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Electricity Governance in Kyrgyzstan: an Institutional Assessment

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Electricity Governance in Kyrgyzstan: an Institutional Assessment The Electricity Governance Initiative ELECTRICITY GOVERNANCE IN KYRGYZSTAN: AN INSTITUTIONAL ASSESSMENT N.Abdyrasulova – Director of Civic Environmental Foundation “UNISON” N. Kravsov – Director of Public Association “USTIN” October 2009 This document was prepared by a team of experts from public organizations in Kyrgyzstan, with support from the World Resources Institute (USA) and Prayas Energy Group (India). Reviewers: A. Sultankulova - Leading Specialist, Department of Management Fuel Energy Complex A. Madeyuev - Director of the Center of Social Technologies L. Ten - Adviser to the Ministry of Economic Development and Trade of the Kyrgyz Republic B. Dyushaliev - Director of the Association of Managers Kyrgyzstan D. Wood - Senior Associate Institutions and Governance Program, World Resources Institute Sh. Dixit - Prayas Energy Group, India Electricity Governance in Kyrgyzstan: An Institutional Assessment/ N.Abdyrasulova, N.Kravsov – Civic Environmental Foundation UNISON, 2009- 129 pp. In this paper we review the current situation in Kyrgyzstan’s electricity sector including the most important and controversial events in the past five years in the sector. Conclusions and recommendations are based on analysis of the results obtained by the authors, using the methodology of the international program “The Electricity Governance Initiative”. The document is intended for a wide range of public, policy makers, business representatives, government and non-government organizations. The document was prepared under the project “Generating Dialogue on Public Interests and Energy in Kyrgyzstan”, implemented by the Civic Environmental Foundation UNISON, in partnership with the World Resources Institute (USA) and Prayas Energy Group (India), with the financial support of Central Eurasia Project of the Open Society Institute (New York). © Copyright: CF UNISON PREFACE From the materials of the conference “The Electricity Governance Initiative – Generating Dialogue on Public Interests and Energy in Kyrgyzstan”, 26th March, 2009, hotel «Ak-Keme»: Erkin Abdykalykov, Director of State Department on Regulating Fuel and Energy Complex I would like to express my gratitude to this working group for conducting this study on the energy sector, especially on public participation, and sharing the results. We are especially weak on this issue, and elaborated recommendations would be very useful for us. An outside perspective is always useful -- there may be some mistakes, and we would be glad to eliminate them. We are ready for collaboration and discussion. Roza Isakovna Otunbaeva, Deputy of Parliament of the Kyrgyz Republic I think that there are many critical issues in energy sector. Electricity is a basic human right, necessary for housing, heat and life. Transparent, reasonable, competent governance of the energy sector is a public issue, and it is necessary to discuss it, not only by means of barricades, posters and slogans, but also by means of governance principles. I was very glad to hear there are some approaches and initiatives that exist and are practiced in the energy sector, which will lead us to competent public participation. Lubov’ Ten, adviser of Ministry of economic development and trade of KR The basic mechanism of interaction between civil society and state institutions is enlightening activity, that is: education: it is impossible to draw up a dialogue, if people do not hear each other or do not understand when they are talking. Natalya Ablova, Bureau on human rights and compliance of lawfulness Many energy sector professionals are worried about NGOs are interfering in their work, because they are not professionals, such as power engineering specialists. We want to reassure them that we are not going to interfere, as you are professionals and you are responsible for uninterrupted power supply. However, as civil society professionals, we must comment on the great social protest and tension present in our society related to sector performance. We are ready to cooperate and to combine our own work with the work done by energy sector professionals. In true cooperation, we hope to rely on you, and for you to rely on us. Bolot Dushaliev, Director of Association of Managers One of the essential issues regarding the power supply is the population’s concern about of the lack of reliability and effectiveness of energy systems. It is obvious that one way to solve this task is to establish a dialogue between the government, energy companies and consumers. The exchange of opinions and elaboration of common approaches may increase quality of decisions adopted. Eleonora Kazakova, Executive Director of Kalinin hydroelectric power station In my