Turkmenistan – The President’s Cash Cow

Turkmen President Gurbanguly Berdimuhamedov expressed his displeasure at the figures for the oil and gas sector at a government sitting on March 5 to review two months of Turkmen development. He instructed Deputy Prime Minister Shahym Abdrahmanov to improve the work of the state concerns Turkmengaz, Turkmennebit (Turkmen Oil) and Turkmenbashi oil refinery complex.

“If necessary, find new leaders — young, capable managers who will work hard and put all their energy into their jobs and the good of the country,” the president said.

But is this just about the leaders? A turkmen.news source in the oil and gas sector says that the whole country has long since become a cash cow for the president, and all the banks and profitable state enterprises are simply moneymakers.

“Turkmengaz, Turkmennebit and especially the Turkmenbashi oil refinery complex are the most profitable Turkmenistan state enterprises at present— one order from the president and they are obliged to pay for his every whim out of their own funds,” the source says.

Most of these whims are supposedly for the good of the state and its image: the Olympic Village is one example — the state budget provided billions for its construction for the 2017 Asian Games. But with a flourish of his pen Berdimuhamedov can make any state enterprise pay for his own needs too.

As an example the source sent several presidential decrees. One (download the .pdf), dated June 27, 2017, says that the president grants permission to the Turkmennebitgazgurlushyk (Turkmen oil and gas construction) enterprise to sign a contract with the Turkish firm Polimeks for major renovation of the Hazar-1 and Deniz palaces in the Avaza national resort zone.

Both facilities on the Caspian Sea coast are state residences of Berdimuhamedov. The contract is worth $5,620,584. The Turkmenbashi oil refinery complex is instructed to foot the bill, including all customs and exchange fees.

According to other documents in turkmen.news’ possession, the Turkmenbashi oil refinery complex has in different years paid for the following on the direct instructions of the president:

• In 2012, the bill for the purchase of equipment for an amphitheater from the Chinese company Jiangsu Guotai (contract value — $8,734,895).
• In 2013, the bill for the installation of a stage in the artificial riverbed at Avaza and the purchase of fireworks from the Chinese firm Forever Wise Limited (download the .pdf) (contract value — $14,500,878). Celebrations of Avaza-2013 Culture Week coincided with Berdimuhamedov’s birthday. This was the stage where American singer Jennifer Lopez performed, ending her set by singing Happy Birthday, Mr President. Following criticism from international human rights activists and to protect her reputation, the singer later apologized for this.
• The same year, 2013, the president obliged the Turkmenbashi refinery complex to decorate the highway from Turkmenbashi airport to the Avaza resort with LED panels. The bill came to $6,687,984. According to the decree, all the equipment then had to be passed free of charge to the Turkmenbashi municipal authorities.
• In 2014, the cost of the next purchase of fireworks from Forever Wise Ltd was much lower — $2,835,000.
• In 2015, the bill from the same Chinese firm came to $3,477,408.

A turkmen.news source in the Central Bank of Turkmenistan has confirmed the authenticity of these documents and the sums indicated.

The source that sent the documents describes the sum of over 36 million dollars (not including the major renovation of Berdimuhamedov’s palaces on the Caspian) as a drop in the ocean, and that the Turkmenbashi oil refinery complex pays bills for hundreds of millions. None of the items listed above is directly related to the Turkmenbashi oil refinery complex. The complex is just a cash cow to pay for Berdimuhamedov’s whims.

“And not one head of an enterprise, minister or deputy prime minister will ask why on earth their organization should cover this unforeseen expenditure,” the source says. “Then a while later it will emerge that Turkmengaz or the Turkmenbashi refinery complex are not making enough profit.” 

The items listed above constitute the relatively major expenditure of the Turkmen oil and gas sector, but there are smaller “everyday expenses” too. According to the turkmen.news source, in pre-COVID times when the borders were open and international events were held in Turkmenistan, enterprises in the oil and gas sector paid for the travel, accommodation, food, and gifts for participants in different conferences, symposiums, and sports competitions, all on the president’s instructions. And there were dozens of such events. 

“Even small sums disrupt the companies’ work,” the source says. “Any organization applies the concept of ‘planning’ or ‘budgeting’. If something unforeseen has to be paid for on the head of state’s instructions, OK, but then this expenditure has to be offset with something else. But what?”

As for “young, energetic managers”, there have been young leaders in the oil and gas sector before. Murad Archaev became head of Turkmengaz at the age of 30 and led this major state concern for two and a half years, from December 2017 to July 2020. After several tough reprimands Berdimuhamedov removed him from the post and sent him to Ovadan-Depe — not to the notorious prison, but to the nearby settlement. He is said to be in charge of the natural gas-to-gasoline plant, though it produces hardly anything, according to turkmen.news sources.

Clearly the problem isn’t the senior managers. It’s the country’s top manager that needs to rein in his appetites.