Are Eriell and Enter Engineering recipients of projects worth $35 billion in Uzbekistan?

The Minister of Energy of Uzbekistan Jorabek Mirzamahmudov tried to shed the light on the investigative material published by “Ozodlik” which claims that Eriell Group and Enter Engineering received projects worth 35 billion dollars.  

The ministers assured that not a single dollar was given for the state budget to these companies during the meeting with a group of journalists and bloggers on February 13 to discuss the problems in the energy sector.

First, the “Ozodlik” inquiry states that $23.4 billion of the total amount ($35 billion) is the total cost of 9 projects involving Eriell and Enter Engineering firms.

In fact, the project cost does not necessarily mean the whole amount will be directed to the project. Often, the project cost is determined and optimized before the contract is signed with the contractors, and the real agreement sum becomes much lower than the project cost.

Here, the total value of the 9 projects is 17.6 billion dollars, signing 14.9 billion dollars so far. And each project is considered separately below:

1. The “25th Anniversary of Independence” mine development project envisages the completion of works worth 2.9 billion dollars, and the present value of the contracts is 1.73 billion dollars. The project is fully funded by the investors with no government guarantee.
2. The Korakol free economic zone and gas-chemical cluster establishment are 3 billion dollars. The project is fully funded by the investors with no government guarantee.
3. The program to increase fossil fuel extraction in 2017-2021. 2.3 billion dollars were financed under the signed contract:

• 805 million dollars own funds of "Uzbekneftgaz" JSC;
• $710 million Gazprombank loan without state guarantee;
• $585 million loan from the Silk Road Fund (China) under state guarantee;
• $200 million in interest-bearing loans from the Ministry of Finance.

4. The total cost of the Shortan gas chemical complex's synthetic liquid fuel production (GTL plant) project based on purified methane is $3.4 billion, the source of funding is:

• 1.1 million dollars own funds of "Uzbekneftgaz" JSC;
• $2.3 million are international organizations’ loans.

Hyundai Engineering & Construction Co. as a contractor based on the tender. Ltd., Hyundai Engineering Co. Ltd. (South Korea) and Enter Engineering Pte. Ltd. (Singapore) consortium was bid winner. The Korean company performed work worth 2.6 billion dollars. The remaining 800 million dollars were spent by "Uzbekneftgaz" JSC for license and construction costs of external infrastructure facilities.

5. Program to increase oil production in 2020-2030. The value of the contract is 2.68 billion dollars, the source of financing is the investor's own funds and direct loans, and no government guarantee is provided.
6. The total cost of the project to expand the production capacity of the Shurtan gas chemical complex is 1.8 billion dollars, the source of financing is:

• 632 million dollars own funds of "Uzbekneftgaz" JSC;
• $1.2 billion in foreign loans without state guarantees.

The amount of work completed under the contract is 1.3 billion dollars, while the costs of license and construction of external infrastructure objects of "Uzbekneftgaz" are 500 million dollars.

Contractors are directly selected.

7. The agreement value of the project to increase the size of the "Gazli" underground gas storage facility and perform additional geological works is 463 million dollars, the source of financing is the investor's own funds and direct loans, the state guarantee is not provided.
8. The contract value of the project for carrying out geological exploration works in the Sechankol, Akjar and Chimboy investment blocks and mining in the Urga, Akchalok and Chandir group mines is 701 million dollars, the source of financing is the investor's own funds and direct loans, no state guarantee is provided.
9. Fergana oil refinery modernization project, the contract value is 399 million dollars, the source of financing is the investor's own funds and direct loans, the state guarantee is not provided. It can be seen that 6 out of 9 projects with a total value of 17.6 billion dollars will be implemented at the expense of 10.1 billion dollars of investors.

The investigative article provides false information arguing that the nuclear power plant (NPP) with the initial estimated cost of 11 billion dollars was also given to the afore-mentioned companies. In reality, no final decision on the construction of NPP has been made yet.

So, the half of the amount mentioned in the "Ozodlik" material, i.e. 17.4 billion dollars does not exist and which means the sum is fabricated.