Hydropower in Kyrgyzstan

Ecoworld, January 15

By Avilash Roul

Can Soviet-era modes of energy resource cooperation survive between newly independent states?

It’s been awhile since the Kyrgyz Republic, along with Tajikistan and other Central Asian nations split off from the USSR and became
sovereign nations. But in terms of managing their energy resources, Kyrgyzstan faces challenges that outwit nations with far more
experience with political independence, and how they best address them highlights issues of globalization and free-trade that are
universal.

When the lights go out in Bishkek, as they do frequently these days, more than a few of these citizens wish for the good old days of the
Soviet Union, as they valiantly beat back the cold and the dark with lumps of coal and candles. Kyrgyzstan has hydropower, lots of it,
but when this upstream nation needs electricity the most, in the shortened days of frozen winter, their downstream neighbor Uzbekistan
needs the water released downstream the least. Water they need for agriculture during the summer they view as squandered as it floods
their barren fields in the winter after passing through hydroelectric turbines upstream.

Back in the days of Soviet central economic planning, the solution was simple - extra fuel was shipped to Kyrgyzstan in the winter to
feed their power plants, and the water stayed behind the dam to be released in the summer. Now that these nations are all independent
entities, however, agreements that used to be quantified in cubic meters of water and kilowatt-hours of electricity are appended by the
market value of these commodities, and as these values fluctuate, these legacy agreements leave one side, than the other, feeling like
they have missed an opportunity.
The value of oil on the world market, however, means very little to someone trying to keep warm in Bishkek, where electricity selling for
what we might consider the paltry sum of 1.5 cents per kilowatt-hour ($.015 US) is for them an exorbitant amount - so much that many
citizens have been forced into debt just to pay their utility bills. Even if none of the other challenges of nation building were present -
overcoming nationalistic and tribal rivalries, eliminating corruption and establishing democracy, the inevitably uneven pace at which
any planned economy transitions to a free market economy guarantees social problems. From Kyrgyzstan to Washington DC, the
appropriate degree of government intervention to smooth the disruptions of the market is unknown. What is certain is that neither
extreme is desirable, and every nation and culture will fitfully find their own unique balance.
- Ed Ring

The Elusive Yet Abundant Hydropower in the Kyrgyz Republic

by Avilash Roul, January 15, 2009

Bishkek’s electricity generating plant can be

seen in
the background - frequently starved for fuel.

Every year when the winter knocks the door at former Soviet Republics particularly Tajikistan and Kyrgyzstan…
Many political pledges, populist programs, negotiations, concessions, and decrees are made to facilitate the easy access to energy needs
at least for survival. The political equations among the Central Asian countries oscillate awkwardly on the use of common rivers water
that produces major requirement for electricity and irrigation. Claimed to having the largest hydropower potential in the region, the
Kyrgyz Republic (Kyrgyzstan) is facing the challenge of an energy quagmire.

Power fluctuations have caused major discontent in Kyrgyzstan, which has been embroiled in political and economic instability in
recent years. The citizens of the landlocked Kyrgyzstan are going through yet another difficult winter and electricity generation is so
low that the government has been unable to honor a pledge to end power cuts. The politics over energy demand and supply inside the
Kyrgyzstan is ticking to explode at anytime as civil unrest.

According to government sources the exceptionally cold winter of 2007 forced them to produce more electricity than planned from the
major Toktogul reservoir. Toktogul Hydro Power Station has a concrete gravity dam with height of 215 meters and water reservoir with
a total volume of 19.5 km3 (cubic kilometers - a cubic kilometer or km3 is equivalent to, and frequently also expressed as “bcm” or
billion cubic meters). The water inflow in the reservoir made 7.44 km3 till October 2008, which is 1.8 km3 less as compared to the last
year at the same time. The water outflow reached 4.3 km3, 1.5 km3 less than in 2007. Once the volume of water in the Toktogul
reservoir decreased even further in May 2008 to 6.8 km3, which was difficult to produce electricity. By overexploitation, the depletion
of the Toktogul reservoir, which on 01 April 2008 amounted to only 7.2 km3, some 5 km3 lower than average (2002-2007).The water in
reservoir is already low since 2007. The water inflows into Toktogul in 2007 summer were 1.7 km3 less than the average of the
previous 15 years. The 2008 winter forced the government to exploit more water to produce electricity. So in the mentioned figure, the
government highlighted that so far the situation is not normal for the winter of December-2008 to March 2009. For this reason the
Kyrgyz government wants to conserve water in the reservoir by scheduled cutting electricity. So it was not primarily the 0.3 km3 net
drop which necessitated the flow reduction, but to manage the low level of water in the reservoir and to produce more electricity
required for this ongoing winter.