opinion, we just have starvation. If the public knew basic facts: what is the product, how much does it cost, and why it is sold, many social problems will decline. It is not possible to go to masses to talk about high technologies, when population does not know basic information: what it is a tariff, and how is it formed. CONTENTS INTRODUCTION 4 I. REVIEW OF THE ENERGY SECTOR IN KYRGYZSTAN 5 1. Overview of the electricity sector 6 2. Electricity Generation, Distribution and Consumption 7 3. Policy and legislative framework 10 4. Regulation 10 5. Financial state of the electricity sector 14 6. Restructuring the energy sector 15 II. ASSESSMENT OF ELECTRICITY SECTOR GOVERNANCE 21 7. Policy process in energy sector governance 24 8. Regulatory Process in Electricity Sector Governance 30 9. Environmental and Social Aspects of Energy Governance 38 CONCLUSION 41 Annex 1. List of abbreviations 43 Annex 2. The main legislation framework related Energy Governance of Kyrgyzstan 44 Annex 3. Reference literature 48 Annex 4. Overview of completed indicators 49 Annex 5. Completed Indicators 53 EXECUTIVE SUMMARY from a governance perspective. Our research is not intended to evaluate the substantive validity of decisions made, but rather to better understand how processes influence outcomes. The general This document is based on research conducted by Kyrgyz civil structure of methodology implemented in Kyrgyzstan is displayed society working group using methodology developed by the in Figure A. This image also reflects key questions in the Electricity Governance Initiative (EGI) of the World Resources research of governance of the energy sector, such as the capacity Institute (Washington DC, USA) and Prayas Energy Group of executive and regulative bodies, capacity of civil society (Pune, India). The National Institute of Public Finance and organizations, the participation of consultants and donors in the Politics (India) supported the project during its first three years. energy sector, and the quality of media reporting on the sector. The methodology was developed over 18 months in 2003-4 and was reviewed by over 100 experts from different countries. The document consists of two primary parts: (i) a review of the The methodology was further revised in 2007 to incorporate energy sector of Kyrgyzstan, and (ii) an analysis and evaluation experiences from pilot projects in 4 Asian countries: India, of sector governance. An overview of the indicators and the Indonesia, Thailand and the Philippines. completed worksheets (which are the basis of the research underlying this analysis) are presented in Annexes 4 and 5. For the study of the electricity sector in Kyrgyzstan, 32 indicators have been selected from the EGI toolkit of 68 indicators. The The first part is dedicated to the review of the energy sector, EGI indicators are a group of structured questions related to presenting its history, its structure, and the most important and three interlocking principles of good governance: transparency, disputed events, particularly the restructuring and privatization participation, accountability, as well as capacity. The decision- reforms, as well as other events that created negative reactions making levels in the sector indicators are divided into the political within civil society. The primary goals of the restructuring reforms process and regulatory process, with special focus on social and were to stabilize energy sector enterprises and increase efficiency environmental issues. through de-monopolization and the creation of conditions for the development in a competitive environment. The goal of the project “Electricity Governance Initiative: Generating Dialogue on Public Interests in the Energy Sector of Kyrgyzstan,” is to evaluate the decision-making processes Figure A. Baseline Indicator Categories BASELINE INDICATORS MAPPING THE ELECTRICITY SECTOR OF KYRGYZSTAN POLICY PROCESS (PP) REGULATORY PROCESS (PP) ENVIRONMENTAL & SOCIAL ASPECTS • Capacity and clarity of • Authority and autonomy; procedures of Legislative • Jurisdiction; • Clarity of environmental Committee; • selection and training of jurisdiction; • Independence of Electricity members; • Executive, regulatory and Ministry • Process for resolving conflicts of legislative mandates; • Quality of debate about reform interest; • Setting minimum and policy change; • Financial and human resources; environmental standards; • Role of donor agencies; • Use of consultants; • Inclusion of environment in • Role of consultants; • Procedural clarity; planning and reform; • Capacity of civil society; • Mechanisms for public • Environmental and impact • Clarity of policy processes; participation; assessment; • Availability of supporting • Disclosure of documents; • Access to redress on social or documentation; • Basis for decisions; environmental grounds; • Privarization and bidding;
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