Will Private Enterprise Improve Power Industry?

Licensing private enterprise to run energy-sector businesses in Kyrgyzstan may well improve management and service provision, but energy experts still insist these strategic national assets should not be placed in private hands.



Kyrgyzstan is rich in water resources but lacks major oil and gas reserves, so hydroelectric power is vitally important to the economy, generating up to 15 billion kilowatt hours a year.



Preparations to denationalise the power industry have been going on for eight years. The state-owned Kyrgyzenergo has been broken up into a number of entities, of which generating companies and the national grid will not be privatised, while the state will retain a controlling stake in the distribution companies. The final phase of privatisation will involve issuing a licence to run these latter companies, placing them under commercial management, or selling them outright to strategic investors.



On October 27, Batyrkul Baetov, secretary of the State Inspectorate for Energy and Gas, told reporters that from now on private individuals and legal entities will be able to obtain a license to operate the electricity industry.



Gani Abdrasulov, an advisor to Prime Minister Feliz Kulov on business enterprise, says experience in other countries shows that introducing private management generally has a positive effect on the economy.



“The electricity industry is one of the economic sectors in Kyrgyzstan that needs to be privatised as soon as possible,” he said. “It has a multitude of problems, and it’s important that private investors should take the lead,” said Abdrasulov.



Other commentators agree, saying that private-sector management could improve collection of electricity payments and reduce wastage of electricity, which is estimated at about 40 per cent of total power production.



Member of parliament Osmon Artykbaev, who generally favours the private sector playing a bigger role in the energy sector, adds one proviso – that power lines and the hydroelectric power stations should not be sold off, but leased.



Political commentators interviewed by NBCentralAsia warned that private businessmen could abuse their control over the energy system at local level, using it to pressure the population as a way of pursuing political ends, for example by cutting off the power at election time.



Akhmatbek Keldibekov, who chairs the parliamentary committee on budget and finances, says the government needs to remain at the helm of strategic assests, saying, “The most important thing is that the controlling share remains in the hands of the state.”



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