Shedding Light on the Power Industry

Tackling reform of Kazakstan’s electricity industry is likely to prove difficult because like the rest of the economy, the sector is not governed by the regulatory mechanisms needed to ensure transparency and efficiency, NBCentralAsia analysts say.



Dariga Nazarbaeva, the president’s daughter and a member of parliament, issued a statement last week saying that electricity sector networks are 60 to 80 per cent worn out and tariffs are skyrocketing due to a lack of transparency in the industry.



Nazarbaeva says her parliamentary group Aimak is drafting a set of amendments both to current laws governing the industry and to the state programme which outlines how the power industry should develop up until 2030. In her view, this programme fails to make a realistic assessment of future growth in domestic and industrial consumption of electricity.



Her proposals were made soon after President Nursultan Nazarbaev announced that the power industry and some other key economic sectors need to be demonopolised.



NBCentralAsia analysts say such reforms are likely to prove problematic because of a systemic lack of transparency across the entire economy, rather than in the power industry specifically.



“Transparency is either present in the entire system or it isn’t,” said NBCentralAsia analyst Yevgeny Zhovtis. “Systemic means that a whole range of things are in place: a functioning parliament that controls the budget, strong anti-monopoly agencies, public scrutiny, free media and a robust civil society. All these elements together guarantee transparency.”



Zhovtis predicts further rises in electricity prices due to inflation, the obsolete technology used in the national grid, and other factors such as “the interests of the companies involved, and the industrial groups that stand behind them”.



Political scientist Eduard Poletaev points out that all monopoly industries in Kazakstan keep themselves closed from public view, and energy firms protect themselves by interacting with the media on its own terms and employing a barrage of lawyers.



In the case of the electricity industry, Poletaev said it shuns publicity not just to protect the business interests of those involved in it, but also out of concern that operating more transparently would reveal poor working and safety conditions and the decrepit nature of the technology used.



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