OREANDA-NEWS  On 30 September KEGOC published report of President Almassadam Satkaliyev at III Eurasian Energy Forum.

Dear colleagues!

High rates of Kazakhstan economic growth observed in the last years (GDP growth to 9-10 % a year) are accompanied by growth of the volumes of power consumption and an increase makes 5-7 % a year. By the results of 2007 an electric energy consumption in the country as a whole has made 76.4 billion êWh, that 6.5 % more than for 2006. Today, in view of the high rates of economic growth as a whole, an electric power industry has the problems on steady raising of the power stations’ capacity, development of national and regional networks. According to the forecasting data the power consumption of Kazakhstan will make 125 mlrd.kWh by 2015, and by 2020 it will increase up to 140 mlrd. kWh. So, an expected growth of energy consumption by 2020 concerning a current level will make more than 80 %.

A government provides support of the plans for industry development. “Plan of the measures for development of power industry of the Republic of Kazakhstan for 2007 – 2015” dated 31.05.2007 has approved by order of the Prime-Minister, and this plan specifies all necessary facilities, requiring a construction and an extension up to 2015, also the list of measures for providing an execution of this plan has been developed, in particular:

Working out of forecasting balance of electric energy for 2007-2015;

Preparation of the list of power facilities are to be reconstructed, modernized and extended, also a construction of new power facilities;

Increasing of investment appeal of the industry;

Working out of forecasting price level for production, transportation and supply of electric energy;

Promotion of the energy-saving technologies and an energy resources conservation;

Development and involvement of state power balance of the renewable energy sources;

Creation of the basis and determination of the main directions of nuclear power industry development.

To realize the measures, according to the Plan of the measures for the period up to 2015 approved by the Government of the Republic of Kazakhstan it is necessary to attract the investment to the tune of USD 23.5 mlrd. It is necessary to invest USD 12.9 mlrd. into the generation sector. It is planned to input 8164 MW of generating capacity to 2015, at the expense of construction of new facilities – 5456 MW and extension of existing power stations – 2708 MW. The projects for generation development are:

Construction of Balkhash TES with capacity - 2640 MW;

Extension of Ekibastuz GRES-2 (block ¹3 and ¹4) - 1050 MW;

Construction of TETs-3 in Astana – 240 MW;

Extension of TETs-2 in Almaty - 240 MW;

Construction of Karagandy TETs-4 - 570 MW;

Extension of TETs-2 in Astana - 240 MW;

Construction of GTES Agip ÊÑÎ – 235 MW;

Construction of Moinakskaya GES - 300 MW.

As to a network construction “KEGOC” JSC realizes and plans the following projects for development of National Power Grid:

1. “Kazakhstan Electricity Transmission Rehabilitation” Project

Project implementation will increase a technical level of the NPG RK substations’ equipment, will provide an energy efficiency and a reliability of NPG RK operation by means of installation at the substations the modern high-voltage equipment, the relay protection and substation automation devices, the systems of dispatch control, data acquisition and control of energy SCADA/EMS, a commercial metering system (CMS), a digital corporate telecommunication network. Modernization of NPG is realized in two phases: 1st phase will be completed in 2009, implementation period of 2nd phase is 2008-2017. Total value of the project is USD 798.4 mln. To realize the project, the loans of IBRD (USD 140 mln. for the first phase) and EBRD (USD 45 mln. for the first phase and 255 mln. EURO for the second phase).

2. “Construction of second transmission line 500kV of North-South transit of Kazakhstan” Project.

The project provides a construction of electricity transmission line at length of 1095 km. with a construction of 500kV “Shu” SS and a reconstruction of the existing SSs situated along a transit route. Strengthening of the transit will allow to provide the south regions of Kazakhstan with electric energy in volume of 7.5 mlrd.kWh at the expense of increasing a carrying capacity from 630 MW up to 1350 MW, to increase a transit potential and also a stable parallel work of the power systems of Kazakhstan, Russia and Central Asia.

It is planned to put into operation the first section of transit YuKGRES-Shu till the end of 2008, that will allow to increase a carrying capacity of the networks in South direction to 100 MW.

The project value is USD 364.2 mln. Planned finishing date is 2009. To realize the project, the loans of IBRD (USD 100 mln.), EBRD (USD 147.8 mln.) and KDB (to the total amount of KZT 9.7 mlrd.) have been attracted.

3. Also “KEGOC” JSC carries out technical support of the project “Ñonstruction of the interregional transmission line North Kazakhstan – Aktobe oblast”, which realizes by “Batys transit” JSC using a mechanism of SPP (state private partnership) on the basis of concession agreement with MEMR RK. Project implementation will allow to connect the power grids of Aktobe oblast to UPS of Kazakhstan and will provide an energy independence of the region from import of Russian electric energy. Project value makes USD 165.8 mln. Planned period of implementation is December of 2008.

