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Kyrgyz Energy Transparency Initiative Promises to Reform Troubled Sector
Source: eurasianet.org
Source Date: Monday, August 02, 2010
Focus: Electronic and Mobile Government
Country: Kyrgyzstan
Created: Aug 08, 2010

Kyrgyzstan’s interim government is addressing some of the root economic causes of the political instability in the Central Asian nation this year, in particular energy-sector woes. But as officials take steps to reform the ailing sector, some civil society activists are worrying about the government’s commitment to genuine change.

Mismanagement of the energy sector played a key role in the downfall of President Kurmanbek Bakiyev’s administration in April. The opaque sector is notorious for corruption, and Kyrgyz citizens greeted tariff increases last winter with anger when it appeared the president’s friends and family members might be in position to profit from the increases. Moreover, some villages faced blackouts up to 16 hours per day.

On July 20, provisional President Roza Otunbayeva signed a decree that is designed to “introduce transparency and public consultation into the management and regulation of the Fuel and Energy Sector.” On paper, at least, the decree forces government agencies and private companies working in Kyrgyzstan’s energy sector to adhere to a set of criteria known as the Fuel and Energy Sector Transparency Initiative (FESTI).

FESTI promises to publicly report the finances of energy interests and introduce “transparent procedures for defining tariff methodologies and setting tariffs,” as well as use “open and competitive tenders” for fuel export and import. The also decree establishes a monitoring body including “representatives from state agencies, non-governmental organizations and the companies of the Fuel and Energy Sector of the Kyrgyz Republic.”

Kyrgyzstan makes most of its energy via hydroelectric power plants. Due to limited reservoir capacity, it cannot store the water to create power during the winter months.

Nikolai Kravtsov, an energy expert and director of Yustin, a consumer rights advocacy group, called the decree “very timely,” but cautioned that implementation will be far more difficult than simply signing a document. “The main thing now is that officials in the ministries understand the document correctly. If we let [ministry officials] implement this document, that will be the end of it,” Kravtsov said.

FESTI is “the right measure now” for tackling widespread corruption, said Asiya Sasykbaeva, director of Interbilim, an umbrella group that monitors the work of non-governmental organizations (NGOs) in Kyrgyzstan. “The level of corruption is very high in the sector because every head of every office, when appointed, thinks [the resources] are his personal property,” Sasykbaeva said. But, she fears, the Energy Ministry may already be flaunting the new regulations.

While expressing his support for the initiative, Energy Minister Osmonbek Artykbaev revealed on July 21 that Bishkek was negotiating with Beijing about exporting power to China, the AKIpress news agency reported. A week before, the ministry announced a $57-million deal to sell power to five Kazakh companies this year, potentially exporting more than 1.8 billion kilowatt hours.

Bishkek published the names of the companies and the amounts of the tenders, but announced the sale only after the contracts had been concluded. Moreover, at the end of June the ministry stopped reporting information on the amount of water in the Toktogul Reservoir, Kyrgyzstan’s largest, for four days. Officials told EurasiaNet.org that the information was held as a commercial secret during negotiations with Kazakhstan. Anti-corruption activists question why they were not involved in the process.

“Civil society actors were invited to the consultations regarding selling the energy, but when it came to the price discussion, civil society actors and the press were asked to leave. Of course, this is not good,” said Sasykbaeva, the Interbilim director, going on to suggest that officials are trying to cover up energy losses rather than reveal shortcomings in their management. “If state officials are not professional, people shouldn’t pay for it.”

Little has been reported on the negotiations with Beijing since Otunbayeva signed the FESTI pact.

Another sticky issue will be the raising of tariffs. A price hike is needed to keep the sector solvent, ministry officials have indicated. At the same time, energy tariffs are a politically explosive issue in Kyrgyzstan. In one of its first decrees following the April uprising that forced Bakiyev from power, the provisional government reversed the energy tariff hikes that had been the source of widespread protest. But the system is not sustainable at the lower rates, many experts believe.

While expressing her support for FESTI and noting potential fiscal benefits from selling energy to Kazakhstan, Aziza Abdurasulova, a well-known anti-corruption crusader, says that, to improve transparency, only experts independent of the Energy Ministry should determine the rates of energy tariff increases.

Kravtsov, the consumer advocate, is also skeptical about how the provisional government is approaching tariff price increases. The day after Otunbayeva signed the FESTI declaration, the energy minister began pushing for tariff increases without consulting outside experts. “He is basically sabotaging the decree of the president,” Kravtsov said.
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