Fertilizer Company Contract Cancelled: Russian Grudges

The Syrian regime could end a contract with the Russian company Stroytransgaz for fertilizer manufacturing in Homs, according to al-Modon.

The Syrian regime’s subtle suggestion of terminating the investment contract with the Russian company Stroytransgaz for fertilizer manufacturing in Homs within the government sector has raised numerous indicators and implications. Particularly noteworthy is the timing of this move, coinciding with Prime Minister Hussein Arnous leading an economic delegation during his visit to Iran, a key contender for Syrian economic interests.

Although there hasn’t been an official announcement, media outlets aligned with the regime have disclosed the decision to halt gas supply to fertilizer plants in Homs, effective from mid-December 2023. These reports confirm that Arnous has instructed the Ministry of Industry to cease gas supply to the plant.

Contract review 

The website supporting the hashtag indicated that Arnous urged the Ministry of Industry to review the contract with the Russian company, citing “lack of economic feasibility.” This move, coupled with Arnous’ directive to explore alternative options, is interpreted by the site as a clear inclination of the government to terminate the agreement with Stroytransgaz.

In February 2019, the Syrian regime’s People’s Assembly approved a contract granting the Russian company investment rights for fertilizer plants in Homs, encompassing an ammonia urea plant, Cal Nitro plant, and phosphate fertilizer plant. The regime’s stake in the venture is set at 35 percent of the total annual profits. The contract outlines a 40-year investment period valued at no less than $200 million. It includes a provision allowing termination and compensation claims if the Russian party fails to achieve the design capacity of the plants within two years.

Contrary to speculations, the contractual framework indicates that cancellation is not a straightforward option. The agreement explicitly permits termination within the first two years from the contract’s signing in 2018, officially ratified in 2019. Economic expert Younis al-Karim affirmed to Al-Modon that the regime lacks the authority to unilaterally cancel the Russian company’s contract. He suggests that the regime’s efforts may be an attempt to create an illusion of decision-making authority amid endeavours to overcome diplomatic challenges in the context of Arab normalization.

Agreement with Russia?   

Karim suggests that the underlying motive behind this move is likely an attempt to exert pressure on the Russian company Stroytransgaz owned by Russian billionaire Gennady Nikolaevich Tymoshenko. This pressure, according to Karim, is likely coordinated and instigated by Russia itself. The objective may be to facilitate a change in ownership of the fertilizer plant investment contract, transferring it to another Russian company. This maneuver is seen in the context of broader changes Russia is implementing in its companies’ investments in Syria and Libya, particularly in light of the upheavals following the rebellion and the demise of Wagner militia leader Yevgeny Yrigoyen.

Wagner, previously responsible for securing the fertilizer plant and phosphate mines in various locations in the Palmyra desert, has resumed its activities in Syria. Karim notes, “The regime, having failed to serve as an alternative to Wagner, which has returned to Syria, is now entangling the country’s investments in internal Russian economic conflicts.”

He further points out that the regime only claims 30% of the profits from the fertilizer plant, evident in its continued gas supply despite the prevailing fuel crisis. However, challenges persist for the Russian company in the Syrian fertilizer plant, stemming from corruption issues, difficulties with Syrian workers, and an overall unsafe working environment.

 

This article was translated and edited by The Syrian Observer. The Syrian Observer has not verified the content of this story. Responsibility for the information and views set out in this article lies entirely with the author.

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