It appears that the US is resolved to sticking with a competitive tender plan to cover future fuel supplies at the Manas Transit Center in Kyrgyzstan, despite a Kyrgyz provisional government preference to set up a joint venture involving a state-run entity and Russia's Gazprom.
Officials in Bishkek portray the joint-venture option as having two big benefits – limiting the possibility for corrupt practices and bringing in extra revenue to Kyrgyz state coffers. Involving Gazprom, Kyrgyz officials contend, could generate an additional $60 million in income for the state.
Speaking at a September 27 news conference in Bishkek, Muktar Djumaliyev, the deputy head of the Kyrgyz presidential administration, also touted the anti-corruption aspect of the plan. “The joint state-run venture would move us away from the corrupt schemes that existed previously and would create a new area of multilateral co-operation,” Djumaliyev said. A Kyrgyz provisional government panel is currently probing the fuel-supply activities of companies allegedly controlled by Maxim Bakiyev, the son of former president Kurmanbek Bakiyev, whose administration collapsed in April.
The Manas transit center is a key logistics hub supporting US and NATO military operations in Afghanistan. The company currently supplying fuel to the transit center, Mina Corp, is at the center of a US congressional investigation into fuel-supply practices. Mina Corp representatives have denied any wrongdoing.
Kyrgyzstan’s provisional president, Roza Otunbayeva, met US President Barack Obama in New York on September 24 for a wide-ranging discussion on US-Kyrgyz relations. The Manas fuel-supply issue reportedly was among the top items on the Kyrgyz side's agenda. Whatever Otunbayeva may have told Obama in seeking US backing for the joint-venture plan, it was apparently not enough to get the US government to alter its commitment to a competitive tender. “The United States has been fully transparent with the government of Kyrgyzstan,” Christian Wright, a spokesman for the US Embassy in Bishkek, told EurasiaNet.org on September 27. “We intend to continue with the contract solicitation. We will not limit our options for fuel in the future.”
For Kyrgyzstan, there appears to be a major incentive to get Gazprom involved in Manas fuel-supply operations. In April, just days before Bakiyev’s downfall, Russia imposed a punitive export duty on fuel shipped to Kyrgyzstan. Experts at the time saw a connection between the Russian action and allegations that Russian fuel shipments intended for Manas were improperly being re-exported to Afghanistan, action that potentially cost the Kremlin millions of dollars in lost tax revenue. Kyrgyz officials apparently believe that Gazprom’s participation in a joint venture could help convince Russian leaders to lift the onerous duties, Bishkek observers say.
Gazprom involvement in fuel-supply operations could also have the potential benefit of diminishing Russian opposition to the US presence at Manas, some experts in Bishkek suggest.
In Washington, fierce opposition to a joint venture is being led by the Pentagon. A source close to policymakers in Washington said; “The Pentagon is absolutely committed to going ahead with the tender and opposed to the Kyrgyz state company approach.”
Representatives of American fuel-supply entities are also vociferously against a Gazprom option, asserting that Russia can’t be trusted in this particular case to act as a reliable supply partner. “US Forces require a reliable and steady supply of fuel. US companies should have a fair chance to supply US Forces,” said Ron Uscher, a lawyer representing IOTC, a competitor to Mina Corp and its affiliate Red Star. “Time and again, Russia has used access to energy to further its interests. A Russian hand on the fuel spigot needlessly compromises the US mission and US Forces.”
John Lough, a spokesman for Red Star/Mina Corp, contended that the existing fuel-supply arrangement has worked well, despite the congressional investigation. “We can’t speculate on hypothetical deals between two governments,’ Lough said. “Mina and Red Star have been exemplary partners with the Department of Defense (DoD) and we believe that this reflects the view of the US Government.”
Uscher, meanwhile, cast doubt on Kyrgyz claims that a joint venture would enhance transparency and reduce the chances for corruption. “Competition keeps prices low and provides the best value to US taxpayers,” he said. “On the other hand, a ‘sole source’ arrangement, without the benefit of full and open competition, is often an invitation to mischief.”
Some companies competing for the new Manas fuel-supply contract are open to the idea of working with the Kyrgyz government. Ocean Trade Safari, founded by Richard Douglas, a former US deputy assistant secretary of defense for counter-narcotics, said in a statement; “Our company expects the US government to make a decision on the Manas solicitation based solely on merits.”
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The US government has a “compelling interest” in having a US-based contractor in place but “this interest does not preclude subcontracting with non-US entities,” the statement added.
Mina Corp has been retained to supply fuel to Manas until at least the end of November, EurasiaNet.org has learned. In June, a payment of $20.3 million was authorized to Mina Corp for a “one month contract extension (Aug),” according to the US government’s Federal Procurement Data System.
By. Deirdre Tynan
