Circle of despair: energy crisis in Kyrgyzstan

Photo: Circle of despair: energy crisis in Kyrgyzstan / Oil&Gas

Baku, Azerbaijan, Dec. 12

By Viktoriya Zhavoronkova - Trend:

There is no place like home especially in winter, that is when you have a home with appropriate conveniences to return to. This unfortunately is a dream for many Kyrgyz people.

The population of this Central Asian country where average winter temperature often falls below zero, faces serious lack of energy supply, especially during winter. This year is no exception. However, comparing the situation to previous years, it looks somewhat different.

The Kyrgyz parliament supported the selling of Kyrgyzgaz, the state gas company, to Russian energy giant Gazprom on Dec. 11. Gazprom, according to the agreement, will own 100 percent of Kyrgyz major energy supplier's shares.

Gazprom will maintain gas supplies to Kyrgyzstan as well as provide its transportation, storage, distribution and sale.

It was a very hard decision to make, and many Kyrgyz parliamentarians were against this bargain. It is very unusual to sell a strategically important state-owned enterprise to a foreign buyer, especially when it comes to the vitally important energy sector. And yet Kyrgyzstan's problems do not end there.

Another issue is the gas debts. Last July Kyrgyzgaz's payable accounts for foreign companies stood at $45 million, which cannot be paid. In buying Kyrgyzgaz, Gazprom also assumes the company's debts.

Foreign gas suppliers, such as Kazakhstan and Uzbekistan are on the verge of refusing to sell gas to Kyrgyzstan, which is one of the major energy source for the country.

Kyrgyz energy expert Rasul Umbetaliyev believes that the country's government is guilty for the country's energy sector problems.

"Earlier governmental regimes of Kyrgyzstan turned this [energy] profitable sector into unprofitable by money laundering," he told Trend.

Umbetaliev believes, that unfortunately the new government also was unable to make changes in this area.

He said that he is negative about the Kyrgyzgaz-Gazprom bargain and for Kyrgyzstan it would be better to keep 34-percent share package, to be able to participate it decision making procedure.

This issue is still to be ratified by Russian Duma and the consideration is scheduled for the beginning of 2014.

Umbetaliyev believes that the solution of Kyrgyzstan's energy problem is not about sale, as the country should start using coal instead of gas in industry, heating and electricity production.

"Kyrgyzstan has about 1.4 billion tons of coal in its deposits, but the country's coal industry is in stagnation now," he said.

Only local investors wish to place funds into this area, he stressed. Umbetaliyev added that Kyrgyz government makes attempts to attract foreign investments to the coal production, which in turn creates even more problems.

Expert believes only two sides should participate in investment projects - the country's government and investors. But, when it comes to Kyrgyzstan, there's a force to be reckoned with - the people's protests.

"It looks like a circle - government cannot solve people's social problems, people protest and prevent government from signing agreements with foreign investors, that might become a step towards the resolution of the country's economic problems," Umbetaliyev believes.

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