Significant re-nationalisation risks in gold mining and infrastructure industries, says Exclusive Analysis

Following the revolution in Kyrgyzstan, which led to the overthrow on April 8 of President Bakiev, business risks in the region are likely to include re-distribution of shares in the gold mining sector, cargo delays at borders, and re-nationalisations, according to analysts.

Exclusive Analysis said its sources revealed that Bakiev has flown to his native southern Kyrgyzstan whilst his son Maxim left for Washington.

The analysts said that Bakiev is likely to consolidate his support base in the south but is unlikely to regain power because he lacks military aid and support from Russia.

Russia have already indicated their support for the interim government, headed by former Foreign Affairs Minister and leader of the Social Democratic Party Roza Otunbaeva, who has promised to hold elections in six months.

The economic implications of the revolution include business disruption caused by the riots in Bishtek, the capital, as well as cargo delays in border regions, particularly with Uzbekistan, claimed Exclusive Analysis.

&#8220The dissolution of the Central Development Agency could serve as a pretext for the new government to restructure the ownership of the flagship Kumtor gold mine

Exclusive Analysis

The interim government has formulated a plan of reforms, aimed at re-nationalising two companies privatised in February 2010, Kyrgyztelecom (77.4% stake sold to a Kazakh-led consortium) and Severelektro (87.9% stake sold to Kyrgyz firm Chakan GES).

Other measures include reversing this year’s utility price increases and liquidating the Central Development Agency, headed by Maxim Bakiev. A significant holding in the state owned gold miner Kyrgyzaltyn was recently transferred to the agency.

Kyrgyzaltyn jointly owns the flagship Kumtor gold deposit with Canada’s Centerra Gold, the largest Western-based gold producer in Central Asia. The dissolution of the agency could serve as a pretext for the new government to restructure the ownership of Kumtor, said Exclusive Analysis.

There have been calls for the state to hold at least 50% of the mine or for it to be nationalised outright. Centerra’s shares have fallen sharply since the civil unrest broke out, although the company reported on 8 April that there were no disruptions to its mining activities.

The US will also have to renegotiate the terms of its Manas air base and the base could be closed altogether, reported the analysts.