Economic Development in Kazakhstan: The Role of Large Enterprises and Foreign Investment

By Anne E. Peck | Go to book overview
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11

PRIVATIZATION, FOREIGN INVESTMENT, AND CONSOLIDATION IN THE ELECTRIC POWER AND TELECOMMUNICATIONS SECTORS

The electric power sector in Kazakhstan had grown to importance in the 1960s and 1970s as a result of the Soviet’s planned development of a coal-by-wire program. By 1985, electric power generated in Kazakhstan accounted for 5.3 percent of total Soviet power production and 4.6 percent of Kazakhstan’s industrial production (Sagers 1992a and 1992c). The sector included the Soviet Union’s first commercial breeder reactor at the Mangyshlak Atomic Energy Complex and the first of the 4,000 megawatt (MV) coal-fired power plants which was built at Ekibastuz. Of the 61 conventional power plants, there were eight large regional electric plants (GRES), 46 combined heat and power plants (TETs), and seven hydroelectric plants (GES). 1 The national transmission grid comprised some 23,463 km of power lines, of which 1,421 km were very high voltage lines (1,150 kilovolt) and 5,455 km were high-voltage lines (550 kV) (ICACBR October 18-24, 1999). There were three 1,150 kV substations, 15 500 kV substations, and 51 220 kV substations with a total transformer capacity of 29,414 MW (US Commercial Office 2000). There were also 18 regional distribution companies (RECs) responsible for distributing power to the cities and villages within the oblast.

After independence, all of the assets in the electric power sector were transferred to the state enterprise Kazakhenergo (World Bank 1999b). The operation of Kazakhenergo was overseen by the Ministry of Energy, which was also responsible for determining tariffs and approving investment plans. By 1995, Kazakhenergo was virtually bankrupt. It was able to collect on less than 50 percent of power billed to consumers and to enterprises, and less than 20 percent of the bills were collected in cash. In May 1995, the total amount owed Kazakhenergo was estimated to be $833 million

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