In the near future “KEGOC” JSC plans to realize two projects for development of NPG RK, having a strategic importance for the republic:

- Project “Construction of 500 kV “Alma” SS with connection NPG Kazakhstan by the lines of 500kV and 220kV”.

Project’s purpose is a provision of reliable power supply for Almaty region, power distribution of the first phase of Balkhash TES (1320 MW), creation of technical feasibility for development of Almaty satellite-towns, construction of industrial park in Almaty, the infrastructures of the Asian games of 2011 and other breakthrough projects of Almaty region. Project value is USD 250 mln. Required period of realization is 2008-2014.

- Project “Power distribution of Moinakskaya GES”.

The project will allow to realize a power distribution of Moinakskaya GES in the volume to 300 MW in the peaking operations. The project’s value is USD  62.5 mln. Project has to be completed to the end of construction of Moinakskaya GES, approximately in 2011.

To realize these two projects it is planned to attract a loan from IBRD to the amount of USD 300 mln.

A volume of the investments for the National Power Grid until 2015 will make USD 1.6 mlrd.

Most actual problem in the sector of transmission and distribution of electric energy in the near-term prospects is an rehabilitation of the regional electrical networks. Complex modernization of the distribution networks are required to attract the investments about USD 7 mlrd.

Kazakhstan economy is characterized by a high share of power-consuming industry. By the expert evaluations, the power-consuming of the republic’s GDP exceeds a similar index of the developed countries 2.5-4 times (USA – 2.5 times, Denmark – 3.5 times, Japan – 4.0 times).

Main reason of an increased power-consuming of Kazakhstan’s GDP is a dominance of material production share and a technological imperfection of the republic’s industrial capacity, an absence of the appropriate metering apparatus and a relative cheapness of the energy resources in a structure of GDP.

A new edition of the Law of the Republic of Kazakhstan “On energy saving” is developed within the frame of realizing the Plan of the measures for development of power industry. This edition provides a creation of special authorized body on energy saving, an energy saving fund, an initiation of the responsible measures for exceeding of the energy consumption norms and an establishment of the mechanisms for stimulation of rational energy resources consumption.

There is developed a new State program of energy saving directed on a sound energy saving in the industrial sector and the domestic household, a realization of economically sound potential of energy saving with the perspective of lowering an energy intensity of GNP.

Kazakhstan Government in cooperation with European Bank for Reconstruction and Development has developed “The Plan of the measures for development of sustainable energy”, providing an attraction of the investments for realization of the measures for energy saving and increasing of energy efficiency of the republic’s economy. The preliminary works with IBRD for creation of a special energy saving fund are carried out.

Present time a basis of Kazakhstan power industry consists of the coal-fired thermoelectric power stations – 13 490 MW, that makes 71% from installed capacity of all power stations of Kazakhstan. Availability of resource base with well-developed infrastructure and open-cast-mining of the fields allows to provide a low cost of coal and therefore, a low final operating cost of thermal and electrical energy.

However, a growth of electricity consumption and ecological effects during wide usage of organic fuel for generation, already today an increasing of the prices for energy carriers rise the questions on involvement of the renewable sources of electric power (RSE) into the power balance of Kazakhstan.

Ministry of Environment has developed a draft law “On supporting of harnessing of renewable resources” and at present time it is reviewed by the concerned state bodies.

By initially estimated, an economically possible potential of RSE which can be used for energy production equals to:

7.5 mlrd.kWh/year – energy of the minor rivers (construction of the mini hydro power plants),

3 mlrd.kWh/year – wind energy (construction of WPS (wind power station),

1 mlrd.kWh/year – solar energy.

Performance potential is notably higher and can be used in further perspective.

Present time the pilot projects for using of wind energy and the minor rivers’ energy are carried out in Kazakhstan.

Against the background of global growth of energy needs and the prices for energy carriers, an availability of considerable uranium ore reserves (about 19% of the worldwide) and the infrastructure of uranium commercial production predetermines possibility of structure diversification of state generating capacity by means of development of nuclear power industry.

Present time MEMR jointly with JSC NAK “Kazatomprom” develop a program “Main lines of development of nuclear power industry in the Republic of Kazakhstan for 2008-2030”. The program provides following:

Working out of normative base and an allocation scheme of APS.

Creation of state structure for management of nuclear power and regulation of its safety.

Construction of vertically-integrated company of nuclear fuel cycle on the base of “NAK “Kazatomprom” JSC enterprises.

Construction and putting into operation of APS.

Scientific and technical provision of APS maintenance and innovation development of nuclear power.

Within the frames of researching the directions for creation of nuclear power bases in Kazakhstan, the Governmental Plan of the measures provides working out of technical and economic assessment on construction of APS in Aktau, with capacity of 900 MW, with putting into operation of the first block (300 MW) to 2015. Kazakhstan has a positive experience on maintenance of nuclear unit on the base of “MAEK-Kazatomprom” LLP. A project on Aktau APS will be a base for expediency consideration on construction of the new APS at the other sites of UPS Kazakhstan.

