The State Assets Management Agency announced the sale of Ferghanaazot enterprise, one of the largest producers of mineral fertilizers, the press service of the State Assets Management Agency (SAMA) reported.
Sale deal of 99.02% government’s stake was entered into with Singapore-based Indorama Corporation Pte. Ltd.
10 bidders showed interest in buying the facility, who were checked according to the announced qualification criteria, including the absence in the international sanctions lists. 4 bidders passed to the next stage of selection.
According to the agency, Indorama Corporation came up with the best offer - a buyout price of $140 million ($130 million and 107 billion soums). While, the investor committed to invest $100 million to modernize the enterprise.
“Based on an analysis conducted with the involvement of Deloitte and the International Finance Corporation (IFC), it is believed that in the current environment of uncertainty in the global economy, turbulence in the commodity markets and high risks of a global recession, the price parameters of the transaction are reasonable and in line with the interests of the Uzbek economy,” - the statement added.
SAMA expects that Indorama, as one of the largest producers of mineral fertilizers, is able to perform complete modernization of Ferganaazot, whose total depreciation of production facilities is currently more than 80%.
In addition, the investor has undertaken to maintain all existing social programs of the enterprise, maintain the number and level of wages of staff, organize employee training, and develop a modern environmental control program. Notably, in March 2022, Indorama Corporation CEO Prakash Kejriwal opposed such commitments.
The parties signed the sale deal on January 16 as part of a business forum in Singapore ahead of the visit of President Shavkat Mirziyoyev to this country.
However, the deal will be fully closed only after resolving issues on "ensuring the supply of natural gas and creating a free market for its products with the regulation of the provision in the relevant legal acts," the report says.
Akmalkhon Ortikov, head of the State Assets Management Agency, also spoke about plans for the privatization of Ferganaazot, which was expected before the end of the year. The International Finance Corporation (IFC), the agency's strategic partner in the privatization of this facility, wondered how the investor's investments would be guaranteed, given that the enterprise runs on natural gas.
“We must provide the investor with a guaranteed supply of gas for at least 10 years… About 5,500 people work at Ferghanaazot today. Tomorrow after the sale of the plant, if there are interruptions in gas supply and other unforeseen circumstances, the new management will be forced to reconsider jobs,” he noted.
The chief of the SAMA believes that due to the uninterrupted supply of raw materials, it will be possible to save jobs, and the investor will confidently invest in the development of the enterprise.
Indorama Corporation is a transnational giant with over 160 manufacturing sites in 38 countries. The company is one of the world's leading manufacturers of fertilizers, polymers, industrial chemicals, fibers, textiles, agricultural and medical gloves, with over 45,000 employees.
The corporation has been actively investing in Uzbekistan since 2010, and is developing projects in the field of textiles, agriculture and fertilizer production, which employ more than 3,000 local employees. In particular, the company has owned Kokand Fertilizers and Chemicals since 2019, which was created on the basis of the Kokand superphosphate plant after privatization.
Ferganaazot was established in 1962 and is one of the largest producers of mineral nitrogen fertilizers, defoliants and cellulose acetates. The total production capacity is 2.8 million tons of fertilizers per year. Net profit has only been growing in recent years: in 2019 - 220 billion soums, or USD 20 million in 2020 - 292.6 billion soums, or USD 26 million in 2021 - 348.7 billion soums, or USD 31 million in nine months of 2022 - 299.7 billion soums, or USD 27 million.