The Ministry of Industry, Energy and Fuel Resources responsible for supplying electricity and heat informed the public that due to
inadequate water supplies in the Toktogul Reservoir, there would be daily power cuts everywhere. School days are shortened or closed.
A senior citizen of Bishkek, Rufat Aliev says, “Even during World War-II, schools were never shortened or closed down.” Although
citizens reprieved from daily blackouts in the extreme cold for few days, the blackouts resume again on November 15 in rural areas and
Bishkek countryside. Kyrgyz electricity company Severelectro has already restarted electricity blackouts in Bishkek in late 2008 and
planning to continue in 2009. (See Table-1 of black out- schedule). Meanwhile, the President sacked the energy minister Saparbek
Balkibekov when the minister apprehended the looming energy crisis in Feb, 2009!

ELECTRICITY BLACKOUT SCHEDULE - BISHKEK (OCTOBER &

NOVEMBER)

Electricity generation in 2008 totaled 8.8 billion kilowatt hours, when in 2007 it was 10.5 billion. Due to the shortage of electricity
generation, the prices of the electricity have been increasing gradually. Kyrgyz Prime Minister Igor Chudinov announced the
government’s plans to increase prices for electricity by 13 percent and water by 20 percent in April 2008.
According to the electricity, heating and hot water tariffs raising plan, the prices may increase by 25-30% starting from April - May
2009. But, right now the price is 62 Tyiyn per KW (1 Som= 100 Tyiyns, in mid-January 2008 the Kyrgyz Som would exchange for
about .025 US dollars, ref. Kyrgyz/USD exchange rate) is much above the normal price. So far, the Ministry of Economic Development
and Trade estimated that the electricity blackouts cost Kyrgyzstan about 60 billion Soms or 6 percent out of GDP growth.

The new Minister of Industry, Energy and Fuel Resources, Ilias Davydov, said to the Parliament in mid-December that “heating and
electricity tariffs are not expected to rise since January 1, 2009.” However, many people who live in condominiums, have already
constructed small stoves in their apartments and buying coal, and/or mazut (heavy, low quality fuel oil) in order to heat their homes, in
case the central heating system fails to provide the required heat. Although people are receiving heat from the central heating system in
Bishkek, people are expecting a high increase in tariff in anytime in end of January 2009. During the summer, the Bishkek residents
were angry and frustrated by the fluctuation of power supply. Nicholas Lukyanovich Kravtsov, a former Soviet energy specialist now
heads the public association on protection of the rights of consumers ‘Yustin’ in Bishkek says, “The government has created this myth
of load shedding on the decline of water level in the reservoir including other myths of non-profitability of the energy sector, high
prices for electricity and privatization.”

On another night without electricity, candlelight

is seen
dimly through the windows of this apartment
building.

The Complex Water and Energy

Nexus in Central Asia
In this situation, it is necessary to delve into policies and mechanisms for management of key resources - water and energy resources.
According to the President of the Kyrgyz Republic, the countries of the region day by day would be involved in tough negotiations for
water and energy. However, one-sided utilization of water resources of rivers for power generation entails problems in water supplies
for people living in lower reaches, primarily for the irrigation purposes.
Tajikistan and Kyrgyzstan are located in the high mountains of Pamir and Tyan Shan, whose many glaciers supply the water which is
the main energy resource in these countries. Hydropower provides over 90% of their energy supply. In the former Soviet region, after
Russia, Tajikistan has the second highest water resource potential (530 billion kWh/year) followed by the Kyrgyzstan (142 billion kWh/
year). However, most of the experts and government agencies are of the view that Kyrgyzstan exploits less than 9% of its hydroelectric
potential. The annual hydropower potential of the smaller rivers is between 5 and 8 billion kWh, but only 3 percent has been utilized so
far. Its rich water resources consist of 50 cubic kilometers of surface runoff a year, 13 km3 of potential ground water resources,
1,745 km3 of lake water, and 650 km3 of glaciers. The region’s largest rivers (the Naryn, 807 km; Chu, 380 km, Talas, 200 km, Saryjaz,
Kara Darya, Chatkal, and others that belong to the Syr Darya and Amu Darya basins) find their headwaters in Kyrgyzstan.

