LONDON — Like oil and gas exporters across the globe, Kazakhstan has been hit hard by the sharp drop in global hydrocarbon prices since late 2014. Exports are down, budget revenues have been squeezed, and the Central Bank was forced to carry out a de-facto devaluation in August 2015 that rendered the Kazakh tenge the world’s most volatile currency last year.
In response, the government has emphatically embarked on an anti-crisis plan. At its center is a major privatization drive, announced in January. In total, 65 state-owned companies and 175 of their subsidiaries are to be transferred partially or entirely to the private sector via a combination of negotiations, auctions and initial public offerings (IPOs) by 2020.
Among the biggest prizes on offer are stakes of up to 25% in the state oil and gas company KazMunaiGaz, national airline Air Astana, state railways Temir Zholy and holdings in the nuclear, mining and electricity sectors. The government is strongly encouraging foreign companies to bid for these.
The topic of privatizing state assets is hardly a new one. Initiatives to reduce the state’s involvement in the Kazakhstani economy have been a common feature since the country gained its independence in 1991, though the two most prominent “waves” took place in the 1990s and, more briefly, between 2012 and 2014. But while the catalyzing reasons behind privatization in Kazakhstan have varied, a unifying constant has been the government’s reluctance to yield control over the country’s strategic assets.
The first wave of “denationalization” initiatives, launched in 1991 before stalling without a formal conclusion in 2000, transformed the Soviet-era command economy into one governed by private property and market forces. By then, according to the US-Kazakhstan Business Association, the private sector constituted over 76% of GDP, although this figure would shrink significantly in subsequent years.
By transferring management rights for key industrial enterprises to opaque offshores, the 1990s privatization drive also created a class of oligarchs from among President Nursultan Nazarbayev’s coterie and the Kazakh political elite.
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