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It is necessary to create the conditions for incomplete market and competition Kyrgyzstan

Friday 22 July 2011

KYRGYZSTAN (Tendersinfo News) – “There is not reforming electric sector but improving governance principles in Kyrgyzstan,” said Rafkat Hasanov, project manger for the energy sector reform. It is essential to make the conditions for imperfect market and competition in the country.

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Electricity Governance in Kyrgyzstan (PDF)

For example, the consumers were assigned to hydro-electric power stations that are operated by private persons in the CIS countries. “I’m not saying that all companies should be privatized. The union and the establishment of sales companies are the options for the energy complex. The worst thing is a private privatization, the wanted to privatize our Severelectro JSC. Monopoly creates the conditions for an incomplete market only in the case of new owners entry creating new capacity”, said Rafkat Hasanov.

He said that there is a manipulation of numbers in Kyrgyzstan. Still nobody can tell the correct cost of electricity. Having hydro-electric power station we can rely on cheap energy, but we also have a heat-electric generating plants that consume it. There is enough electricity in the country and sooner or later Kazakhstan is aware that the Kyrgyz energy is much cheaper and would buy it in large quantities, added Rafkat Hasanov.

In early 1990s, the Commonwealth of Independent States, as well as the other states around the world, started systematic reforms to restructure the energy sector on the initiative of the western financial institutions. Kyrgyzstan, like all other CIS countries, has received both good and bad sides of centralized management of the Soviet Union. After independence, the problem of ensuring a viable energy sector emerged. In order to resolve this problem, the Government developed a program to reform the energy sector, including its governance system. Reform of this sector was not left without attention by the civil society in Kyrgyzstan, because the results of the reform affected the interests of the population including the business community and ordinary citizens (domestic consumers of the electrical and heat energy).

Globally, competition has been promoted as a healthy market structure. However, for markets to function properly, consumers need information about the suppliers of the energy, as well as the opportunity to observe and participate in sector decision making processes. Joint actions result in a coherent system of decision making, foresight and predictability of regulatory decisions, sustainable and reliable energy supply and hence the incentive for investments.

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