Considering an inertial development of power industry connected with long duration of the projects on power facilities construction, together with supporting a realization of the Governmental Plan of the measures to 2015, it is necessary to review the problems of industry development in the long terms up to 2030.

During this period it is required to construct 6 major thermoelectric power stations of 1000-2000 MW for each in the different regions of our state (in Kostanai, Pavlodar, Aktobe, Almaty, Mangystau, East-Kazakhstan oblasts). Present time “Samruk” Holding and the Ministry of Energy and Mineral Resources work at definition of the power stations types by the type of fuel used. Available hydropotential of Kazakhstan allows to realize a construction of the hydroelectric power stations with total capacity of 1450 MW.

Development of Kazakhstan UPS in long-term perspective assumes a construction of the extended lines of 500kV to connect the electrical networks of West zone oblasts of Kazakhstan with the central and the south regions of Kazakhstan, to provide power transmission of new major power stations to the deficit regions, that is a partial solution of the problems of the state energy independence.

The above mentioned perspective projects are the focus of attention of Kazakhstan Electricity Grid Operating Company “KEGOC”, which is a System Operator of the Unified Power System of Kazakhstan.

“KEGOC” Joint Stock Company was created in 1996 according to the Governmental Regulation of the Republic of Kazakhstan “On certain measures for restructuring of power system management of the Republic of Kazakhstan”.

Authorized capital of the Company is – KZT 75.6 mlrd. According to the President Order of the Republic of Kazakhstan since 2006, Joint Stock Company “Kazakhstan State Assets Management “SAMRUK”” became a shareholder of “KEGOC” JSC. 74 power stations of 35-1150kV with installed capacity of the transformers 32 thousand MVA are on “KEGOC” JSC balance sheets. Total length of “KEGOC” JSC transmission lines is 23.4 thousand km.

“KEGOC” JSC as a System Operator of UPS of Kazakhstan carries out following:

Provide reliable operation of UPS of Kazakhstan;

Provide interaction with power systems of the neighboring states in the control and assurance of parallel operation stability;

Provide system services for power transmission through the National Power Grid, as well as provide the Grid maintenance and availability;

Provide system services for technical dispatching through centralized operational dispatch control of the Unified Power System of the Republic of Kazakhstan;

Arrange an operation of the balancing electricity market.

Present time “KEGOC” JSC has a delegation power to represent the Republic of Kazakhstan in the international integration unions cooperating in the energy sector.

Particularly, “KEGOC” JSC is a representative of Kazakhstan in CIS Electric Power Council, a principal coordinating body of energy sector in the Commonwealth Independent States.

The Companies of “Samruk” Holding considers a question of participation in the international projects on development of power industry. One of them is the project on construction of Kambaratinskie GES-1 and GES-2 in Kyrgyzstan, with the capacity of 1900 MW and 360 MW accordingly. A partnership of equal participation of Kazakhstan (“KazKuat” JSC), Russia and Kyrgyzstan was created to realize the project.

A unified power project integrating the projects for construction of electricity transmission lines and the substations in territory of Central Asia countries to realise an export potential of the chains of Kyrgyzstan and Tadjikistan Power Stations for electricity need satisfaction both in the region, and behind its limits (Afghanistan, Pakistan), can become one more line the international cooperation. The project assumes a construction of 500 kV OHTL from Kyrgyzstan and Tajikistan in the directions to Pakistan, Afghanistan, Kazakhstan, in particular:

On route Kyrgyzstan-Tadnjikistan-Pakistan (2100 km):

Kambaratinskie GES–Datka–Hodjent–Dushanbe–Rogunskaya GES-Peshavar;

On route Tadjikistan-Afghanistan-Pakistan (1000 km):

Rogunskaya GES - Dashtidjumskaya GES – Kabul –Peshavar;

On route Tadjikistan-Kazakhstan (280 km):

Hodjent–Zhambyl.

Total estimated cost of the lines and the substation is USD  1.9 mlrd. Implementation of the project requires to create the consortium with participation of the Central Asian Republics, Kazakhstan, Russia, also the possible participation of Pakistan, Iran, Afghanistan and China. This project has a great geo-economical potential. At the present day a preliminary investigation of the project feasibility is carried out.

Dear colleagues!

Kazakhstan has a clear Plan for strategic development of power industry, with determination of specified terms on the planned arrangements and the projects, a required volume of investments. Realization of the targeted plans is supported by the Republic Government. After creation of “Samruk” Holding, there is increase of resource potential required for implementation of the projects on power industry development.

Final goal of development of Kazakhstan power industry to 2015 is to create an infrastructure providing a coverage of electricity needs in volume of 125 mlrd.kWh, creation of export (5 mlrd.kWh) and transit (10 mlrd.kWh) potentials.

Being involved in realization of the major international projects Kazakhstan becomes a participant of creation and functioning the system of global energy security.

Thank you for your attention.