Publication: Eurasia Daily Monitor Volume: 5 Issue: 131

As inflation for food and energy is rising by the month, public debates about the government’s ability to handle the worsening economy are becoming ever more common in Kyrgyzstan. Local civil society groups and journalists voice concerns over the course of privatization of the country’s key hydropower sites. Newspapers publish their ideas about how the national government could alleviate the situation, while the political opposition accuses the ruling regime of distancing itself from the population’s needs. Concern about the rapidly rising costs can be heard across the country.

Electricity rates increased by 13 percent yet again in June, now reaching 0.7 soms per kWh (roughly 2 cents) and will continue to rise in the coming months to 0.94 soms (2.6 cents). In July monthly tariffs increased to 500 soms ($14) per gigacalorie (Delo nomer, June 4). In total, together with other utility costs, a family of four people will have to pay roughly 1,400-1,500 soms ($14) during the winter months. Although by regional comparison electricity tariffs are relatively low in Kyrgyzstan, the cumulative sum for energy consumption is high by local standards and is almost 30 percent higher than last year.

The continuing public debate has, however, not yet led to greater transparency in the privatization process or allowed the political opposition to take part in public debates. There is, in fact, little or almost no debate even in parliament. Furthermore, professional opinions about the processes in the hydropower sector are rarely made public. The public is still unaware whether and how the government will privatize Kambarata-1 and Kambarata-2 hydropower plants. It is still unclear whether the Kyrgyz government will retain its control share in these two sites or turn them over fully to foreign investors.

The Kyrgyz government defines the Kambarata projects as strategically important for the national development but fails to disclose details of the costs for their construction, potential investment risks, costs for production, and, finally, the projected impact on the national economy.

The increase in energy rates will be felt most acutely in the fall when the population will need to bear both inflation for food prices and energy costs. The government, in turn, is expecting social tension and mass demonstrations. Kyrgyz President Kurmanbek Bakiyev has already cushioned himself against political tension by appointing his brother Zhanysh Bakiyev to head the National Guard and by substantially increasing pay to interior armed forces.

Predicting shortages of electricity in the winter of 2008-2009 due to low levels of water at the Toktogul dam, the country’s major hydropower site, Kyrgyz Minister of Production and Energy Saparbek Balkibekov called on citizens to use water sparingly during the summer. In the spring electricity was shut off for few hours during the day and at night. Although Balkibekov promised a regular supply of electricity in the summer, if a limit on electricity usage set by the ministry is exceeded, temporary electricity shutoffs will be repeated. Amid rolling blackouts this year, demand for generators has increased by five times in Kyrgyzstan. The cost of one generator ranges from $650 to $2,100 (Delo nomer, June 4).

Meanwhile, the situation in neighboring Tajikistan is murkier. Following the severe winter of 2007-2008, when Tajikistan announced a humanitarian crisis because of shortages of electricity and food, the public has become afraid of the coming winter and the repetition of the crisis. Fears are felt across Tajikistan, and many are considering leaving the country for the winter period to escape the nightmares of the past experience. Tajik experts agree that President Emomali Rakhmon’s popularity was considerably damaged following the crisis, but Tajikistan’s civil society or mass media outlets rarely condemn the government openly for mismanaging the energy sector and allowing such crises to occur.

Kyrgyz politicians and society by no means expect the Tajik scenario to be repeated in their country, but rising prices might create political tension. Opposition forces, recently mobilized into a “United Kyrgyzstan” bloc, will be able to gain public support on the wave of general anger with the government and worsening living conditions (Vecherny Bishkek, July 4).

Another possible scenario could be small scale spontaneous protests against local governments across the country without the political opposition’s encouragement. If the energy crisis worsens in 2009 and 2010, the opposition will have effective arguments to challenge Bakiyev in the 2010 presidential elections.