EXPERIENCE OF KYRGYZ REPUBLIC: ENERGY SECTOR S SERVICES

Transcription

1 MULTI-YEAR EXPERT MEETING ON SERVICES, DEVELOPMENT AND TRADE: THE REGULATORY AND INSTITUTIONAL DIMENSION Geneva, March 2010 EXPERIENCE OF KYRGYZ REPUBLIC: ENERGY SECTOR S SERVICES By Ular MATEEV Ministry of Economic Development of Kyrgyz Republic

2 CURRENT STATE OF ENERGY SECTOR SERVICES OF KYRGYZSTAN КR possesses 2 % of energy resources of CА in particular 50 % of coal reserves, 30 % of hydropower resources. However, imports more than 50 % of oil, gas, coal. Electric-power industry accounts for 10 % of the state budget income ( ), 3-6 % of Gross National Product and 16 % of industrial output, Electricity production - from 12,3 to 14 billion kwh. Export volume - from 1,0 to 4 billion kwh annually Coal production thousands tons, 20 years ago 4 mil. t Gas production - 30 million cubic meters Oil production - 97 thousands тons, t. 20 years ago

3 Base laws and the institutes regulating activity in the energy sector Laws of КR: On power 1996, On electricpower Industry» 1997, On Energy saving 1998, On innovative activity 1999, On oil and gas 1998, On natural and resolved monopolies» 1999, On licensing» 1997, On bowels» 1997, On restriction of monopolistic activity, development and competition protection 1994, On coal 1998.

4 Public Management and Regulation in Fuel and Energy Complex (FEC) Government approves National Energy Programme and controls its implementation Ministry of Energy (ME) defines policy and development strategy of FEC, controls its implementation, elaborates mechanisms of relationships among companies and consumers, carries out exportimport policy, provides energy security of the country, promotes development of new technologies and Renewable Energy Sources. State Inspection on energy and gas under ME executes control and supervision functions on provision of reliability, effectiveness, security and continuity of energy supply for production, transfer, distribution and consumption of the electricity, heat energy and natural gas by energy plants, all consumers irrespective from the ownership as well as functions on provision of energy saving and accident prevention and safety.

5 Public Management and Regulation in Fuel and Energy Complex (FEC) 2 State Department on FEC regulation under ME provision of balance of interests of producers and consumers of energy resources, issuance and supervision over licenses on work in the energy sector, setting of tariffs on electricity and heating, consideration of disputes of energy sector subjects. Regulatory body does not possess adequate independence in decision-making. Its Executive Council authorized to make decision is comprised of Minister of Energy and Deputy Minister of Finances. Financing of the regulator is carried out from the state budget; regulatory body is compelled to be guided not by economical, but political issues; Ministry of Management of Public Property controls public share holding in energy companies, executes management functions, including defining of development strategies, in particular on denationalization and privatization, selection of management in these companies, monitoring over their work, and takes measures on improvement of effectiveness of corporate management; State Agency on Environmental Protection and Forestry carries out an evaluation of impacts on environments and regular ecological monitoring;

6 Public Management and Regulation in Fuel and Energy Complex (FEC) 3 Agency on Water Resources under Ministry of Natural Resources issuance of licenses on construction of dams for energy objects on rivers and water reservoirs; Ministry of Economical Development develops and implements mechanisms of public support in the areas of development and stimulation of electricity export; Ministry of Labour and Social Development carries out social protection of low-income part of population and supervision over work safety; Ministry of Finances monitors targeted and effective utilization of the external official aid and coordination of activities of public bodies and local authorities on implementation of programs and projects in the energy sector financed by international finance organizations and donor-countries; State Agency on Architecture and Construction licenses and controls construction of energy sector objects; Local authorities issue permits on land allotments.

7 Electric-power industry Electric-power industry consists of 17 power plants with total capacity of 3,68 millions kw, including: 2 thermal power plants with total capacity of 0,73 million kw; 15 hydroelectric power stations (HPS) with total installed capacity of 2,95 millions kw; km of power lines 0,4-500 kv: 546 km- power lines of 500 kv; 1714 km - lines of 220 kv; 4380 km - lines of 110 kv; 490 SS with voltage of kv and with capacity exceeding 8000 МVА.

8 Structure of electric-power industry Re-structuring has allowed to involve a private sector into electricity production. Today it is JSC «Chakan HPS» with capacity of 29,78 МW, JSC «Kalininsky HPS» - 1,5MW, JSC «Issyk-Atinsky HPS» - 1,6 MW, JSC «Keminsky HPS» - 11,2MW. HPSs comprising «the Cascade of Toktogul HPS» are not subject to privatization: Toktogul HPS МW, Kurpsay HPS МW, Tash-Kumyr HPS- 450 МW, Shamaldy-Say HPS МW and Uch-Kurgan HPS МW. Also JSC NG" with voltage 500, 220, 110 kv Building of new generating stations with private sector s participation is allowed. Thus Kambar-Ata HPS-2 with capacity of 360 МW is under construction. Agreement - КR and the Russian Federation agreed on building of Kambar-Ata HPS 1 with capacity of 1900 МW which will be private JSC.

