Institute for War and Peace Reporting | Giving Voice, Driving Change

No Takers for Kyrgyz Power Companies

This winter has shown yet again how crucial a stable supply of energy is to Kyrgyzstan’s survival, yet when the country’s electricity companies are put up for sale, no one wants to buy them.
By IWPR
Three major power companies in northern Kyrgyzstan – the distribution firm Severelektro, Bishkekteploset, which pipes hot water to the capital, and the Bishkek TETS, a fuel-fired power station that supplies the heating for the system as well as the city’s electricity – were included on a list of state enterprises due for privatisation which was unveiled in November.



According to reporter Sabir Abdimomunov, one factor that may deter potential investors is that they will have to respect a cap on the prices they can charge Kyrgyz electricity consumers while facing pressure to invest money and improve productivity and profitability.



The official tender for the companies was announced on January 27 – but no one has put in a bid.



“Not one investor or company has submitted documents for the tender,” said Suyerkul Bakirov of the State Committee for Managing State Property. “So nothing has been sold. That’s what the [property] committee has decided.”



Prime Minister Igor Chudinov has hinted that the terms of the tender could be altered in order to make the deal more appetising.



Ordinary consumers fear that once the companies are sold off, they will be forced to pay high prices by the profit-hungry new owners, and that the government will stand back and let it happen. Yet for this tender, the government did set out arrangements under which there would be no immediate increase on 2008 electricity tariffs, while in subsequent years, price rises could not exceed 13 per cent.



Power industry privatisation has been a hugely contentious issue in Kyrgyzstan, with parliamentarians debating the pros and cons furiously.



Given the current global economic downturn, Narynbek Moldobaev of the governing Ak Jol party believes the government needs to give the power companies away for a symbolic sum if it wants to attract investors.



“Anyone who might have been able to buy them is now penniless because of the international financial crisis,” he said.



The opposition, meanwhile, continues to oppose privatisation as a matter of principle.



One leading figure, Temir Sariev, a member of parliament representing the Ak Shumkar party, suspects the authorities are up to no good. “First they say there was no buyer, and after that they’ll offer them [firms] for less money, and then for even less, and in the end it will go to some prearranged individual,” he said.