Perhaps as a start,
you could give us a little bit of background information
on your company. The hydropower energy sector in
Kyrgyzstan has gone through a number of changes,
particularly in the last year and half. What is
the company today and what is the shareholder's
structure?
Our company was created after the restructuring
of Kyrgyz Energo joint-stock company. The structure
was made with the aim of transferring to the market
economy in this sector. Tomorrow is our first
anniversary since we started our business. Our
activities include: production and sales of electric
and thermal energy. Our company's structure consists
of hydropower stations on the Naryn River. There
are several of them: Tooktogul, Kurpsai Koshoplov,
Shamlisaisk and At-Bashi power stations. We also
have 2 thermal-electrical stations, located in
Osh and Bishkek. They supply heat to the citizens.
As I understand, your enterprises are also
engaged in transportation and retail of electricity
for export. Is this correct? Are you exporting
some electricity abroad?
Yes, we export electricity to the neighboring
countries like Uzbekistan, Kazakhstan and Western
parts of China, so called Syndian-Yigur autonomous
region. The set up capacity of electric power
station is 3600 mega watts. Our country is actually
rich in energy resources and it takes the 3rd
place among CIS countries, after Russia and Tajikistan.
We just talked about the reason of recent
restructuring of Kyrgyz Energo. How has the company
been performing in the past year of independence?
This year has been very difficult for us because
first of all, we had financial problems. Back
then, Energo system was united, and there was
a set financing. When the distribution of companies
was taking place, they became independent and
nowadays, they collect money for our production.
Unfortunately, they can't pay us on time to the
full degree. I don't think it is going to last
forever because they have been trying to set up
the streamlines of financial processes. The second
problem of this year was abundance of water. There
was too much water in the whole world like in
Europe, Russia and Central Asia. In one hand,
it is good. Toktogul reservoir, for the fist time
during 10 years, accumulated enough of water,
which would be close to the maximum. We tend to
have a big potential for processing energy. The
more water we have, the more energy it produces.
But on the other hand, our neighbors had a large
quantity of water too. Therefore, they did not
need our water and our electric energy since their
electric power station functioned to its full
100%. This year we were unable to complete our
plans for export. These are the main problems
but in general, we supply our population both
with electrical and heating powers, even though
they don't pay us for the privilege of using it.
It may surprise you that we provide electrical
power and wait to be paid. In the civilized society,
if you don't pay, you don't get anything.
Nevertheless, the turnover of the company
last year was rather considerable. I believe the
figure was around 2 billion soms. Is this figure
accurate?
It is a true figure. We have not summed up the
total income for this year yet but our consumers
in the whole owe us 1.5 billion som. Since they
have only paid 500 million soms, this year it
will add up to 2 billion.
Of this 2 billion soms of electricity that
was actually provided, how much money were you
able to collect?
In total, our consumers are paying 90%. Cash
makes up about 20% and then budget organizations
have a certain mechanism of return financing.
Ministry of finance should provide money to the
budget organizations so that they are able to
pay for electricity. The budget organization pays
us and we, in return, have to pay taxes to the
budget. This kind of operation should be done
in cash. Industrial enterprises have deficiency
of cash and that's why they pay us with their
goods. For example, in order to build a dam, we
have to use cement from the cement factory. So
we supply electrical energy and they reimburse
us with cement. It is a problem of our economy.
And of course, it is not a healthy situation.
We should avoid it. We could always limit the
consumption of users that don't pay us. I think
that only strict methods will save the energy
system. We need to cut off the utility and let
them live without electricity and heat. Sooner
or later, we will apply this method. Neighboring
countries, Kazakhstan and Russia already went
through this procedure when the whole provinces
were cut off.
Talking about some of the further restructuring
and modernization of your plants, you are in a three
year plan of modernization and upgrading of all
your facilities. I believe that the necessary investment
for this is no less than 10 million USD. How do
you seek out this funding?
We have 2 ways to do it. The first one is to get
a loan. Most of our equipment is made in Russia.
We can turn to the Russian government to provide
us with the loan. They would supply us with Russian
equipment. But actually, we are working with German
and Japanese companies. Toshiba is interested in
our heating power stations too. There are big possibilities
that we could also cooperate with them because there
is a Japanese program to aid the developing countries.
Thanks to this program, we could use services of
Toshiba. Another way is to do it at the expense
of export of electrical energy. But we have to make
arrangements with Kazakhstan first, because in order
to enter Russia, we have to transit Kazakhstan.
