Social and Energy Issues: How to Prevent The Collapse of Kazakhstan's Energy Complex?

Kazakhstan's energy industry needs urgent and large-scale modernization that will require huge financial investments. And the population will have to pay for it if they do not want to be left without electricity
The Chairman of the Board of JSC "Samruk-Energo", Serik Tyutebayev, said this at the "Samruk-Kazyna" Public Council's visiting meeting at the CHP-2 in Almaty.
Crumbling Infrastructure
"Energy consumption in the country is constantly growing. Over the past five years, it has grown by 9.4%. New power generation facilities are being launched but at a much slower rate due to the lack of funding and low tariffs. Because of this, the load on the existing thermal power plants is growing. Their wear leads to frequent accidents, such as in Ekibastuz, Rudny, Ridder, Temirtau,"
Tyutebayev explained.
According to the speaker, many companies are working at a loss and are on the verge of not only physical but also financial collapse. The Almaty company "AlES", for instance, owes over $6 billion for coal supplies. It is also necessary to upgrade equipment, the prices of which are constantly rising due to international tensions. Indeed, piping for steam boilers and pipelines has risen in price by 3.5x in the last two years.
And according to Ernat Berdigulov, Managing Director for Strategy and Asset Management of Samruk-Kazyna NWF JSC, the company annually subsidizes the economy of Kazakhstan (1.3 trillion KZT).
At the same time, some individuals and organizations make the most of this situation for personal enrichment, for example, by mining cryptocurrencies.

Not Enough Workers
Another lingering issue is the growing personnel shortage. Many specialists have moved to Russia. Others have emigrated to foreign countries. Those who stayed in the country, go to work at higher-paid jobs in the oil industry.
Thus, JSC "Samruk-Energy" increased salaries by 10-15% this year. Now they average from 250-350 thousand tenge, the head of the holding said.
Despite the lack of funds, Samruk-Energo is building new power plants and rebuilding existing ones with a total capacity of 4.1 GW. Most notably in Almaty and Ekibastuz. When everything is finished, the country will start receiving additional volumes: 500 MW in 2024, 470 MW in 2025, 470 MW in 2026, 836 MW in 2027, 1236 MW in 2028, and 0150,600 MW in 2029.

Therefore, while the infrastructure has not completely collapsed, it is urgent to move on to the issue of increasing tariffs, Samruk-Energo assures. Some experts argue that tariffs need to be doubled to cover all the costs of infrastructure maintenance, workers' salaries, investments and the transition to more eco-friendly technologies. Hardly anyone will be up for such a sharp increase, but people will have to pay more regardless.
When All Options Are Fraught
Different companies will have different prices. But on average, according to Aidar Rymkulov, Managing Director for Economics and Finance of Samruk-Energo, they will increase by 10-11% for end consumers and amount to 300-500 tenge per month. Those who are used to saving and do not spend in excess will not notice it, representatives of Samruk-Energo assure.

The Majhilis Deputy and member of the public council of JSC "Samruk-Kazyna", Yerlan Sairov, warned that in conditions of growing poverty among the population, such a step could lead to social tension. Alternative options are thereby worth attention as well. And if prices are to be raised, then a mechanism for strict spending control should follow.
Political scientist Peter Svoik has the same pattern of thought. He suggested switching to non-tariff investment and modernizing the industry via the UAPF (Pension fund in Kazakhstan - Ed.) and targeted state loans. Improvement from tariff increases will undoubtedly necessitate their doubling, and, in turn, lead to social instability.
And a slight increase in tariffs will not help energy companies much, while the population's dissatisfaction is a guarantee. If nothing is changed, then accidents like Ekibastuz will become ubiquitous. And whichever option you choose is fraught with unpleasant consequences.

Southern Capital Can Exhale
Another important issue that was discussed at the meeting was the construction of a new gas station at CHP-2 in Almaty. It is set to begin in August this year. In the meantime, a two-stage international tender is underway to select an EPC contractor. It will most likely be a Chinese company.
The first block should be completed by December 2024 regardless of who wins the tender. And in 2026, the station will already be fully operational.
The initial cost of the project was 324 billion KZT, but now it may increase due to higher prices for gas and imported equipment. The prices for tariffs will definitely increase, but the air quality will also improve.
Original Author: Danil Utyupin
DISCLAIMER: This is a translated Piece. The text has been modified, the content is the same. Please refer to the original piece in Russian for accuracy.
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