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Gazprom's dollar nets debt-stricken Kyrgyz operator as Putin ratifies two-state deal

February 04, 2014, 16:30 UTC+3 MOSCOW
Under a contract of sale and purchase, Gazprom's $1 will buy 100% of Kyrgyzgaz authorized capital
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MOSCOW, February 04. /ITAR-TASS/. Russia's president has signed law ratifying an inter-state accord handing over Kyrgyzstan's debt-stricken national gas operator, Kyrgyzgaz, to Russia's Gazprom for one U.S. dollar.

The State Duma lower house of Russia's parliament and the Federation Council upper house approved the law on January 17 and January 29 respectively, giving force to a joint government agreement on cooperation in the transport, distribution and sale of natural gas. The 25-year deal has options for five-year extensions.

Kyrgyzstan is to set up a 100% offshoot of Kyrgyzgaz, transferring all the operator's property and rights to the new organization. Under a contract of sale and purchase, Gazprom's dollar will buy 100% of Kyrgyzgaz authorized capital.

Kyrgyzgaz owns high-pressure gas pipelines, distributing plants, booster stations, underground storage facilities, wells, land plots, buildings and raw materials — and a debt of $40 million.

Agreement terms task the new company and its successors with supplying natural gas to Kyrgyzstan, storing it underground, distribution and sales, construction, repair and operation of the transportation and distribution network and responsibility for other industry infrastructure.

Kyrgyzstan guarantees favorable conditions for the company's operations, among them exclusive rights to import natural gas for Kyrgyz consumers, non-interference by government bodies in the company's pricing policy for gas transportation through Kyrgyz territory to third countries and protection of investment by Gazprom and its affiliates from expropriation or nationalization.

Gazprom guarantees investment of at least 20 billion rubles in upgrading supply infrastructure, upgrade of company equipment and trunk gas pipelines and compliance with tariff policy approved by Kyrgyz authorities. It pledges uninterrupted gas supply to the republic's consumers given available technical possibilities and at contracted volumes.

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