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Turkmenistan Seeks to Attract International Energy Companies Amid Challenging Business Environment

Ashgabat, Turkmenistan - The Government of Turkmenistan has announced its intention to develop a renewable energy sector, with significant solar and wind potential. In recent years, the country has taken steps to attract international investment, including partnering with Abu Dhabi Fund for Development on a 10 MW solar power plant.

Despite these efforts, many international energy companies have been deterred from entering the market due to the challenging business environment and uncertain terms of investment. According to industry insiders, decision-making is centralized at the highest level, and contracts are often subject to change or ignored by vested interests.

To overcome these hurdles, UK companies are advised to work with trusted local partners to manage bureaucratic and political risks. Obtaining payment for goods and services in advance, as well as splitting larger projects into tranches, can also help mitigate these risks.

Opportunities for Investment

The country’s renewable energy sector offers opportunities for investment, particularly in solar and wind power. However, companies looking to enter the market must be prepared to navigate a complex regulatory environment and address concerns around corruption and organized crime.

Challenges Facing International Companies

Corruption and Organized Crime

Turkmenistan has been ranked as one of the most corrupt countries in the world by Transparency International’s Corruption Perception Index. Bribery is illegal, but there have been reports of agents or intermediaries seeking facilitation payments and Turkmen organizations seeking to have their expenses met to pursue business in the UK.

The country is also positioned along the western and northern routes for Afghan opiates traveling to Europe and Russia, making it a conduit for illegal drug trafficking. However, Turkmenistan has acceded to several international treaties aimed at combating drug trafficking and has brought its national laws and regulations into conformity with these agreements.

Intellectual Property

Companies operating in Turkmenistan are advised to take legal advice locally to ensure that their intellectual property rights are protected under the country’s laws. The Chamber of Commerce and Industry of Turkmenistan and the State Agency for Intellectual Property Protection can provide guidance on protecting patents, trademarks, and copyrights.

Security Concerns

Terrorism Threat and Protective Security Advice

The UK Foreign, Commonwealth & Development Office (FCDO) advises against all travel to certain areas of Turkmenistan due to the risk of terrorism. Companies operating in the country are advised to follow FCDO guidance on protective security measures.

Human Rights

Turkmenistan has been criticized for its human rights record, with reports of arbitrary detention, torture, and forced labor. The British Embassy in Ashgabat engages with the Government of Turkmenistan on human rights issues, including justice, good governance, women’s rights, freedom of expression, religion, and belief.

Companies operating in Turkmenistan are advised to prioritize human rights due diligence and engage with local stakeholders to ensure that their activities do not contribute to human rights abuses.

For further information, contact the DBT office in Turkmenistan or email ukembassy.ashgabat@fcdo.gov.uk.