Kazakhstan begins consolidating domestic energy transfer companies

ASTANA – The Kazakh Senate recently adopted a law to consolidate energy transmission companies to increase their reliability, according to the press service of the Ministry of Energy.

29.06-5

“The law provides for the consolidation of regional power transmission companies. As a result of the reforms, liberalisation of the electricity market, including the past privatisation processes in the energy sector, many companies providing electricity transmission services were opened in the country,” said Energy Minister Kanat Bozumbayev.

According to the law, “On Amendments and Additions to Some Legislative Acts on Electricity Issues,” at the first stage, the transmission companies should have a process control technological system by January 2018. At the second stage, the companies should have trained and certified personnel, provide safety equipment, protective overgarments, and individual and collective protection equipment by 2020. Automated systems of commercial accounting, telecommunications systems ensuring their unification with the systems installed by the system operator and the regional electricity grid company should be installed by 2022.

“A working group with the participation of the Atameken National Chamber of Entrepreneurs and all government agencies have developed the qualification requirements to power transmission organisations. These requirements are not easy to perform and their implementation will take up to five years in a temporary order. It also requires a lot of capital investment. Today, there are about 160 regional electricity companies in Kazakhstan and 19 of these including Kazakhstan Electricity Grid Operating Company (KEGOC) meet these requirements. Around 14 small and medium-sized enterprises also meet these requirements and 99 companies do not meet the criteria. We should solve this issue. We expect that about 27 companies will have to join those companies that meet these requirements by 2019,” said Bozumbayev.

The authorised body in the sphere of tariffs will take measures against companies that do not meet new requirements by regulating tariffs so that it would not be profitable for these regional electricity companies to function. They will join large companies that fulfil the requirements.

The law also provides for the release of power transmission organisations from corporate income tax and property tax after receiving abandoned electrical grid facilities and lifting the prohibitions provided for by legislation in the field of natural monopolies.

The law also contains a mechanism for transferring abandoned electricity grids through amendments to the law on state property.