Journal Record, The (Oklahoma City) - Kazakhstan still suffers from lack of fuel despite large reserves

ALMATY, Kazakhstan — As it winged its way precariously over the snow-capped Tien Shian mountains, Flight 525 from Tashkent was more cause for joy in Almaty airport than one would expect from a rickety old Russian-built commuter plane.

But these days in the former Soviet republic of Kazakhstan, any plane that flies is a good plane. And this creaky Antonov, which can just barely make it over the surrounding peaks, was the first plane to fly into the capital, Almaty, all day with enough fuel to fly back out again.

“It seems strange, doesn’t it?,” said airport administrator Mayra Uzkinbayeva, as passengers who had been waiting hours, even days, to leave Almaty rushed to the ticket counter. “We have oil everywhere, but not a drop for planes.” A fuel shortage was the last thing anyone expected for Kazakhstan, home to one of the world’s largest oil reserves, capable of producing 700,000 barrels a day. When Kazakhstan gained independence after the 1991 breakup of the Soviet Union, instant prosperity seemed a more likely forecast than enduring hardship. But six years later, Kazakhstan is still waiting to cash in on its main resource, held back by a major handicap left from the Soviet era: This vast Central Asian land has no pipeline to link the bulk of its oil reserves to the rest of the world. The result is a country mired somewhere between bust and boom. Almaty at night is a surreal mixture of darkened streets and unlit courtyards that conceal rows of modern storefronts offering Western sporting goods, appliances and computers. Two new five-star hotels glisten above the city’s squalid Soviet-style urban sprawl. Every morning, Kazakhstan’s airports fill up with would-be travelers who wait patiently as their departure times are gradually pushed back through the day. Then, like conspirators in a well- rehearsed hoax, they good-naturedly cash in their tickets when the flights are canceled in the evening. The international airlines that have opened direct routes to Kazakhstan have been asked to fly in extra fuel to avoid having their planes refuel in Almaty, which sometimes takes up to a week. The only domestic flight that usually leaves on time is for Chimkent, a desolate oil town in southern Kazakhstan that happens to have its own refinery. Other places are not so fortunate. In January, as temperatures plunged to 10 degrees below zero in northern Kazakhstan, some 15,000 families had to evacuate apartments that had no heat and little light. Even in the capital, electricity is sporadic. In the remote hinterland, nomadic herders live in conditions that give little indication it is the 20th century. Some good news came in December, when Kazakhstan signed an agreement with Russia and eight foreign oil companies to build a 1,000-mile pipeline to transport oil from western Kazakhstan to the Russian Black Sea port of Novorosiisk. The deal ended a four-year impasse with Moscow, which had previously blocked permission for Kazakhstan to export oil through Russia. But the new pipeline will not be finished until 1999, which means Kazakhstan will continue to pay exorbitant fees to import gas and oil from its Central Asian neighbors, Uzbekistan and Turkmenistan. “This is the old Soviet system at work,” said Revmira Voschenko, a correspondent for the Russian Information Agency in Almaty. “We have to pay other countries to get our own oil.” This has been too much for Kazakhstan’s struggling postcommunist economy. Unpaid wages and pensions are now approaching the $1 billion mark, according to the official estimate. Miners and teachers who go months without salaries have turned to strikes and other protests. As in other former Soviet republics, the problem of late wages in Kazakhstan is linked to deeper economic malaise. Finance Minister Alexander Pavlov said recently that 40 percent of Kazakhstan’s companies were on the verge of bankruptcy. But the government, fearing the social upheaval mass unemployment could bring, has been unwilling to shut down the factories. Instead, the government is trying hard to raise cash through an ambitious privatization of Kazakhstan’s major state-run enterprises, including gold mines and oil and gas companies, that in 1996 netted $l billion in direct foreign investments. But foreign management and capital have not always provided the answers: The German carrier Lufthansa, which manages Almaty’s airport, has been unable to solve its fuel woes. Western economists in Almaty say the investment would be even higher if the government moved faster to modernize Kazakhstan’s Soviet-era legal system and tax code, or made a concerted effort to eliminate widespread corruption. Nursultan Nazarbayev, Kazakhstan’s former Communist Party chief who since independence has ruled as president, has allowed limited reforms but, like other Central Asian leaders, has avoided any moves that would diminish his authority.