Kazakhstan moves to formalise 'nationalisation'

Kazakhstan, where foreign investment has fuelled 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 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.
Oleg Maximov, oil analyst with Troika Dialog, said Kazakhstan was more likely to implement its "nationalisation" law in sectors such as banking than in the oil and gas industry.
"You don't use a nuclear bomb to kill a mosquito," he said. "The government has other means should one state company or another wish to obtain a piece of any project. There have already been examples."
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.