Having bought our electrical energy, we can use
money to buy equipment. |
Do you think that
your company and the hydroelectric sector here in
Kyrgyzstan are appealing to investors? Do you think
there is enough investment to the sector and why
could it become so important for the future for
Kyrgyzstan?
This is vital for us because we need to develop
energetic sector. At present, we produce 12 billion
kilowatt/hour a year. This is enough to meet our
local needs and export 2 billion. You are acquainted
with the situation of our economy and there is a
hope that there will be a rather considerable growth
in the economy. Our industry will stand on its own
feet and then will indeed feel the lack of electrical
energy. For this very reason, we are looking for
investors. The Soviet Union was unable to finish
construction of 2 heating power stations: Kombar-Ata
One and Kombar-Ata Two. It was put together up to
40% and then it was left unfinished. They have also
begun the construction of Kombar-Ata One, whose
capacity is 1900 megawatts. And the second Kombar-Ata's
capacity is 360 megawatts. Collectively they produce
about 5 billion kilowatts/hour. In order for Kombar-Ata
One to function, we would need 1 billion and 200
million USD. For Kombar-Ata Two, we need 260 million
USD. The construction of these two power stations
solves 2 big problems. I will draw it for you. This
is the existing cascade of Toktogul heating power
station. This is Toktogul reservoir and Kombar-Ata
is a little higher. And this is the Fergana valley,
which includes Kyrgyzstan, Uzbekistan, Kazakhstan
and Tajikistan. All of them need water in summer
time. When there was Soviet Union, we had a united
heating energy system, which irrigated the whole
Fergana valley. Water was stored here in winter,
and in summer it was used for irrigation. Electrical
energy was produced in summer and supplied Central
Asia with it. In winter, they saved the water and
did not work to the full capacity. The needs of
electricity in Kyrgyzstan were covered by Uzbek
gas and Kazakh coal. It was a united multiuse building.
But when all the countries got their independence,
Uzbekistan and Kazakhstan increased the cost of
gas and coal. They told us to pay in dollars. And
of course, we could not do it. At present, our hydroelectric
power station is working in energy regime. We produce
energy and let the water flow in winter, when the
water is not needed. But if we had both of Kombar-Atas
working, they would work in winter and provide electrical
energy. In winter, the water would come down to
Toktogul power station and be reserved, and it would
work again in summer. Kombar-Ata power stations
are important for the whole region, not only for
Kyrgyzstan, but also for Kazakhstan and Uzbekistan.
Moreover, the construction is already through by
40%. We have conducted a few tenders but it did
not show any results. The problem is that investors
say, I quote: "OK, we will invest money but
when will we get our money back? We have 40% of
loss in this country. You have limited possibilities
of export because Kazakhstan and Uzbekistan don't
pay their debts." So there is a problem, in
order to attract investors, we have to increase
export.
Could this arrangements and policies with Kazakhstan
and Uzbekistan be revised? It seems like you are
following the same steps that were taken during
the Soviet time. Don't you think it is time to make
a step forward into the market economy?
We are coming towards it. From the very beginning,
we wanted to work within a market economy philosophy
but there was a strong resistance from our neighbors,
soon we will come to it. We need 20 million USD
for the start in order to buy coal and gas with
cash. When Kazakhstan and Uzbekistan need water
in summer time, we will sell electricity with cash.
We are ready to make our first step next summer.
Do you think that the investment climate in Kyrgyzstan
is favorable?
In general, it is favorable. Our president is trying
to attract investors. We cannot expand without investment.
Favorable conditions are there but the problem is
that when it comes to concrete projects, people
get lost. They did not learn to appreciate the investors,
but this is temporary. We have to change people's
minds that investors are not a pocket with money
but a person who wants to help our economy and who
has his own interests. In general, thanks to the
steps that are taken by our government, we are reaching
a point where people are starting to understand
this.
We like to learn about the company but also about
the people running it, so could you tell us a little
bit about your previous experience, progression
of your professional career and what do you feel
most satisfied with?
I could say that during last 12 years, I have been
into big politics. I was working with Mr. Akaev
when he was still pursuing the scientist career.
When he came to power, he created his own team.
I was and still am in his team. I worked in his
administration, coming and leaving the White House
four times a day. In between, I had time to do diplomatic
work where I obtained a diplomatic rank of an extraordinary
assignee. I represented our Republic in CIS countries
and then I worked with the Ministry of Foreign Affairs.
Later on, I switched to the managerial work because
I had a degree in electrical engineering. |
Mr. Sagynbek
Z. Dordoev