OREANDA-NEWS. May 25, 2011. The EBRD is helping to modernise the transmission of electricity in Kazakhstan with a loan that will improve energy efficiency in the system and increase electricity transmission capacities.

A USD  156 million loan to Kazakhstan Electricity Grid Operating Company (KEGOC), a state-owned power distribution company, will modernise its electricity transmission facilities with the rehabilitation of a high-voltage power transmission line in Ossakarovka in the Kazakh region of Karaganda.

Up to USD  70 million of the 15-year loan is expected to be co-financed by two syndicate banks - UniCredit Bank Austria AG and Raiffeisen Bank International AG.

The investments will result in a more efficient use of existing energy resources and increase electricity supplies to the Kazakh capital Astana and the Akmola region in the north-central Kazakhstan.

Once fully completed by 2014, the planned modernisation will improve the reliability of electricity supply by reducing losses in this line segment from 10 per cent to 5 per cent, or roughly 40,000 MWh, which is equivalent to carbon savings of 60,000 tonnes of CO2 per year.

In addition, KEGOC will use this loan to refinance its debts and optimise the company’s cash-flow and balance sheet as it prepares to take up its new role as a single buyer in the electric power capacity market as part Kazakhstan’s energy sector reform.

This EBRD credit will be closely tied to ambitious reform objectives that KEGOC and the Government of Kazakhstan have set for the sector, including the restructuring of energy distribution market operations and improving sector regulation.

Kazakh Ministry of Industry and New Technologies, the EBRD and KEGOC plan to sign a tri-partite ( unless, absolutely unclear I suggest to leave the initial wording as it was approved by the Ministry and every word was debated) Memorandum of Understanding on the Development of the Power Sector in the Republic of Kazakhstan to promote the rational use of energy resources and ensure the efficient and sustainable supply of electricity. This will strengthen national energy security, address regional imbalances and improve industrial competitiveness by providing a secure and sustainable electricity supply at an efficient and transparent cost which will support Kazakhstan’s sustainable growth, economic diversification and industrial competitiveness.

By signing the Memorandum of Understanding the Government of Kazakhstan commits to develop a non-discriminatory progressively liberalised power market.  

The EBRD confirms its intention to support the Government of Kazakhstan in the establishment of efficient competitive power market in the Kazakh power sector through active policy dialogue and specific projects. 

The EBRD, as the largest financial investor in Kazakhstan outside the oil and gas sector, is proud to participate in this process, EBRD Managing Director for Energy and Natural Resources Riccardo Puliti said, speaking at the project signing ceremony during the EBRD’s 2011 Annual Meeting in Astana.

“With this key infrastructure investment, the Bank’s support is aimed at helping local customers to have a reliable, quality and cost-effective access to electricity supply. Our modernisation project will improve energy efficiency in the power system in line with the highest international standards. It will help in patching up regional power imbalances within Kazakhstan and will set good foundations for the country’s further development,” Mr Puliti said.

KEGOC operates high voltage lines for a total length of 24,380 kilometres, ranging from 110kV to 1,150kV across 74 substations with total installed capacity of around 35,000 MVA. 

“The Loan Agreement with EBRD will continue our partnership in development of the Kazakhstan electric power sector. By implementing this project, we will promote the fast-pace development of Astana, particularly, its industrial infrastructure, meeting the energy needs of the new projects under state programme of industrial and innovative development,” said Almassadam Satkaliyev, the Chairman of KEGOC Management board.

The EBRD’s current investment strategy for Kazakhstan focuses on supporting the corporate sector, addressing its financing requirements while also promoting economic diversification and innovation.

The Bank is also working with authorities and other international financial institutions to strengthen the country’s financial sector. The banking sector remains the key conduit for EBRD financing for small enterprises.

The EBRD is also actively supporting the development of the infrastructure sector in Kazakhstan, as shown by its involvement in an important restructuring of the railway sector, crucial to the transportation of  key products, and is also working to improve the infrastructure in Kazakh municipalities. Another priority is addressing energy imbalances and the issue of improving energy efficiency.

Since the beginning of its operations in Kazakhstan, the EBRD has invested over €2.8 billion in over 130 projects in various sectors of the Kazakh economy, mobilising additional investments in excess of about €6 billion, with about 70 per cent of the projects’ being investments into the development of the country’s private sector.