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How Kazakhstan and Russia negotiating over issues of lifting restrictions on transit of Kazakhstani goods

Friday, 25 October 2019, 12:48:34

The current ban of the Russian Federation on the transit of a number of Kazakhstani goods discredits the basic principles of the Treaty on the Eurasian Economic Union, restricting the freedom of transit of goods, the press service of the Ministry of Trade and Integration of the Republic of Kazakhstan reports.

The application of the Russian Federation restrictions on transit negatively affects the economic condition of the coal industry in Kazakhstan. According to preliminary estimates, the monthly losses of Kazakh coal miners from a reduction in coal supplies amount to more than $11 million.

In July, the Kazakh side announced plans for transit through the territory of the Russian Federation to Ukraine of 103.5 thousand tons, the Russian side approved a quota of 60.2 thousand tons. In August, they requested 240.8 thousand tons, approved – 86.5 thousand tons. In September, the application was 189.7 thousand tons, the Russian side limited to 86.5 thousand tons. In October, the application was 191.9 thousand tons, the Russian Federation approved 86.5 thousand tons.

Moreover, the late approval of even these reduced volumes actually led to the abandonment of Kazakhstani goods by Ukrainian buyers.

The terms of the contracts often stipulate the buyer's obligations to purchase coal from the departure station. Late deadlines for providing information on the amount of agreed transit do not allow advance planning of export. This has already led to the disruption of supplies and the abandonment of contracts.

In addition, there are facts of unreasonable stopping of cars by the Russian railways services.

For example, in July ArcelorMittal Temirtau JSC filed an application for the transit of 80.4 thousand tons. The Russian side agreed on transit of 55.2 thousand tons, but later the volume was reduced by more than three sentences and amounted to 13.6 thousand tons. By this time, 19.6 thousand tons (288 wagons) had already been shipped. As a result, 189 cars were stopped by Russian Railways near the Russian - Ukrainian border.

Thus, Kazakhstan only in July-September did not deliver about 340 thousand tons to its Ukrainian partners.

The issue of canceling transit restrictions was considered in the framework of the Kazakh-Russian Intergovernmental Commission held Oct. 15-16, 2019, in Nur-Sultan.

The result of the negotiations was an increase in the monthly volumes of Kazakh coal transported to Ukraine by 40% – up to 120 thousand tons.

At the same time, as stated by the Minister of Trade and Integration Bakhyt Sultanov, "the proposed size does not fully cover the request of Kazakhstani coal exporters."

“In November, Kazakhstani coal exporters submitted to the Russian Railways applications for transit to Ukraine of more than 200 thousand tons (204.61 thousand tons). The fact that the Russian side unilaterally restricts our exports, from our point of view, is nothing more than a barrier,” said the head of ministry. “We will continue negotiations with the Russian side both in a bilateral format and at the EAEU site. The Eurasian Economic Union guarantees equal conditions to all participants. Including, and ensuring freedom of transit of our goods to third countries. The actions of our EAEU partners should not impede economic relations with other countries.”

For reference: The restriction of Russian coal exports to Ukraine led to a certain overabundance of this product on the domestic market of Russia. As a result, Russian consumers began to abandon Kazakhstan coal. The volume, which continues to be sold in the Russian Federation, has significantly reduced prices, which entails financial losses for coal mining enterprises. The deterioration of the financial situation of Kazakhstani coal enterprises increases the risks of delays in fulfilling obligations to contractors and the workforce and, as a result, the risks of growing social tension.


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