9 Market structure of energy sector services JSC Severelektro - 16 regional electric networks (REN) and customers, JSC Vostokelektro" 14 REN and customers, JSC "Оshelektro" - 12 REN and customers, JSC "Dzhalal-Abadelektro" - 12 REN and customers, JSC Bishkekteploset" supplies heat for 68 % of the available housing consisting of 1312 apartment houses in Bishkek. In 1990-s the population consumed 16 %, the budget - 19 %, the industry, agriculture and commercial consumers - 65 % of the electricity. Today consumption structure: the population - 63 %, the budget - 12 %; the industry, agriculture and commercial consumers - 25 %. 1,609 millions tons of coal, gas - 0,664 billion cubic meters and black oil - 37 thousand tons. Heating, hot water supply and cooking are carried out by the electricity. In 1990 the population consumed 1 billion kwh, in ,6 billion kwh, with strong seasonal fluctuation: winter consumption is 3,5 times bigger than summer consumption. Coal consumption by the population has reduced by 3 times, gas - by 4, furnace fuel oil - by 16 times, but the electricity consumption has increased by 3,3 times.

10 Ways of development of electricpower industry To increase the reliability of energy supply in Kyrgyzstan is possible via following measures: Decrease losses of the electricity in JSC NG" from 6,0 % in 2005 to 5,5 % to , REN - technical losses from 18,4 % in 2005 to 12 % at 2025, commercial losses - from 20,5 % in 2005 to 3 % at 2010; Increase electricity consumption till 2010 with mid-annual rates of growth of 107 %; during annual rates of growth are expected at level of 106 % and further in and 2025 at level of 104 %; There is a possibility to increase export of electricity via: Construction of HPS and Kara-Keche power station might raise export from 2,28 billion kwh in 2005 to 5,2 billion kwh by 2015, to 11,6 billion kwh by 2018, to 12,4 billion kwh by 2020 and to 15,8 billion kwh by 2025; Possible building of four HPS on the river the Sary-Jaz with 200 МW capacity each with total production of 1,7-2 billions kwh.

11 Tariffs Electricity 1 kwh 1.5 soms (3,5USC) Heat energy 1Gkal soms ($24 ) Natural gas 1000m soms ($319) Coal - from 50 to 100 USD Gasoline 1 litre around 30 soms (69USC) Diesel fuel around - 26 soms (59USC)

12 Regional cooperation 1. Barrier for expansion FER is insufficient throughput and low versatility of fuel and energy transmission communications (oil-and gas pipelines, power lines). Potential markets of FER are Iran, China, Pakistan, Turkey and a number of other countries. 2. Regional cooperation in development, rational use of energy resources: The conclusion of long-term intergovernmental agreements on water-power resources of Naryn-Syr-Darya cascade of water reservoirs on the basis of economic mechanisms of mutual relations; Maintenance of synchronous functioning of energy systems of the states of region, acceptance of legal bases of cooperation in joint maintenance of optimal modes of use of water-power resources, trade in energy carriers, realisation of the co-ordinated policy in the external energy markets, and also in the sphere of energy saving; 3. Decrease of energy intensity of economies of the countries in the region, unproductive losses. Potential of energy saving is % of energy consumption in region.

13 Regional cooperation Decrease in losses: RК - 9 % or 5843GWh, КR - 11 % or 1392GWh, RТ - 15 % or 1988GWh, RU - 10 % or 4064ГGWh annually which in aggregate amounts to GWh Investments into reduction of losses in transfer and distribution in all four countries - 3 Billions dollars New production projects - the Ekibastuz district power station II, the Bishkek thermal power station II, Камбарата I, Камбарата II, Rogun, Sangtudin HPSs In four countries it is possible to increase production from 139 ТWh to 228 ТWh. 54 % of the additional electric power at new stations, 16 % of the additional electric power at the expense of reduction of losses, and the remaining 30 % - at the expense of rehabilitation of old generating units. The contribution of additional production: RК-45 %, RU, RT - 22 % each, and КR - 9 %. Investments will lead to average additional expenses on 1kWh: 2,1 cents in RТ; KR; RК; RU. Altogether - 13 bln. dollars for 20 years.

14 Needed additions in laws and rules Tariff setting methodology from forecasts to indexation; Obligatory disclosing of the information; Partial cancellation of licensing and the further deregulation; Obligatory hedging; Cancellation of all laws providing privileges and discounts on payments for energy; Monetization of all payments on social protection

15 Results Market economy mechanisms will be introduced. The distributive power companies, the Bishkek thermal power station, Bishkek enterprise of thermal networks will be privatised or transferred into concession to strategic investors. There will emerge private investors, management will improve, reliability and quality of energy supply will be enhanced. Power intensity will be reduced, sectoral and regional energy saving programs will start working In coal and oil and gas branches of Fuel and Energy Complex, the competitive environment and the mechanism of monitoring of retail prices from the state bodies will be operating.

