On the results of the technical audit of power plants in Kazakhstan and the implementation of the program "Tariff in exchange for investment"

On July 12, 2023, the Minister of Energy of the Republic of Kazakhstan, Almasadam Satkaliyev, at a meeting of the Government of the Republic of Kazakhstan, spoke about the results of the technical audit of the CHPP and about measures to implement the "Tariff in exchange for investment" program.

During the technical audit, international experts and KPMG visited 57 plants, including 37 thermal power plants in Kazakhstan.

According to the results of the assessment of the technical condition, it was revealed that 62% of power boilers, 58% of turbines have exhausted their fleet life and need to be replaced. The volume required for the replacement of capacities is 2.5 thousand MW, the Minister of Energy said.

Also, according to Almasadam Satkaliyev, action plans for each plant have been formed for today, taking into account the recommendations provided by experts following the results of the audit. Outdated plants with a high level of wear and tear, not subject to modernization and restoration, will be gradually decommissioned as new capacities are commissioned.

The Ministry, in accordance with the instruction of the Head of State, is working on the implementation of the updated program "Tariff in exchange for investments" within the framework of the approved "Roadmap".

Thus, in order to increase the investment attractiveness of the generation sector, the annual limit of return on investment was increased from 32 billion tenge to 428 billion tenge. It is planned to increase the marginal tariff in the electric capacity market to 1.5 million tenge per 1 MW per month.

According to the Minister of Energy, this measure will ensure an annual inflow of investments in the amount of 160 billion tenge into the generation sector for the renovation and repair of existing plants.

In order to ensure a predictable tariff policy, the possibility of approving marginal tariffs for electricity for a long-term period is being considered, taking into account annual indexation for inflation.

Also, as part of short-term measures to implement the Tariff in Exchange for Investment program, it is proposed to conclude Investment programs for major repairs of main and auxiliary equipment for the three-year period 2024-2026 for thermal power plants with a high level of depreciation that are not subject to modernization and restoration. This will allow to maintain these thermal power plants in working condition until the commissioning of new capacities for the stable passage of the heating seasons, - said Minister of Energy Almasadam Satkaliyev.

It is proposed to change the approach to the selection of investment projects as part of the conclusion of Investment Agreements, in terms of the obligation of owners to develop a program for the modernization, reconstruction and expansion of capacities for plants subject to further operation in the long term.

As the head of the department noted, the main criteria for concluding investment agreements will be the establishment of target indicators, in terms of reducing the level of depreciation by 10-15% from the current level, reducing the company's own needs, bringing the specific consumption of reference fuel to the design one, and introducing BAT.

At the same time, it is planned to introduce counter obligations on the part of market participants to ensure transparency of the intended use of the funds received. At present, relevant amendments to the legislation are being worked out, - said the head of the department, Almasadam Satkaliyev.

For the purposes of transparency and control over the intended use of funds, it is proposed to introduce a three-stage control over the implementation of investment agreements, which provides for:

- Control by the authorized body on the basis of the project office;

- Control by local executive bodies with the involvement of public organizations, residents of a particular region;

- Conducting public hearings with the involvement of interested parties, control by law enforcement agencies, - summed up the Minister of Energy.