Kyrgyz Republic - Energy sector review
Narayan, Deepa
Energy consumption in the Kyrgyz Republic, with the exception of household use of electricity and natural gas, has declined sharply since independence in 1991 and is unlikely to return to pre-independence levels within the coming decade. The country is not devoid of energy supplies, there are abundant low-cost hydropower resources which have been partially developed, small (and declining) oil and gas production, and despite significant coal resources, a collapsing coal industry. Imports of coal, petroleum products and natural gas account for about 60% of primary energy use. These net energy imports contribute about US$ 100 million to the country's annual trade imbalance. Control over energy pricing has caused considerable difficulty. Import prices for coal, petroleum products and natural gas for industrial use are largely passed through to consumers. However, prices of electricity, district heating and household gas have been kept artificially low. The government's unwillingness to raise these prices is weakening the energy supply industry, and distorting consumption patterns and investment requirements. Considerable donor assistance has been provided to the Kyrgyz Republic as it makes the transition from centralized systems to a market economy. For the future, the Kyrgyz energy sector should be increasingly self-financing rather than a drain on the national budget and balance of payments. The present underutilization of the sector's supply capacity provides an important opportunity for the Government to restructure and rehabilitate the sector without being under intense pressure to add new capacity.
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