Twenty years of neglect have left Kyrgyzstan’s energy system in desperate shape. But just how bad could it be? A new report quantifies the gloom: Simply plugging the holes and getting the existing equipment into reliable shape will cost between $1.5 and $2.1 billion, or up to 46 percent of GDP, says a study sponsored by the US government’s development wing, USAID. Without urgent attention, the country could be plunged into darkness for months -- energy experts who have examined the detailed findings say -- and Bishkek could lose its heating.
The findings, compiled at the Energy Ministry’s behest, detail deterioration in a sector where most facilities -- generation plants, transmission lines, and distribution systems -- are 30-40 years old “and have passed the end of their economic lives.” Poor management and the political challenge of raising energy tariffs to sustainable levels have left the entire sector operating at a loss.
“If the true costs required to replace worn-out equipment and dilapidated facilities are not included in the cost of electricity service, the financial and physical conditions of the power sector can be expected to continue to deteriorate and will put the power system at risk of a catastrophic breakdown,” says the study. At Bishkek’s strategic thermal power plant -- which provides electricity, heating and hot water to the capital -- for example, 20 of 24 boilers and 10 of 11 generators “have been fully depreciated.”
Increasing energy tariffs in Kyrgyzstan is no easy task. Toward the end of President Kurmanbek Bakiyev’s rule, in early 2010, he suddenly raised energy and heating prices by 170 and 400 percent respectively. That helped spark the popular protests that ousted him in April. But immediately after his fall, the interim government, bowing to popular pressure, reversed the price hikes, ending a short-lived effort to make the ailing sector sustainable.
An inability to accurately measure consumption and rampant misreporting by the company in control of energy distribution -- reading between the lines, this appears to mean theft -- contributes to the losses.
There is “substantial room for manipulating reported amounts of kWh consumed, billed, and collected,” says the study, blasting the management culture at the state-run companies responsible. Because “remuneration and reward systems throughout the sector are designed in a way that provokes and enables illicit activities,” it is “very difficult to hold specific individuals or organizational units accountable.”
Kyrgyzstan has taken great pride in its efforts to open a small hydropower plant at Kambar-Ata, part of a much larger project planned by the Soviets in the 1970s. But attention to the project has left other essential infrastructure wanting critical maintenance, or subject to “cannibalization” for parts.
Kambar-Ata 2, which began operating with one of three turbines last year, did not employ independent oversight during construction. The $200 million dam now risks the “potential disaster” of succumbing to flood. (And already appears to be facing operational problems.)
“This unsafe situation should not be allowed to exist for any sustained period of time,” the report says. Run in such a way, the state-controlled Electric Power Plants Company “is betting the safety of the plant and the public on the hope that maybe nothing terrible will happen in the near future.”