There are 20 major power plants with a total installed capacity of 3,680 MW in the country. Although there is conflicting information
about the total number of large hydropower and combined heat and power plants (CHP) in the Republic, it’s commonly accepted that
2,950 MW comes from 18 hydro power plants and approximately 725 MW comes from two heat and power plants.

EXISTING POWER PLANTS IN KYRGYZSTAN

(Source: Ministry of Industry, Energy and Fuel Resources, Kyrgyz Republic)

SMALL HYDROPOWER PLANTS ON THE NARYN

RIVER

According to National Energy Program (NEP) of the Kyrgyz Republic for 2006-2010 and the Strategy of the Fuel and Energy Complex
until 2025 (NEP), there will be addition of 3,960 MW from several hydropower stations by 2025 (See Table-4). However, this
ambitious program needs sufficient investment. The NEP also envisages to commission 1200 MW Kavak state district heating power
station by 2015. During the same period, the NEP will add to the hydropower generation from small hydropower amounting 178 MW.

HYDROPOWER PLANTS PROPOSED OR UNDER CONSTRUCTION

Although power production is growing from 13.3 billion kWh in 1990 to 14.5 billion kWh in 2006, the citizens are deprived of
electricity. The share of hydropower stations in power production increased from 67 to 94 percent, while the share of heat and power
plants decreased drastically from 32 to 6 percent in 2006. In country’s fuel energy mix, hydropower takes 81 percent; heat and power
plants 17 percent and small hydropower stations around 1.3 percent.

Most of the existing hydropower plants were constructed in Soviet times entirely along a single river - the Naryn River. Before 1991,
Toktogul Reservoir was operated in ‘irrigation mode’, with large summer releases to satisfy irrigation demands in Uzbekistan and
Kazakhstan, and low winter releases. Surplus hydropower in summer produced by the Naryn Cascade was transmitted to the
downstream Republics. During the winter, the Kyrgyz Republic received sufficient fuel to operate its combined heat and power plants.
After 1991, fuel deliveries have not fully satisfied Kyrgyzstan’s needs. Therefore, the Kyrgyz Republic increased releases from the
Toktogul Reservoir during winter. As a result, the reservoir operation has shifted to ‘power mode’ with large winter releases and lower
summer releases. However, to address growing problems in the first half of the 1990’s, the Basin States entered into annual agreements
on water allocation energy exchanges in an attempt to re-establish the pre-1991 operating regime. The 1998 Framework Agreement on
the joint use of water and energy resources in the Syr Darya Basin between the Kyrgyz Republic, Uzbekistan, Kazakhstan, and
Tajikistan places these agreements on a more formal footing. However, the implementation of the yearly basis negotiated outcome of
the 1998 agreement is always questionable.

According to one of the senior Kyrgyz government representative, “It was the balance system to make countries equal. But after
collapse of the USSR, upper riparian countries had to buy fossil fuel from downstream countries in market price, while latter used water
free of charge. Uzbekistan and Kazakhstan cannot understand that Kyrgyzstan needs money to maintain all these reservoirs to provide
with irrigation water”.

The Barter system: Water vs Natural Gas

In the latest negotiation with Uzbekistan in Tashkent, the Kyrgyz Minister of Industry, Energy and Fuel Resources Ilias Davydov
concluded the imported natural gas price at $250 per 1000 cubic meters. Although the minister explained that the price is quite
acceptable, when Uzbekistan sells gas to Russia at $326 per 1000 m3, last year the price was very low at $145. Earlier, both the
government has an intergovernmental agreement, where it says that Uzbekistan promises to deliver Kyrgyzstan gas, while Kyrgyzstan
give 600 cubic meters of water and 600 million kW/h of electricity. The Kyrgyz government agreed on these conditions, in order to
keep the Bishkek heat and power plant operational. Kyrgyzstan intended to negotiate with Uzbek authorities into leaving the gas price
unchanged - $145 per 1000m3. In 2007/2008 the Uzbek gas cost Kyrgyzstan $145 per 1,000m3.

The Uzbek government has been accusing Kyrgyzstan not to abide by the water-energy deal that has historically governed water
allocations between the two nations. Even per the agreed arrangement, however, the Uzbeks complain about being unable to attain their
goals for irrigation needs in summer as well as over unwanted flooding in winter. The Uzbek government’s intention, ideally, is to make
beneficial use of the water of the Naryn River and the Toktogul reservoir not only for the Kyrgyz Republic, but for the national
economies of Uzbekistan, Tajikistan and Kazakhstan as well. This is one of the most political and complicated issues between these
neighboring countries. There have been many instances of the downstream Uzbeks accusing the upstream Kyrgyz of not abiding the
1998 agreement which always renewed annually as per the parties request. For example, when Kyrgyz officials released more water for
producing electricity during the Winter of 2008, most of the Uzbek’s arable land flooded. When the Uzbeks needed more water in the
following summer for irrigation, the reservoir had less water. There were hardly any official remarks on this.

