New Hydroelectric Scheme Takes a Step Forward
New Hydroelectric Scheme Takes a Step Forward
Experts say that having got parliament’s approval to privatise the still incomplete Kambarata hydroelectric scheme, the Kyrgyz government must set about making the contractual and technical arrangement for exporting power to other countries – essential if the project is to turn a profit.
On June 19, a bill allowing the privatisation of the incomplete Kambarata-1 and -2 plants, and also the Bishkek heat-producing power station, was passed by parliament.
The passage of the law has been seen as a breakthrough as once the Kambarata scheme is finished – and it will take three billion US dollars in investment – it will allow Kyrgyzstan to increase its electricity exports from 2.4 billion kilowatt/hours to 6 billion kilowatt/hours a year.
Kyrgyzstan currently produces up to 13 billion kilowatt/hours a year. The two Kambarata stations, located on the river Naryn, will produce six billion kilowatt/hours a year.
Until now, privatisation of power-generating facilities was blocked because they were deemed strategically important to the state. Parliament held off approving denationalisation of the hydroelectric stations – the fourth and final phase in the privatisation process – because members were unhappy with the way the three preceding stages had gone. They felt the process to date had not made the energy sector more efficient.
However, they changed their mind after President Kurmanbek Bakiev attended parliament twice to argue that a country like Kyrgyzstan, with an external debt of two billion dollars, would not be able to build the huge hydroelectric plants or renovate the Bishkek power station by itself.
Now that the way has been opened to privatization, the Kyrgyz government is to work with the United Energy Systems of Russia and Kazakstan’s KazKuat to prepare a feasibility study.
NBCA observers say one of the main preconditions for bringing in investors for this costly project is to provide profitable export routes so that the power stations can recover their costs rapidly.
“Investors will never come in when there might be risks,” explained Bazarbay Mambetov, an NBCA economic commentator. “The risk here relates to where the electricity generated by Kambarata-1 and -2 will go.”
Political analyst Turat Akimov agrees that once investors start showing an interest, there will inevitably be questions about whether there are reliable and powerful grids to facilitate exports of the power.
“The Kambarata project is competitive, but it is a different matter who will lay a transnational transmission line to, say, Pakistan, India or China,” said Akimov.
Kyrgyzstan currently exports power to Tajikistan, Kazakstan, Uzbekistan, China and Russia. Observers say it has time to expand that list, since construction of Kambarata-1, the larger of the two, could take nine years.
However, Sapar Orozbakov, the director of the Bishkek Centre for Economic Analysis, believes it will be very difficult to attract investors, since Kambarata is a very capital-intensive project and will not be viable economically.
“Kambarata-1 and -2 are not competitive, since one kilowatt/hour of energy will cost more than eight [US] cents,” said Orozbakov. For comparison, electricity produced in the new hydroelectric schemes neighbouring Tajikistan is planning will cost no more than two cents pe kilowatt/hour.
Orozbakov also noted the fact that the green light parliament has given to privatisation does not mean include rights to manage the water used to turn the hydroelectric turbines – something the main potential investors in Kazakstan and Russia will be looking for.
Southern regions of Kazakstan are located downstream of the river Syr Darya, which originates in Kyrgyzstan, so the country has an interest in managing the seasonal regulation of the water flow.
(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)
On June 19, a bill allowing the privatisation of the incomplete Kambarata-1 and -2 plants, and also the Bishkek heat-producing power station, was passed by parliament.
The passage of the law has been seen as a breakthrough as once the Kambarata scheme is finished – and it will take three billion US dollars in investment – it will allow Kyrgyzstan to increase its electricity exports from 2.4 billion kilowatt/hours to 6 billion kilowatt/hours a year.
Kyrgyzstan currently produces up to 13 billion kilowatt/hours a year. The two Kambarata stations, located on the river Naryn, will produce six billion kilowatt/hours a year.
Until now, privatisation of power-generating facilities was blocked because they were deemed strategically important to the state. Parliament held off approving denationalisation of the hydroelectric stations – the fourth and final phase in the privatisation process – because members were unhappy with the way the three preceding stages had gone. They felt the process to date had not made the energy sector more efficient.
However, they changed their mind after President Kurmanbek Bakiev attended parliament twice to argue that a country like Kyrgyzstan, with an external debt of two billion dollars, would not be able to build the huge hydroelectric plants or renovate the Bishkek power station by itself.
Now that the way has been opened to privatization, the Kyrgyz government is to work with the United Energy Systems of Russia and Kazakstan’s KazKuat to prepare a feasibility study.
NBCA observers say one of the main preconditions for bringing in investors for this costly project is to provide profitable export routes so that the power stations can recover their costs rapidly.
“Investors will never come in when there might be risks,” explained Bazarbay Mambetov, an NBCA economic commentator. “The risk here relates to where the electricity generated by Kambarata-1 and -2 will go.”
Political analyst Turat Akimov agrees that once investors start showing an interest, there will inevitably be questions about whether there are reliable and powerful grids to facilitate exports of the power.
“The Kambarata project is competitive, but it is a different matter who will lay a transnational transmission line to, say, Pakistan, India or China,” said Akimov.
Kyrgyzstan currently exports power to Tajikistan, Kazakstan, Uzbekistan, China and Russia. Observers say it has time to expand that list, since construction of Kambarata-1, the larger of the two, could take nine years.
However, Sapar Orozbakov, the director of the Bishkek Centre for Economic Analysis, believes it will be very difficult to attract investors, since Kambarata is a very capital-intensive project and will not be viable economically.
“Kambarata-1 and -2 are not competitive, since one kilowatt/hour of energy will cost more than eight [US] cents,” said Orozbakov. For comparison, electricity produced in the new hydroelectric schemes neighbouring Tajikistan is planning will cost no more than two cents pe kilowatt/hour.
Orozbakov also noted the fact that the green light parliament has given to privatisation does not mean include rights to manage the water used to turn the hydroelectric turbines – something the main potential investors in Kazakstan and Russia will be looking for.
Southern regions of Kazakstan are located downstream of the river Syr Darya, which originates in Kyrgyzstan, so the country has an interest in managing the seasonal regulation of the water flow.
(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)