16 Mineral oil and gas Forcasted geological resources of hydrocarbon raw materials in the Fergana hollow amount millions tons. There are 15 oil, gas and oil and gas deposits in operation. Extractable stocks of oil equal to 11,3 millions tons, natural gas of industrial categories - 4,8 billions cubic meters. Wear-and-tear of the field and technical equipment exceeds 75 %.

17 Participation of state bodies SP «Кyrgyzneftgas» - investigation, extraction, processing, transportation and storage of oil and gas products, also participates in the joint venture. A payment for connection to networks and gas pipelines is defined by SDRFER. Payment size is defined by capacity (electricity) or volume (natural gas). Expenses of the company for connection are distributed and paid by years, but no more than 25. Participation of a private sector in investigation, extraction, gathering, transportation and storage, transfer, distribution and commercialization is allowed. Licences for carrying out of investigation and oil field development are issued by State agency on geology together with Kyrgyzneftegaz. Using sites in the prospecting purposes is limited by 1000 sq. km for two-three years with a minimum level of annual investments at a rate of 50 US dollars for one 1 sq. m, or 100 US dollars for 1 sq. m depending on a rent kind. Licences for development are issued for ten years with a condition of provision of the annual reporting.

18 Gas and gas supply Gas. Wear-and-tear of the equipment - 80 %, losses millions cubic meters, or more than 10 %. Replacement of the main km and 90,0 km of average and low pressure gas pipelines is required. For ensuring of reliability of gas pipelines and constructions in the north of republic catfish is required about 2 billions soms. Gas supply. Delivery of natural gas (NG) in volume of 750 million cubic m a year, including 300 million cubic meters under direct contracts is done by JSC "Кyrgyzgas". JSC "Кyrgyzgas maintains 753 km of the main, 657 km of average pressure and 1679 km of low pressure gas pipelines. There is a permanent growth of prices for NG; for two years the price have increased from 45 dollars to 240 US dollars for 1000 cubic meters At present an audit and an evaluation is taking place for the subsequent privatization of gas company JSC "Кyrgyzgas and the oil company JSC "Кyrgyzneftegas".

19 SWOT analysis: strengths Large Potential of hydropower resources exceeding 160 billions kwh. Republic possesses 50 % of coal stocks of the Central Asia Geographical affinity to the large occupied centres in region Increasing base of the human capital in water-power engineering Interest of multinational firms on entry to the national and regional markets under «correct market» conditions The new legislation promotes now the third party to get and access to electricity and NG networks.

20 SWOT analysis: Weaknesses Incompleteness of reforms of Fuel and Energy Complex on subsurface management, absence of complex vision of the purposes and methods of reforms Administrative procedures are the basic restriction to the development of Fuel and Energy Complex The limited potential on transfers of an electricity and distribution of natural gas Dependence of thermal power station of Bishkek from import of power resources (coal, black oil, gas) The latent cross subsidies among different groups of consumers of electricity, thermal energy and natural gas Presence of quasifiscal deficit (QFD) in electric-power industry The limited potential of internal investments into sector The limited geographical coverage of gas distribution networks Shortage of human resources in the development and marketing of energy services

21 SWOT analysis: possibilities Growth of production and improvement of reliability of energy deliveries to internal consumers at the expense of development of reforms in energy sector, improvement of management by the power companies Building of new generating stations of any capacity with the assistance of a private sector Increase in production and export of the electricity at the expense of expansion of potential of capacities of thermal and hydrostations Strengthening of an export position on the regional electricity market Introduction energy saving measures, technologies Coal self-sufficiency and export of coal to neighbouring countries of the region High and increasing level of an unsatisfied electricity and gas demand in the national and regional markets Increase of per capita incomes will allow to raise prices for electricity, required for full compensation of expenses Market rules will allow participation of foreign investors, including new technologies transfers

22 SWOT analysis: threats The competition from the regional players in energy market can diminish economical prospects Universal obligations on services and restrictions on foreign ownership diminish, at present, foreign investments Ageing of electricity production and distribution infrastructure in the city centres Growth of deficiency of base capacity of the electricity Macroeconomic dependence of the republic on the energy sector able to influence the state budget Advancing introduction of generating capacities in the countries - potential importers of the Kyrgyz energy and the subsequent refusal to purchase energy of republic

23 Conclusion КR possesses potential for electricity and coal export. Electricity export carries a seasonal nature The reasonable regional energy policy is required It is necessary to lower QFD, losses, to raise a collection of payments To create the regional energy market To introduce independent regulatory bodies in the countries of CA

24 Thanks for attention Kyrgyzstan, Bishkek