WELCOME TO OLTIN YO'L GTL

The stable outlook reflects the agency’s expectation that, over the next year, Uzbekistan’s fiscal and external net asset positions will remain strong, albeit decline slightly, due to expected future current account deficits and government borrowing. “We could raise the ratings if monetary policy effectiveness were to improve, for example through a decline in dollarization of the economy. Further diversification of the government’s revenue base or the composition of the economy’s exports would also be supportive of the ratings,” the agency said. “We could lower the ratings if the fiscal or external positions deteriorated, for example if fiscal deficits increased beyond our base-case scenario or if higher-than-expected current account deficits led to an increase in external financing needs. We could also lower the ratings if we observed increasing weakness in key state-owned enterprises (SOEs), leading to growing contingent liabilities for the government,” S&P Global Ratings said. “Our ratings on Uzbekistan are supported by the government’s strong fiscal and external positions. These strengths predominately arise from the government’s large asset position, which stems partly from the policy of transferring part of the revenues from commodity sales to the Uzbekistan Fund for Reconstruction and Development (UFRD),” the statement of S&P Global Ratings said. “Our ratings are constrained by Uzbekistan’s low economic wealth, as measured by GDP per capita. In our view, future policy responses may be difficult to predict, given the highly centralized decision-making process and that accountability and checks and balances between institutions are relatively underdeveloped. Our ratings are also constrained by low monetary policy flexibility,” the agency noted. S&P Global Ratings said institutional And Economic Profile: Reforms have begun to open up the economy but challenges remain Broad-based policy reforms have improved institutions, albeit from a low base, and opened up the economy. “We expect decision-making to remain centralized. GDP per capita remains low, at an estimated $1,200 in 2018. We expect real GDP growth to remain relatively strong, averaging 5% over our forecast period to 2021,” the agency said.

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Short-term IDRs of the country in both currencies are assigned by the Agency at the level “B”, the rating of the country ceiling is at the level “BB-”. “Uzbekistan’s rating is counterbalanced with the low level of public debt and data on high economic growth compared to other countries with similar ratings, strong commodity dependence, high inflation, and structural deficiencies in terms of GDP per capita,” the Agency explains. Fitch expects that the country’s economy to grow by 5% in 2018, while this indicator of growth will slow to 4.9% in 2019. The Agency considers, that the growth rate will reach 5.3% in 2020. “The growth will be based on public investments into strategic projects, housing and infrastructure costs,” the report notes. The country’s rating can be upgraded if the progress in strengthening of the macroeconomic stability is occurred. At the same time, a steady decline in foreign exchange reserves and a weakening of the sovereign balance can lead to a negative rating action. Sovereign credit rating is a tool to assess the readiness of the state to meet its financial obligations in prompt and full manner. In July, the government of Uzbekistan attracted a consortium of the banks led by JP Morgan Chase to obtain a sovereign credit rating and issue sovereign bonds. In accordance with the decree of Mr. Shavkat Mirziyoyev, the President, the funds received from the bonds placement will be used for social programs activities and construction of infrastructure. Mr. Jamshid Kuchkarov, the Deputy Prime Minister, Minister of Finance stated in September that the government considers the sovereign rating as one of the ways to diversify sources to attract funds from abroad. Obtaining a sovereign credit rating will contribute to the growth of foreign direct investment, expansion of cooperation with foreign partners, as well as to the creation of favorable conditions for the banks and companies in attraction of the credit funds at the global financial markets at the lower interest rates, the Deputy Prime Minister noted. In November, he stated that after received the rating in the first quarter of 2019, it is planned to issue bonds at the foreign market. In addition to Fitch, the authorities also work with two other rating agencies – Moody’s and Standard & Poor’s. Their ratings are expected before the end of the year.

The event was attended by the representatives of the China Development Bank, Export-Import Bank of Korea (KEXIM), Korea Trade Insurance Corporation (K-SURE), “Gazprombank” JSC, Russian Agency for Export Credit and Investment Insurance (EXIAR), Credit Suisse (Switzerland), Japanese banks – MUFG, SMBC and Mizuho, as well as the international consultants of the Project, representatives of the embassies of China, Korea, Russia, Uzbekistan, the management of Uzbekneftegaz JSC, ministries and agencies of Uzbekistan, Fund for Reconstruction and Development of Uzbekistan, representatives of the EPC Contractor – Hyundai Engineering Co. Ltd., Hyundai Engineering and Construction Co. Ltd. and Enter Engineering Pte. Ltd., and other attendants. “The GTL project is one of the largest investment projects not only in Uzbekistan but also in the region, and its strategic importance was evidenced by the second visit of the President of the Republic of Uzbekistan to the construction site, where he personally reviewed the progress of its implementation. For now, Uzbekistan sets the new goals and objectives out in economic development, and the start-up of such a modern enterprise as Uzbekistan GTL is a clear confirmation and full commitment of Uzbekistan to continue the initiated economic reforms.” noted Bahrom Ashrafhanov, the Chairman of the Board of Uzbekneftegaz JSC, in his welcome speech. Afterwards, the representatives of financial institutions, “Uzbekistan GTL” Project Company and “Uzbekneftegaz” JSC held a signing ceremony of loan and financial documentation. The GTL plant in Guzar district of Kashkadarya region will produce more than 1.5 million tons of high-quality synthetic liquid fuel in compliance with the EURO 5 standard. There are only few high-tech plants of this kind in the world, based on GTL (gas-to-liquids) technology, in South Africa, Malaysia and Qatar. Implementation of the investment project “Production of Synthetic Liquid Fuel on the basis of Purified Methane of Shurtan GCC” (UzGTL) is carried out in accordance with the Decree of the President of the Republic of Uzbekistan, No. PP-2706, dated December 29, 2016. The implementation of project will enable to expand the capacities on deep processing of natural gas, reduce the import of hydrocarbons, meet the domestic demand in high-quality and environmentally friendly fuel, and fill the market with strategic products made from its own feedstock. The new high-tech production will make possible for oil and gas industry of Uzbekistan to move to a new technological level of hydrocarbons deep processing. According to the calculations, the start-up of the plant in 2020 will ensure to substitute of up to 1.5 million tons imported oil products for a total price of more than USD 1 billion. The EPC Contractor of the project is a consortium of companies, Hyundai Engineering Co. Ltd., Hyundai Engineering and Construction Co. Ltd. (Republic of Korea), and Enter Engineering Pte. Ltd. (Singapore.) The EPC contract is completed by up to 65% in overall. The highly intensive construction activities are underway at the construction site of the plant in Kashkadarya region. More than 5,000 workers and specialists, including foreigners are involved, with mobilization of approximately 500 units of construction machinery, special and heavy large-size equipment.