Where is Turkmenistan's Gas Money Going?

Where is Turkmenistan's Gas Money Going?

Monday, 30 November, 2009
IWPR

IWPR

Institute for War & Peace Reporting

The Turkmen government has announced that it no longer depends solely on natural gas as a revenue source. NBCentralAsia analysts say this is unlikely to be true, and the real question is how much of the gas money makes it into the official coffers, since management of the revenues from Turkmenistan’s mineral wealth is far from transparent.



The government reviewed its budget for 2010 on November 13, announcing an increase in spending of more than 25 per cent, including on areas like healthcare, social sphere, construction work and culture.



The authorities says the budget increase will come from businesses which have by one-third through “proceeds from foreign enterprises”.



As President Gurbanguly Berdymuhammedov said at the government meeting, “Thanks to our policy of economic diversification, next year the budget will not be reliant on the fuel and energy industry as has been the case previously.”



Turkmenistan’s economy is largely based on the country’s vast natural gas resources, but there is little clarity about where the revenues earned from gas resources go.



As one observer in the capital Ashgabat put it, “People see grandiose, high-cost buildings going up and sumptuous events taking place, and they think all the money goes on those things.”



The state-controlled media do not report on oil and gas contracts or on how such projects are going. Nor has information been made public about the operations and aims of the Stabilisation Fund, established in 2008 to soak up surplus energy industry revenues.



Annadurdy Hadjiev, an Turkmen economic analyst based in Bulgaria, estimates that in 2008, government budget revenues from gas exports came to about nine billion US dollars. Add to that exports of petroleum products and electricity, and the figure would reach something like 12 or 13 billion dollars.



Turkmenistan produces about 80 billion cubic metres of gas a year, consuming a quarter itself and exporting the rest, most of it to Russia and some to Iran.



Hadjiev believes the launch of a new gas pipeline to China with a capacity of 30 billion cu m annually and a rise in sales to Iran will increase government revenues by 40 per cent.



“As before, more than half of the state budget will come from the proceeds of the fuel and energy industry,” he said. “Otherwise where will the money from gas sales to Russia, Iran and China go?”



Other observers say the government’s claims that it can survive without gas revenues are hard to believe.



One anonymous official suggested that Turkmenistan has come under pressure from the international community to be more transparent about the income it makes from gas, but has responded by drawing up an annual budget that excludes this revenue source.



(NBCentralAsia is an IWPR-funded project to create a multilingual news analysis and comment service for Central Asia, drawing on the expertise of a broad range of political observers across the region. The project ran from August 2006 to September 2007, covering all five regional states. With new funding, the service has resumed, covering Uzbekistan and Turkmenistan.)
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