Russia and Central Asia to Share Power

Six members of the Commonwealth of Independent States countries have agreed to set up a common market for electricity, which NBCentralAsia experts say will help attract huge investment in Central Asian energy.



At a CIS summit in Yalta last week, Kazakstan, Kyrgyzstan, Tajikistan, Russia, Belarus and Armenia signed up to a common electricity market.



The agreement will give each state free access to electricity supplies from other participants under a common tariff system, and the right to sign purchase contracts within those other countries.



The other six CIS members - Uzbekistan, Moldova, Ukraine, Georgia, Azerbaijan and Turkmenistan - have refused to sign the agreement, saying that the common market will mostly benefit Russia. They argue that Russia’s subsidised energy market makes it unprofitable for other states to export electricity there.



NBCentralAsia analysts agree that Russia will get the best deal, but they say the agreement will open up more markets for Central Asian countries and help them attract investment.



“Russia has the greatest interest in setting up this market because it wants to buy cheap electricity from Central Asia for domestic consumption and sell its own power to Europe at world prices,” said an NBCentralAsia economic expert based in Tajikistan.



The expert said that to function effectively, the Yalta agreement would require the construction of a common electricity grid and new power stations.



Tajikistan and Kyrgyzstan, with water resources located in high mountains, have immense potential for exploiting hydroelectric power, but they are unable to capitalise on it at the moment. According to World Bank research, Kyrgyzstan has the potential to generate 163,000 gigawatt-hours a year, while Tajikistan could produce 317,000 gwh.



Since the emergence of independent states in 2001, the once unified Soviet power network has been restructured by each CIS country separately, as different approaches have left them unable to coordinate, and there is no common market in electricity.



Analyst Eduard Poletaev believes the agreement will gradually become a reality, and the principles established for a unified network in the Soviet period will make the process easier.



While Kazakstan stands to gain most as the transit hub for electricity destined for Russia and other countries, Poletaev argues that all members will benefit from a reduction in the post-Soviet malaise affecting the industry, such as lack of coordination and disjointed development of the network.



Gulnur Rakhmatulina, a leading economic expert at the Kazakstan Institute for Strategic Studies, sees the agreement as “a huge breakthrough” that will improve the potential for energy investment in Central Asia.



“It will be a major factor in securing sustained economic growth, and will open up opportunities for investment to flow into Central Asia to build powerful hydroelectrical plants,” she said.



(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)