Russia’s Eurocement Group plans to appeal an Uzbekistani court order that seeks to reverse the privatisation of Akhangarancement. On 21 July 2014, the Tashkent region’s Economic Court upheld the claim of Uzbekistan’s State Committee for the Privatisation, Demonopolisation and Support of Competition looking to invalidate the privatisiation of Akhangarancement, which occurred 20 years ago. The Economic Court ordered the arrest of Akhangarancement’s assets and bank accounts, which are worth more than UZS414 billion.
In 2006, Eurocement Group acquired a 75% stake in Akhangarancement, 12 years after privatisation took place.
Akhangarancement is the second largest cement manufacturer in the country, with a market share of approximately 30%. In addition to supplying the domestic market, it exports cement to Kazakhstan, Turkmenistan and Kyrgyzstan. Last year, the plant reported a 6% y/y rise in production levels. In June, Eurocement Group awarded China CAMC Engineering Co. Ltd a US$128 million contract for equipment supply and construction of a new dry process plant at the site. When this 2.4 million t plant comes online in 2016 it will increase Akhangarancement’s production capacity to 4.8 million t.
In a press release on the matter the Russian construction materials company stresses that it has acted in accordance with local laws, regularly paid taxes and that audits revealed that it has upheld full transparency and legality with regards to its activities. Eurocement also notes its social outreach initiatives in the area, such as financial support for the construction of schools, church restoration work and children’s sport.
Eurocement has estimated that the loss of Akhangarancement could be around US$900 million, based on EBITDA figures, assets and funds available in bank accounts. If modernisation work, the increase in production capacity and the introduction of dry technology are taken into consideration then this figure could be nearer to US$1.2 – 1.4 billion.
“On July 16, 2014, we were informed about the lawsuit filed by the State Committee for the Privatisation, Demonopolisation and Support of Competition seeking to revoke the plant privatisation decree dated August 30, 1994. The Tashkent region’s Economic Court accepted the suit on Thursday, July 17, 2014, the hearing date was set for Friday, and the ruling was made on Monday morning, in just a few hours. The claims lodged by the State Committee for the Privatisation, Demonopolisation and Support of Competition are ill-founded and unlawful subject to the evidence put before the court. We are intending to file an appeal with a higher court, and we will file a lawsuit with international courts pursuant to the international conventions and bilateral investment agreements,” Eurocement Group President Mikhail Skorokhod was quoted as saying.
“Eurocement Group has 30 days to file an appeal beginning July 21, 2014. Should the court uphold the first ruling, this will essentially mean the expropriation of the asset. In 2012, the Uzbek authorities adopted the act preventing the privatisation results from being reconsidered or revoked,” added Mr Skorokhod.
Adapted from press release by Louise Fordham
Read the article online at: https://www.worldcement.com/europe-cis/06082014/eurocement-to-defend-uzbekistan-assets-242/