unified taxation rules and tariffs (primarily transit ones) will be developed for transport. "In addition, the document will help to develop the material base of the EurAsEC countries and level out the development of different transport systems," the minister said. He said the document is modelled on the European Union's transport concept. It should remove border-crossing barriers, introduce unified transparent tariffs, and reduce the proportion of transport costs in the price of a product from 25-30% to 10-12% as in EU countries. The EurAsEC consists of Russia, Belarus, Kazakhstan, Tajikistan, and Uzbekistan.

Uzbekistan is interested in performance of pharmaceutical companies

TASHKENT. November 16 (Uzreport) - Uzbekistan is interested in the performance of enterprises manufacturing pharmaceutical products – it is particularly interested in their quality. Starting from July 1, 2006, all drugs and other products of medical purpose produced domestically, as well as primes and materials imported for localization of their production were exempt from the value added tax, according to the Ministry of Healthcare. Today, 92 enterprises in Uzbekistan produce pharmaceutical products. The legal framework for the regulation of their activity is constituted by the Law "On drugs and pharmaceutical activity". As for the pharmaceutical products being imported, drugs are included in the list of products subject to obligatory certification. Organizations responsible for quality assurance of drugs and medical equipment currently have all the necessary means to evaluate the quality of any medical preparation through pre-clinical and clinical trials, approve the regulatory documents and permit the use of the medications checked. The structures concerned considered and expanded the list of products made subject to obligatory certification, which is why all the medications imported to and produced in Uzbekistan can be sold only after certification by the competent agencies. The system of private medical aid is actively developing in Uzbekistan. Thus, the number of private medical facilities has grown from 700 in 1999 to 4,000 in 2006. The Ministry of Healthcare constantly warns the citizens about the risk and danger of applying for medical aid to clinics that do not have the required licenses and purchasing medications from unauthorized entities.

Indian firm plans to acquire Uzbek textile plants

TASHKENT. November 16 (Uzreport) - SP Oswal of Vardhaman group is planning to acquire a textile firm in Uzbekistan to expand its operations in the sector. A senior merchant banker said the firm is looking for large production facilities in the country to expand its operations, The Times of India reported on Thursday. As Uzbek government is giving subsidies and other concessions to the companies which are investing in the country, the CEO of ICICI Securities S Mukherji said,"A number of companies have shown interest to invest in Uzbekistan as the Indian textiles industry is looking for opportunities to expand." He further said that Uzbekistan would be the next destination. The Uzbek government is giving a number of exemptions to the foreign investors. A high level delegation has come to India to attract FDI, the report said. The report said the Uzbek government has decided to extend incentives like a price discount of 15% on cotton fiber and exemption from value added tax on exports. He said enterprises that are going through re-equipment process would be exempted from the payment of duties on import of technologies and auxiliary equipment. Besides, the enterprise attracting foreign direct investment would be exempted from income tax and property tax. Such subsidies from the government have made the textile industry very attractive in Uzbekistan. During late nineties, a number of foreign companies from South Korea, Japan, Switzerland, Turkey and US entered in Uzbek market and formed around 50 joint ventures. But a number of companies are not in good shape as they use old technologies. ICICI Securities was instrumental in completing the buy-out of a spinning company having 220,000 spindles by Spentex in Uzbekistan. He said the deal was highly successful and Spentex is planning to get into similar deal again. Mukherjee said parameters like availability of cheap labor, cheap power and good infrastructure would make textile sector highly competitive. Besides, the country produces around 1.2 million tons of cotton, which can be used as raw materials.

Uzbekistan to sell assets of Zarafshan-Newmont in December

TASHKENT. November 17 (Uzreport) - Uzbekistan plans to hold an auction on 18 December to sell the assets of bankrupt US-Uzbek gold mining joint venture Zarafshan-Newmont, the country's Real Estate Exchange said in advertisement. The starting price for the assets of the joint venture was set at the volume of 172.86 billion soums or about US$140 million. The bids for the auction will be accepted until late 17 December. In early October, Uzbekistan's Arbitration Court for the Navoi Region declared Zarafshan-Newmont bankrupt. In early August, Uzbek tax authorities seized the assets and gold owned by Newmont Mining through its 50% stake in Zarafshan-Newmont, the US company said then. The seizure followed an arbitration court's ruling in favor of Uzbek tax authorities for US$49 million in back tax claims against Zarafshan-Newmont for 2002-2006. Zarafshan-Newmont was established in 1992 on a parity basis between the US Newmont Mining and Uzbekistan's Navoi Ore Mining and Metallurgical Plant, or NGMK. Zarafshan-Newmont develops the Muruntau open-pit gold mine, owned by NGMK. In 2005 Zarafshan-Newmont produced 7.72 tons of gold, down 65% on the year. The joint venture is one of three gold producers in Uzbekistan.

Uzbek, Austrian banks sign cooperation agreement

TASHKENT. November 17 (Uzreport) - National Bank of Uzbekistan for Foreign Economic Activities (NBU) and the Raiffeisen Zentralbank Osterreich AG (RZB, Austria) signed a memorandum of cooperation in Vienna, Austria, on November 15, 2006. The Uzbek bank said in its press release, dated November 17, that the document directed to further deepening business relations between two banks and development of cooperation between businesses circles of Uzbekistan and Austria. NBU said the Raiffeisen Zentralbank is considering to open credit line to finance purchase of modern equipment and technologies for small and medium enterprises, engaged in agriculture, food industry from Austrian and other foreign equipment producers. RZB was founded in 1927 and is headquartered in Vienna. It is the central institution of the Austrian Raiffeisen Banking Group (RBG) and the core company of the RZB Group. The bank has correspondent relations with over 4,500 banks in 100 countries. NBU and RZB established correspondent relations in 1996 and currently RZB is strategic partner of the Uzbek bank in Austria, the NBU said in its release.

