Kazakhstan moves to formalise “nationalisation”

March 24. Reuters. ASTANA

By Raushan Nurshayeva

* Nationalisation to be used in rare cases – minister
* Says Karachaganak dispute not implicated by new law

Kazakhstan moves to formalise "nationalisation"Kazakhstan, where foreign investment has fueled economic growth, said on Thursday it had adopted a law on nationalisation of private property, but would only do this as a last resort and pay compensation to investors.

Kazakhstan, a vast Central Asian nation with ample oil, gas and metals reserves, has grown more assertive over its natural resources. It has pushed to revise deals signed with foreign companies when strapped for cash in the post-Soviet years.

Up to now, state officials have avoided to use the word “nationalisation”, preferring to talk of “restoring a balance of interests” in a series high-profile disputes with foreign companies and investors.

Now the word, which had been on everyone’s lips, has been cemented into law, which will formalise the process.

“Nationalisation is a process of confiscating property used only in exceptional cases, when all other forms of expropriation or reaching agreement with property owners have been exhausted,” Economy Minister Zhanar Aitzhanova told reporters.

She said “nationalisation” was part of the new state property bill signed into law by President Nursultan Nazarbayev this month.


Aitzhanova said the adoption of the new law on nationalisation had nothing to do with the Karachaganak gas venture dispute, which involves Italy’s Eni and Britain’s BG Group.

“By adopting this law we implied no concrete cases,” she said. “This law now provides clear understanding of this (nationalisation).”

Eni and BG have have faced a series of tax claims from Kazakhstan over Karachaganak.

In 2008, partners in the giant Kashagan oil field project ceded an 8.5 percent stake to let state energy company KazMunaiGas double its share after facing accusations of environmental violations, delays and cost overruns.

Aitzhanova said authorities could resort to nationalisation only if there were “a threat to national security”. She declined to elaborate.

“For each concrete enterprise or property, which is being nationalised, there will be a separate draft law prepared,” she told a government meeting earlier.

She said the new law established that Kazakhstan would make a market-based, one-off compensation payment to the owner of the nationalised property within two months of taking such a step.

“I believe that this creates a predictable investment climate not only for foreign investors, but for national companies as well,” Aitzhanova said.

“They know now that the state can nationalise companies only in rare cases and only within rigidly established procedures and after full market-based compensation paid for this property.”