Kazakhstan has become a leader in Central Asia in attracting financing to the water and energy complex

02 августа 2021
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Kazakhstan has become a leader in Central Asia in attracting financing for the development of the hydropower complex in 2020, Trend agency reports with reference to the Eurasian Development Bank.

As noted in the material, analysts of the Eurasian Development Bank conducted a detailed study of investment activity in the hydropower complex (HPC) of Central Asia (CA). For three decades, the weakening of regional cooperation has been associated with a course towards self-sufficiency of power systems. At the same time, the total power capacity of the Central Asian countries increased from 42.2 GW in 1992 to 53.8 GW in 2020.

The formation of the CA power sector took place in the context of the implementation of state programs in the region. Taking into account the ownership structure and the specifics of investment projects in the HPC, the state plays a key role in its development. States and state-owned companies are actively involved in the development of concepts for the development of the complex, determine the tariff policy, search for sources of funding, implement projects, etc.

In 2020, the leaders in terms of investments in the HPC were Kazakhstan ($ 2.78 billion, or 1.6% of GDP) and Uzbekistan ($ 1.377 billion, or 2.4% of GDP). In Tajikistan and Kyrgyzstan, investment in HPC capital amounted to $ 507 million (6.3% of GDP) and $ 89 million (1.2% of GDP), respectively.

In Tajikistan, budget constraints have not become an obstacle to an active state investment policy through external borrowing. Weak investment performance in the HPC of Kyrgyzstan is due to limited government revenues, as well as understated tariffs, which do not cover the cost of power production.

In the context of insufficient investment attractiveness of the HPC for private capital and foreign investors of most CA countries, multilateral development banks (MDBs) are an important source of financial resources for government initiatives. At the moment, 104 projects worth $10.2 billion are underway.

The leader in terms of financing is the EBRD with a portfolio of $ 3.3 billion, or 32.7% of the total financing of MDBs in Central Asia. They are followed by the World Bank - $ 3.0 billion (29.6%) and ADB - $ 2.6 billion (26.2%).

The EDB and the EFSD, the EIB and the AIIB together account for $ 1.2 billion (11.5%). Despite the fight against the consequences of the COVID-19 pandemic, the IDBs continued to finance the HPC CA. In 2020, the IDB approved financing for 24 projects in HPC CA for a total of $ 1.8 billion.

The identified aggregate investment proposals in the power segment of the HPC CA are currently estimated at $ 52.8 billion. Of this, USD 45.4 billion (86.0%) is accounted for by the generation segment and $ 7.4 billion for the power grid complex (14.0%).

The main goals set for the projects remain the security of energy supply by diversifying power sources and increasing the types of generating capacities traditional for the country, entering new electricity markets and strengthening internal power ties.

It is expected that the implementation of the investment projects planned for the next decade will allow avoiding a shortage of electricity in the region, despite the increase in its consumption. The surplus of electricity in the region will increase from 37.2 TWh in 2020 to 45.6 TWh in 2030, which, in turn, creates conditions for increasing the volume of electricity exports and puts on the agenda the question of what are the directions of surplus electricity sales.

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