Central Asian republics need accord on electricity exports: report

TASHKENT. November 24 (Uzreport) - The Central Asian Republics (CARs) will require to get an intra-regional agreement on electricity transit in place for having access to export markets including Pakistan, Iran and some other countries, said a report of the World Bank. Major new power generation projects in Central Asia will only be feasible if there is assured access to export markets outside the region, Asia Pulse reported. Western investors currently view the new generation projects as high-risk ventures. Pakistan and Iran have the added attraction of experiencing their peak demand in the summer when the largest potential electricity surpluses exist in Central Asia, according to the report. However, the report said that CARs will continue to persist electricity supply shortage in winter and some new electric power generation will be needed to meet winter demand.

The Kyrgyz Republic and Tajikistan face energy shortages in the winter and attempts to secure major export markets for their summer hydropower surpluses have not succeeded. Annual domestic demand in the Central Asian Republics can be met until about 2020 through the implementation of loss reduction measures, the rehabilitation of existing generation capacity and regional trade at the margin. While the most cost effective option to meet the seasonal supply shortfall will be to trade at the margin, some new generation will be needed to meet winter demand requirements. The most attractive new generation options to meet the winter demand requirements are the Talimardjan Thermal Power I Project in Uzbekistan that is largely complete, and the Bishkek II Thermal Power Project in the Kyrgyz Republic, which is partially constructed. Some upgrading of the transmission facilities will be required to facilitate intra-regional trade, including the construction of the North South Line in Kazakhstan, and the reduction of transmission bottlenecks in the southern part of the Central Asian grid. Increased intra-regional trade will provide significant benefits. In order to take full advantage of this, appropriate agreements are required among the countries in the region. In all likelihood these will have to be negotiated on a bi-lateral basis, in which case efforts should be made to ensure that the agreements among the various parties are based on consistent principles. A consistent approach to electricity trade by the various countries would facilitate the development of intra-regional trade. Once agreements are in place they will then have to be carefully managed to ensure the benefits from intra-regional trade are optimized. Access to these markets like Afghanistan, Pakistan, Iran, China and Russia will particularly benefit the Kyrgyz Republic and Tajikistan since they are the countries with the potential to export significant quantities of electricity. Uzbekistan (and to some extent Kazakhstan), have the potential to export thermal power in the winter and also benefit in their role as prospective transit countries and as potential power traders.

LUKOIL to invest more in Uzbek projects next year

TASHKENT. November 24 (Uzreport) - Major oil and gas projects are being stepped up in Uzbekistan within the framework of Russian-Uzbek partnership. Thus, LUKOIL continues developing the Kandym- Khauzak-Shady gas deposits, in which US$170 million will have to be invested in 2007. Furthermore, a consortium of investors formed by UZBEKNEFTEGAZ, LUKOIL OVERSEAS, PETRONAS, KNOC and CNPC intends to launch prospecting operations in the Uzbek section of the Aral Sea on product sharing agreement terms. Next year US$33 million is to be invested in this project.

Uzbekistan produces 111,010 cars in 10 months of 2006

TASHKENT. November 24 (Uzreport) - UzDaewoo Auto, Uzbek car producer, increased production of cars to 111,010 in ten months of 2006 or increased output by 33% year-on-year. The Uzbek plant produced 59,549 Nexia cars and 38,788 Matiz cars and 12,588 Damas mini-buses and 85 Lacetti cars. UzDaewoo Auto plans to manufacture 72,000 Nexia cars, 51,000 Matiz cars and 14,000 Damas cars. The plant plans to produce 5,000 Lacetti cars from 2006. Overall, the Uzbek plant planned to produce 142,000 cars this year and 180,000 cars in 2007. Two years later, the company will reach its designed capacity and produce 200,000 cars annually.

Power generation grows by 3.9% within 10 months of 2006

TASHKENT. November 27 (Uzreport) - Within the period of January-October 2006, compared with the index of the same period of 2005, power generation increased by 3.9% in the country, that is to say up to 40.657 billion kW/h, according to the data of the State Statistics Committee of Uzbekistan.

In particular, within the accounting period the thermo-electric power stations generated 35.175 billion kW/h of electric power (+7.7%), hydroelectric power stations and blocks of stations – up to 5.482 billion kW/h (less by 15.3%), including hydroelectric power plant they generated 504 million kW/h (less by 15.9%). A total of 42 power stations are currently functioning in the power system of Uzbekistan. The stations generate more than 12.3 million kW/h, which comprises about 50% of generating power capacity of the entire power system of Central Asia.

Over 98% electric power, to be manufactured in the republic, is generated at the power stations, which form a part of the Uzbekenergo State Joint-Stock Company, which was set up on the base of the Ministry of Energy and Electrification of Uzbekistan. The Uzbekenergo structure comprises 16 enterprises - producers of electric power, including of seven thermal power stations, six hydroelectric power stations and three heat and power plants. The basis of national electric power system is made up of such large thermal power stations as Syrdarya, New Angren and Tashkent seven thermal power stations, which generate over 85% of electric power. Electric transmission in the republic is accomplished on 235,000 km of the electric power lines of all voltage grades and transformer substations with the capacity of 35 kW and exceeding total power of 37.7 million kW/A.

In 2005 in the country generated 47.581 billion kW/h of electric power, which was less by 4.2% is than in 2004. The consumers obtained 9.9 million Gcal of thermal energy; US $16.9 million-worth electric power was exported.

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