Ashgabat: investment hotspot

Russian companies will vie for the right to invest in Turkmenistan on the sidelines of an economic forum to be held in Ashgabat from Monday.

Many of them submitted project proposals in advance, taking advantage of Prime Minister Viktor Zubkov's visit to the Turkmen capital in November, a month that witnessed a flurry of activity between the two states. Indeed, the head of gas giant Gazprom, Aleksei Miller, also held talks with the government of President Gurbanguly Berdymukhammedov and conceded a 50% price increase on the gas that Russia buys from its Central Asian neighbour.

Moscow was seriously concerned about the future of the 25-year contract to buy 70-80 billion cubic metres of gas from Turkmenistan from 2009 after Berdymukhammedov came to power a year ago. It asked Ashgabat for guarantees that it would not renege on his predecessor's commitments, but the Turkmen leader was keen to avoid making grandiose promises. The price increase was the result of his astute diplomacy, whereby Ashgabat kept several pipeline projects on the table and warned that they could be constructed at Russia's expense. It has also successfully linked the decision to construct the Caspian Littoral Pipeline (PGT) to Moscow's decision to raise the price it pays for Turkmen gas.

Moscow's acceptance of Ashgabat's demands raises the profile of bilateral strategic relations. As a result, the number of Russian companies that establish themselves in the Turkmen construction, car manufacturing and mobile telephony sectors will rise exponentially in the coming months.