Tajikistan has formally revoked a contract with China’s Henan Zhongya Holding Group, accusing it of failing to fulfill its obligations on rehabilitation of Tajikistan’s fertilizer plant. Tajik authorities are seeking new investors to rehabilitate Open Joint-Stock Company (OJSC) Nurihoi Osiyo (Fertilizers of Asia) located in Levakand (formerly Sarband) in Khatlon province.
By government’s decree issued on August 30 this year an agreement between the Government of Tajikistan and China’s Henan Zhongya Holding Group on modernization of OJSC Nurihoi Osiyo is revoked as the Chinese company failed to fulfill its obligations.
The State Committee on Investment and State-owned Property Management (GosKomInvest) and the Ministry of Foreign Affairs are ordered to take necessary measures to ensure implementation of this decree and notify Henan Zhongya Holding Group of this decree.
Recall, OJSC Nurihoi Osiyo with an authorized capital of 720 million USD was established in November 2016 on the basis of the debt-ridden and loss-making fertilizer plant OJSC Azot (formerly TojikAzot), which had not been in operation since 2008 due to lack of natural gas supplies.
Tajikistan’s lower house (Majlisi Namoyandagon) of parliament (Majlisi Oli) on December 14, 2016 ratified the deal for Henan Zhongya Holding Group to assume control of OJSC Azot in a deal that required the company to invest $360 million over the next three years.
The plant specializes in the production of carbamide, or urea, an organic compound used in fertilizer.
For the first 10 years of resumed operations, the plant was supposed to be 51 percent owned by the Chinese company, while the remainder was supposed to be held by the Tajik government.
Annual demand for carbamide in Tajikistan is around 360,000 tons, an amount it now imports at a cost of $50 million.
Under the bilateral agreement, 30 percent of profits were supposed to go to the Tajik state and the rest to the Chinese partner.
The Chinese company should have organized production of urea by spring last year but they have failed.
Khatlon governor Davlatsho Gulmahmadzoda told reporters in Bokhtar (formerly Qurghon Teppa) on July 18 last year that Henan Zhongya Holding Group has postponed organization of production of urea at OJSC Nurihoi Osiyo yet again.
“The Chinese company should have organized production of urea by spring this year but they have failed. They then promised to re-launch the enterprise in August. However, judging by what we see reintroduction of the fertilizer plant into operation will be postponed again,” the governor said.
According to him, the Khatlon government does not have the power to influence the investors.
“Prime Minister Qohir Rasoulzoda has ordered the State Committee on Investments and State-owned Property Management to revoke the contract with Henan Zhongya Holding Group if the plant is not relaunched in August and conclude a contract with another investor,” the governor added.
The plant was nationalized at the expense of Ukrainian tycoon Dmitry Firtash in 2014. Firtash acquired a controlling stake of the company, which used to known as TojikAzot, in 2002. As a result, 75 percent of the company was owned by Firtash, while another 20 percent belonged to the Tajik government and another 5 percent was owned by Khairullo Saidov, the son of ex-Minister of Industry Zayd Saidov.
Tajikistan’s anticorruption agency also charged Firtash with the illegal privatization of the Dushanbe-based clothing factory Guliston in 2002 and argued that Zayd Saidov had been involved in the fraudulent privatization of the Guliston factory and TojikAzot.
Tajik authorities are seeking new investors to modernize the fertilizer plant. The modernization is planned to increase the plant’s annual capacity to 1.6 million tons.
