BAKU, Azerbaijan, July 28
By Nargiz Sadikhova – Trend:
Kazakhstan has become a leader in Central Asia in attracting financing for the development of the water and energy complex in 2020, Trend reports citing the Eurasian Development Bank.
Analysts of the Eurasian Development Bank conducted a detailed study of investment activity in the water and energy complex (WEC) of Central Asia (CA). For three decades, the weakening of regional cooperation has been associated with a course towards self-sufficiency in energy systems. At the same time, the total energy capacity of the Central Asian countries increased from 42.2 GW in 1992 to 53.8 GW in 2020.
The formation of the CA energy sector took place in the context of the implementation of state programs in the region. Taking into account the ownership structure and the specifics of investment projects in the water and energy complex, the state plays a key role in its development. States and state-owned companies are actively involved in the development of concepts for the development of the complex, determine the tariff policy, search for sources of funding, implement projects, etc.
In 2020, the leaders in terms of investments in the water and energy complex were Kazakhstan ($2.78 billion, or 1.6 percent of GDP) and Uzbekistan ($ 1.37 billion, or 2.4 percent of GDP). In Tajikistan and Kyrgyzstan, investments in the capital of the water and energy complex amounted to $507 million (6.3 percent of GDP) and $89 million (1.2 percent of GDP), respectively.
In Tajikistan, budgetary constraints have not become an obstacle to an active state investment policy through external borrowing. Weak investment indicators in the water and energy of Kyrgyzstan are due to limited government revenues, as well as understated tariffs, which do not cover the cost of electricity production.
In the context of insufficient investment attractiveness of the water and energy complex of most CA countries for private capital and foreign investors, multilateral development banks (MDBs) are an important source of financial resources for government initiatives. At the moment, 104 projects worth $10.2 billion are under implementation.
The leader in terms of financing is the EBRD with a portfolio of $3.3 billion, or 32.7 percent of the total financing of the sector in Central Asia. It is followed by the World Bank with $3 billion (29.6 percent) and ADB with $2.6 billion (26.2 percent).
The EDB and the EFSD, the EIB and the AIIB together account for $1.2 billion (11.5 percent). Despite the COVID-19 pandemic, the IDBs continued to finance the water and energy complex of the Central Asian countries. In 2020, the IDBs approved financing for 24 projects in the sector for a total of $1.8 billion.
The investment proposals in the energy segment of the water and energy complex of the Central Asian countries are currently estimated at $52.8 billion. Of this, $45.4 billion (86 percent) is accounted for by the generation segment and $7.4 billion for the power grid complex (14 percent).
The main goals set for the projects remain the security of energy supply by diversifying energy sources and increasing the types of generating capacities traditional for the country, entering new electricity markets and strengthening internal power ties.
It is expected that the implementation of the investment projects planned for the next decade will allow avoiding a shortage of electricity in the region, despite the increase in its consumption. The surplus of electricity in the region will increase from 37.2 TWh in 2020 to 45.6 TWh in 2030, which, in turn, creates conditions for increasing the volume of electricity exports and puts on the agenda the question of what are the directions of sales surplus electricity.
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