Kyrgyzstan: Utility Price Hike Squeezes Citizens

Utility consumers in Kyrgyzstan are bracing for the arrival of their first bills since energy and hot water tariffs skyrocketed at the outset of the new year. For many, the new utility rates may serve as a dose of cold reality that fuels anxiety about a potential decline in living standards.

Pressed by the frail Soviet-era infrastructure, as well as by regular electricity shortfalls, officials say they need more revenue so that they can invest in the energy sector. Last fall, Prime Minister Daniyar Usenov unveiled a plan to increase tariffs in two phases in 2010, starting on New Year's Day and jumping again in July.

January bills are due to arrive at homes in the next few days. Some analysts worry about the public reaction to the hikes. In 2010, heating costs are rising by 400 percent; electricity by 170 percent. The price of hot water - a fee calculated according to the size of a resident's dwelling -- more than doubled at the start of the year.

"We can definitely see social tension growing now. It is a gradual psychological process. People will realize [they will have difficulty paying] after getting their bills for the utilities. And when before they used to spend 20-30 percent of their paycheck on payments, now they will have to spend about 80 percent of their salary to pay for the utilities," Bishkek-based political analyst Mars Sariev told EurasiaNet.

The government said it had no alternative but to implement the hikes. Officials pointed out that, prior to the January 1 increase, utility rates had remained steady for seven years.

According to Usenov, the cost of producing a kilowatt-hour of electricity at the Bishkek thermal power station is 1.7 soms (US $0.04). Before the price increase, the same kilowatt-hour was sold at 0.7 som, far less than necessary for the state-controlled energy company to break even, let alone be able to afford repairs and regular maintenance of its equipment.

Already enduring sharp inflation and suffering from stagnant economic growth, most Kyrgyz are long accustomed to state-subsidies for utilities and other government services. Accordingly, many perceive the rate increases to be an unfair burden. Many also fear corrupt officials may try to siphon off funds intended for infrastructure repair. "Most simple economic calculations show that the largest part of the population is simply not able to cover necessary expenses and compensatory fees will only enforce inflation," said Gulnara Ibraeva, a sociologist at the American University of Central Asia.

One Bishkek pensioner told EurasiaNet that, even with his senior citizen discounts, he expects to spend 75 percent of his government allowance on utilities. "How will I live on the rest of my pension? I don't know. There are some other pensioners who get even less than I. I don't know how they will survive," said Victor Kononenko, 73.

"I haven't received my bills for those utilities yet, but I already know that this is unreal to pay. It will be very difficult. I think people are barely holding themselves together," said Lyazat Arpachieva, a 38-year-old sales-person in a Bishkek shopping mall.

In a city where temperatures can dip to minus 20 degrees Celsius in winter, the only solution for some will involve hardship and suffering. "In this situation, people living near the capital are simply beginning to cut themselves off from the utilities, voluntarily severing their radiators and hot water pipes. The quality of life is falling. Consequently, the level of distrust in the government and its political reforms is growing," Ibraeva told EurasiaNet.

Though some experts suggest social tensions could cause public expressions of discontent, one political scientist noted that a potential protest movement might have trouble forging a sense of cohesion needed to put pressure on the government. "People are expressing their complaints, but only in their kitchens. To organize mass protests, dissatisfaction is not enough. It is necessary to have mechanisms and leaders to mobilize people, which we don't have at the moment," said Azamat Temirkulov of the American University.

"The government is sly, pragmatic and very calculating today," Temirkulov continued. "Authorities see that there is no opposition. [?] That is why the government started implementing its tariff policy now."