UZBEKISTAN: Cement Plant should pay tax on excess profit for six years

The Higher Economic Court of Uzbekistan has upheld the penalty tax on excess profit of Ahangarancement JSC (a subsidiary of Russian Eurocement Group JSC) from 2009 to 2014 and penalties for its late payment, the press service of Ahangarancement said.

The Higher Economic Court by its decision reversed the earlier decision of Economic Court of Tashkent region to invalidate the decision of the State Tax Inspectorate of the Ahangaran region to recover excess profits tax and penalties from the factory.

The message said that the decision by the Higher Economic Court was made despite the fact that the calculation of excess profit tax was made by Ahangarancement in accordance with the laws of the country, the correctness of the calculation was confirmed by the ministry of finance and the expert council at the State Tax Committee of the republic.

The press service said that the plant appealed to the Prosecutor General of Uzbekistan to “make a protest to the Supreme Economic Court of the Republic of Uzbekistan to reconsider the decision regarding the case."

“The decision significantly changes the legal practice on issues of the formation of profits of cement companies, significantly encumbers the plant with an additional tax burden, leads to a reduction of investment opportunities of the enterprise, jeopardizing the implementation of the project of modernization of the enterprise,” said the press release.

Tax authorities of Uzbekistan haven’t commented on this situation.

In March 2014, complex unscheduled inspection of financial and economic activity of Ahangarancement JSC started due to the criminal charges against several employees. However, the inspectors did not find large violations in the activity of the plant.

In July 2014, the Economic Court of Uzbekistan`s Tashkent region granted the claim of the Uzbek State Committee for Privatization, Demonopolization and Development of Competition to recognize invalid the contract for the sale of Ahangarancement JSC (Ahangaran city, Tashkent region). Cash in the bank accounts of the enterprise and fixed assets have been seized by court decision.

In late 2014, the Board of Appeals of the Tashkent Regional Economic Court overturned a lower court decision to invalidate the privatization of Ahangarancement JSC, which is controlled by Eurocement Group holding. The decision of the board was taken on the basis of a settlement agreement, which was signed by parties to the litigation.

In August 2006, Russian Eurocement Group holding purchased some 75.5 percent of shares in Ahangarancement JSC. At present, the share of Eurocement Group in the authorized capital of JSC is 83.92 percent.

Ahangarancement JSC is the second largest cement producer in Uzbekistan. The design capacity is 1.736 million tons of cement per year obtained by “wet” method. During the next three years, it is planned to introduce a new line of dry method of production. After its launch, the production capacity of the plant will exceed 4 million tons per year.

In 2014, Ahangarancement increased cement production by 5 percent, compared to 2013 - up to 1.7 million tons, clinker production - by 6.2 percent, up to 1.2 million metric tons. The plant's share in the domestic market of the country is about 30 percent. Products are exported to Kazakhstan, Kyrgyzstan and Turkmenistan.

UZBEKISTAN: Cement-Maker Faces Loss Of Assets In Uzbekistan

Russia's cement-producing giant Eurocement is facing the loss of its facility in Uzbekistan in a nationalization drive by the Central Asian country.

An Uzbek economic court in Tashkent has annuled Eurocement's 2006 acquisition of Uzbekistan's biggest cement producer, Akhangarancement, which could lead to the cement-making facility's nationalization.

Uzbek media reports on July 22 said the Uzbek State Competition Committee filed a lawsuit last week against Eurocement's purchase of Akhangarancement.

The Tashkent court ruling on July 21 paves the way for the plant that Eurocement bought 75 percent of eight years ago to be nationalized.

Sources close to Eurocement told RIA Novosti News Agency in Russia on July 22 that the court ruling will be appealed.

UZBEKISTAN: Eurocement to build new cement plant

The Eurocement Group, the biggest supplier of cement, ready-mix concrete, and aggregates in Russia, plans to construct a new cement plant in Uzbekistan.

The relevant agreement worth $128 million for the supply of equipment, design, installation supervision, and training for the construction of the cement plant in Uzbekistan's Tashkent region was signed with the Chinese CAMC Engineering Co., Ltd., Eurocement said on June 30.

The new plant's capacity will amount to 2.4 million tons of cement per year, and the facility's commissioning is scheduled for 2016.

The Eurocement Group has 16 cement plants across Russia, Ukraine, and Uzbekistan, as well as several concrete mix plants, concrete goods factories, and aggregate-mining quarries.

The cement consumption of the mineral-rich Uzbekistan is 300 kilogram per capita, a figure below the global average which is estimated at 536 kilogram per capita. This places Uzbekistan in a favorable position for the future development of the cement industry.

Local building materials company Uzbuildmaterials JSC announced the government's plans to invest $49.1 million in the local cement industry in late February 2014.

The program includes nine projects for the three largest cement plants in the country: the Kyzylkumcement plant, the Akhangarancement plant, and the Bekabadcement plant.