Similarly, the Kyrgyz government inked a deal with Kazakhstan to import of 250 million kilowatt-hours of electricity to Kyrgyzstan in
September 2008. However, the head of the parliament committee on fuel-energy sector Yury Danilov suspected that the price of Kazakh
electricity will make 3-4 soms per 1,000 kilowatt hours.

The Role of Multilateral Development Banks

Major donor agencies like the World Bank and Asian Development Bank (ADB) consider the present energy situation in Bishkek is
continue to be a concern. The ADB is believed to be agreed to allocate $20 million for black oil, coal and gas purchasing for the
Bishkek heating plant in the first quarter of 2009. The World Bank immediately sanctioned an emergency assistant to rehabilitate the
Bishkek Heating Plant.

The ADB has a strategy called Central Asia Economic Cooperation under which a project named CASAREM (Central Asia/South Asia
Regional Electricity Market) has been implemented for allowing energy export to Afghanistan and Pakistan as a market for the
Kyrgyzstan and Tajikistan’s energy. Maya Eralieva, Central Asia and Caucasus Coordinator of NGO Forum on ADB, says, “The MDBs
[Multilateral Development Banks] especially the ADB has been cajoling the Kyrgyz government to export energy to far Afghanistan
and Pakistan. While the situation at home is very grim, why the ADB is suggesting to exporting energy to outside the national border.”
Like the ADB, the World Bank is also planning for an export market for the Kyrgyz hydro power with emphasizing privatization of the
energy sector in Bishkek. The privatization of Kyrgyzenergo (the State electric agency) has been stalled at the parliamentary level since
1997, when sell-offs of large monopolies were suspended following allegations of price rigging and corruption. However, during this
present emergency situation many international agencies like USAID have been re-opening the public debate on privatization.
According to the senior human rights activist, Natalia Ablova of the Bureau on Human Rights and Rule of Law, privatization would be
a very dangerous experiment at least for the Kyrgyzstan as there is non-transparency, no legal system to protect consumer rights, and no
judicial control over private companies.

The Elusive Yet Abundant Hydropower in the Kyrgyz Republic

It’s interesting to note that the national Flag of Kyrgyz Republic carries the glowing sun, but the country is pressed with increasing
energy shortages. In the flag there is the tyunduk positioned in the center of the glowing sun. This image of the tyunduk, which
translates as rooftop, refers to the top of the boz-yui – the traditional house of nomadic Kyrgyz people. So far, this scenic
and beautiful landlocked country is looking for ways and means to harness the full potential of its hydropower. To pacify the anger of
citizens of Bishkek, the Minister of Industry, Energy and Fuel Resources Ilias Davydov said that the government will consider writing
off of citizens’ debts in early 2009. However, Mr. Guljan Ibraeva, citizen of Bishkek says, “Joint effort can resolve all the energy crisis,
lack of water resources, food crisis in this region. We have to put all our efforts together and back to Soviet time designed system which
is suitable and more sustainable.” This winter may decide the future of Kyrgyzstan’s energy sector and its bilateral relation with the
neighboring countries on water and energy. The Country must pay attention to hydro-energy diplomacy seriously.

THE KYRGYZ REPUBLIC

About the author: Avilash Roul, a doctoral fellow on international environmental negotiations, has been writing, advocating,
researching, creating knowledge on Environment and Development in various English Daily media since 2000. Earlier, he worked with
Down To Earh (fortnightly magazine published in New Delhi, India). He also contributed regularly in Sundays for a column in New
India Express on environment and development. More recently, Mr. Roul worked as an Assistant South Asia Regional Coordinator for
the Bank Information Center (www.bicusa.org), an independent, non-profit, non-governmental organization that advocates for the
protection of rights, participation, transparency, and public accountability in the governance and operations of the World Bank,
regional development banks, and the International Monetary Fund. Presently, he contributes his time on researching and empowering
and building capacity of various communities on environment risk management, climate change, forest, mining, water and wildlife
issues in South Asia as well as advisor to Society for the Study of Peace and Conflict - a Delhi Based think tank.