1. ERRA Workshop on Regulatory Monitoring of the Electricity Sector Almaty, Kazakhstan, January 31 – February 2, 2006 1 EnergoAlem Company Electricity Market in Kazakhstan Electricity Market in Kazakhstan Kenzemurat Dukenbaev Director

2. Basis for regulatory reforms began with Decree of the President «On Electricity» of 23 December 1995, # 2724. the Decree that had the power of a law specified principles of functioning of the energy sector on a competitive basis under the state governance, which included the following: licensing of activities related to generation, transmission and distribution of electricity, export and import transactions; state regulation of prices (tariffs) for services in the power sector; allocation of electricity, including its sale to consumers in accordance with concluded agreements; de-monopolization and privatization of power facilities with competitive activities; Regulatory Basis for Reforms

3. Mechanisms of sustainable development of the economy of Kazakhstan

4. Standards for goods and services in the power sector IndicatorsParameters Voltage± 11% Frequency± 0,2% Quality of goods Indicators Parameters Time Quantity Disconnection of consumers 10 t. and more More than 3 min. 6 1 sec. – 3 min. 30 Less than 1 sec. 70 Quality of services * * Allowed interruptions – standard, not coordinated with consumers and not subject to fines * In case of prevention of standard interruptions or deviations, separate agreements are concluded.

5. Classification of emergency situations* * The situation is recognized as an emergency by a special decree of local authorities Maximum allowed decrease in the service level compared to contractual one Criteria Scale of emergency situations Number of affected Number of people with violated living environment Material damage 1 Area of emergency, territory Small Less than 10 Less than 100Less than 1 Production facility Local11-50 101-300 1,1-5,0 of a community, district Regional51-500 301-500 5,1-500 oblast Stateover 500 RK Cross border Striking factors go beyond the RK or emergency happened abroad and affects the territory of Kazakhstan

6. Expansion of the structure of the energy resources market * * In the Republic of Kazakhstan the difference in the cost of a calorie of different energy resources differs from the world cost by 2.5 times, which fact decreases the possibility to make them interchangeable 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 800160032004800 км $/тыс.БТЕ г а з о п р о в о д м о р с к о й г а з о п р о в о д н а з е м н ы й г а з о п р о в о д п о К а з а х с т а н у п е р е в о з к и с ж и ж е н н о г о г а з а э л е к т р о э н е р г и я п е р е в о з к и н е ф т и в т а н к е р а х н е ф т е п р о в о д п о К а з а х с т а н у эл.энергия по Казахстану (0.0013 ) Offshore gas pipeline electricity

7. Expansion of the electricity market in CIS

8. Organization of competition in the infrastructure sector Distribution of functions between the state and the concessionary Types Infrastructure Credit commercial index Electricity supply Nuclear power plants, substations, power networks, etc. + Heat supply Heat networks, autonomous boilers, pump stations, baffles, etc. + Water supply Reservoirs, dams, pump stations, pipelines, water treatment facilities, etc. + Sewage Sewerage, sewage treatment works у + Street lighting Street lamps, billboards + Telecommunications Communication lines, satellites, stations, cables, etc. + Transport air road railroad river maritime urban Airports, aero navigation Roads, highways, bridges Tracks, railway stations, signalizationа Ports, channels, gate locks Ports, light towers Roads, streets, traffic lights, information systems, etc. + Waste collection Collection, recycling and processing of household and industrial waste + Post Post, sorting units, postal transport, etc. + Religious facilities Cult institutions, cemeteries, undertakings, etc. + Recreation Parks, gardens, stadiums, gyms, swimming pools, etc. + Education Children institutions, schools, colleges, universities - Healthcare Polyclinics, hospitals, nursing homes, etc. -

9. Tariffs for public infrastructure services