T HE E LECTRICITY G OVERNANCE I NITIATIVE : F INDINGS OF T HE K YRGYZ G OVERNANCE A SSESSMENT Nurzat Abdyrasulova, Executive Director, UNISON

C IVIC E NVIRONMENTAL F OUNDATION UNISON 2 Non governmental non for profit environmental organization acting on national and international level Has been established in 2002 in Bishkek It has main two target areas of activities: Sustainable Energy development & Climate Change (energy efficiency, energy saving, RES promotion, EGI and Climate advocacy); Environmental Quality Improvement (eco-education, public awareness, POPs elimination, eco-tourism development, eco-sanitation). UNISON fulfill international events and information campaigns P UBLIC F OUNDATION UNISON

E NERGY S ECTOR Energy is one of the most socially and politically sensitive issues in Kyrgyzstan with significant impact on country economy. 99% of the population are connected to the electricity grid Electricity infrastructure has been established 40 years ago on the base of the hydropower cascade of the electricity stations - existing capacity is 2950 MWh and 730 MWh from TPP

C URRENT STATE -TPES SHARE 4 Source: International Energy Agency, 2003

C URRENT STATE -FEC BY ECONOMY SECTOR 5 Source: International Energy Agency, 2003

EGI R ESEARCH 14 indicators on Political Process and 17 on Regulatory process has been selected as *priority* indicators for pilot research in Kyrgyzstan Restructuring and privatization process of the Energy Sector has been the main themes of the research 6

R ESEARCH C ONTENT IntroductionEnergy Sector Overview Assessment of the Policy Processes Regulatory Processes of the Governance Environmental and Social Aspects of the Governance Main conclusions Recommendations on Governance Improvement

Energy Governance in Kyrgyzstan is closed sector, with lack of good governance principles, such as TRANSPARENCY, ACCOUNTABILITY, OPENNESS 8

M AJOR F INDINGS – P OLICY P ROCESS Financial reports of the Implementation Agency are not available; There is no public participation during the decision making and no procedures of the alternative opinion consideration; No clear jurisdiction of the organization forms of the Energy Companies: in one hand Sate owns 90% of the share, in other hand juridically they are Join Stock companies accountable to Board of Directors. 9

R EGULATION P ROCEDURES MAJOR FINDING There is distinguished Regulator Body but the key factor - independence is not covered Written norms exists but practical implementation is weak (e.g. licensing, appeal procedures, quality of service providing) There is unclear tariff policy and no well defined tariff methodology No public hearings and participation on tariffs settings

E NVIRONMENTAL AND S OCIAL A SPECTS Environmental security is declared as a first priority of the country policy, but economic interest prevail Environmental questions in the policy reform is considered and well reflected but practical implementation in minor Very weak public participation and information about ESIA of energy projects 11

BUILDING PUBLIC CONFIDENCE THROUGH TRANSPARENCY Declaration that there will be an independent regulatory commission Formation of a Working Group to develop immediate and long term measures for protecting the public interest. Formation of a reference group to enhance transparency and public confidence. 12 RECOMENDATIONS

I MMEDIATE ACTIONS Develop a credible and published set of proposed tariff methodologies Revise and reissue sector Licenses and develop Performance Agreements Develop a set of procedures for transparent selection of private service providers Develop a set of procedures for the Regulatory Department that insures public access to documents Develop a set of procedures to post annual reports on Ministry websites Develop a set of procedures for the mandatory publication of feasibility studies and reports 13

L ONGER TERM ACTIONS Review of legal and operational frameworks to identify gaps to be addressed for the sustainable development of the energy sector. A broad set of governance recommendations is outlined in the EGI Assessment Report. Development of a roadmap for the establishment of an independent regulatory commission Define the role of the independent regulatory commission in the development of a regional electricity market (including export pricing and security of supply) 14

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