Turkish Contractors in Turkmenistan Facing Payment Crisis

Image Turkish construction companies in Turkmenistan are on the edge of big losses as the government rejects to pay an alleged $1 billion for completed or ongoing projects, businessmen say. The Turkmen government is either seizing equipment or offering new and attractive contracts to overcome upcoming legal problems, they say Turkish construction companies in Turkmenistan are hardly financing their ongoing projects in the country as the government is not doing any payments, according to some businessmen.

Turkish construction firms doing business in Turkmenistan are facing financial problems as the government is rejecting to pay the cost of completed projects worth $1 billion, according to contractors speaking to the Hürriyet Daily News & Economic Review on Sunday.

“More than 40 Turkish construction firms have been subjected to mistreatment,” said Tarık Bozbey, head of the Mediterranean Exporters Union and head of Bozbey Construction. “Turkish firms there are in a serious financial struggle.”

Bozbey said that because the Turkmen government was not making its obligatory payments the construction of some projects could not be completed. The government seized construction vehicles and equipment from some Turkish firms “illegally,” according to Bozbey. “This means billions of dollars in losses for the firms,” he said, adding that the Turkmen state had violated international laws by mistreating the Turkish firms.

“And yet Turkmenistan continues to invite Turkish firms for new infrastructure and construction projects worth nearly $4 billion,” Bozbey said, adding that the firms are hesitating over starting up new projects. “As we have already lost million of dollars, how can we consider new projects?”

Talking to the Daily News, Ozan İçkale, a board member of İçkale Construction, said Turkmenistan, which called on Turkish firms in early 2006, has changed its attitude toward international companies due to its decreasing income from energy resources.

According to İçkale, Turkmenistan President Gurbanguly Berdimuhamedov increased the price of natural gas from $60 to $160 in 2007. Relying on energy income from the state, the president signed contracts with Turkish construction firms to turn Ashgabat into a “new Dubai.”

Russia had been importing nearly 50 billion cubic meters of natural gas annually via Gazprom until an explosion at a Turkmen pipeline in April 2009. Various allegations by Moscow and Ashgabat paved the way for a serious decrease in gas exports and income for the Turkmen government, İçkale said. “They started to urge Turkish firms to rush and complete construction projects with no payment,” he said. When Turkish firms there started facing serious difficulties in financing their operations, “The Turkmen authorities seized our vehicles and equipment worth nearly $12 million,” said İçkale.

“Some Turkish businessmen are even imprisoned with no clear accusations,” claimed İçkale, without giving any names. According to İçkale, the government is forcing Turkish firms to leave the country before paying the total cost of the projects.

His company had contracts worth nearly $350 million, but collect only $205 million so far, İçkale said. These projects include a hotel in Turkmenbashi, irrigation canals in Abada city, a 72-house residence project, two schools, a theater and a convention center in Ashgabat. İçkale said the cost of seized vehicles and equipment owned by his company was nearly $100 million.

“Turkmenistan has been one of the most important markets for Turkish construction firms after Libya caused firms to loose millions of dollars,” said İçkale.

Legal action
Speaking on the condition of anonymity, a Turkish businessman who still has investments in Turkmenistan said nearly 25 Turkish firms would apply to the International Center for Settlement of Investments Disputes, or ICSID, in two weeks’ time.

The ICSID is an autonomous international institution established under the Convention on the Settlement of Investment Disputes between states and nationals of other states with over 140 member states.

“Such a move will put Turkmenistan in a tough position, as Turkmenistan has already violated international laws and mistreated many Turkish investors,” the businessman said.

President takes initiative
According to the businessman, Turkmenistan President Berdimuhamedov recently called Turkey’s President Abdullah Gül and asked for the Turkish firms to not file against the Turkmen state at the ICSID. Gül decided to organize a trip to Turkmenistan to discuss the matter and resolve the dispute together with Turkish Foreign Trade Minister Zafer Çağlayan, the source said.

The source also said an independent institution based in the United Kingdom has been working to determine the amount of the losses of Turkish firms in Turkmenistan. The result will be reported to the international court, he said. The losses might reach more than $1 billion, according to the source.

Turkish firms, which have invested nearly $1.5 billion in Turkmenistan in more than 800 projects, had $20 billion worth of contracts in the country as of the end of last year, according to figures provided by the Foreign Economic Relations Board of Turkey, or DEİK. Source: GÖKHAN KURTARAN, ISTANBUL- Hürriyet Daily News
Last modified onSaturday, 06 May 2017 10:07