Vladimir Posner, the host of Vremena (Times), the only more or less independent talk show left on Russia's 1 kanal, is coming to Bishkek. He is apparently also meeting with students of AUCA, my alma mater, and I am hoping to make it to the meeting with my alumni card as he is a very interesting person to listen to.
The current government is slowly nailing the lid of its own coffin. Not only privatization of energy companies is controversial, very few people think this the process will be transparent. Read on...
Kyrgyzstan Fast-Tracks Energy Sell-Off
Source: IWPR
Parliament gives away its right to block controversial privatisation deals in the electricity industry.
Legislative changes allowing the Kyrgyz government to privatise the potentially lucrative energy sector without consulting parliament have raised concerns that it wants to speed ahead with sales with little accountability or transparency.
On April 18, parliament passed three bills relating to energy privatisation in the course of a single day. The key law signs away parliament’s right to be consulted before privatisation programmes are approved.
In past years, it would have been difficult to get such bills passed so easily. In its previous incarnation, the legislature frequently raised objections to plans to sell power stations and other energy-sector assets because members felt the process was botched and was not in Kyrgyzstan’s best interests.
That changed after the December election, when the newly-created Ak Jol party swept the board and gave President Kurbanbek Bakiev and his allies the majority they needed to pass bills effectively unopposed.
The two other parties represented in parliament – the Social Democrats and the Communists, with 20 of the 90 seats between them – were unable to slow the rapid progress of the privatisation bills’ rapid progress, let along block them.
RUSH TO THE FINISH
In January, Bakiev told his government to make the rapid sell-off of power companies a priority. (For more on this, see Kyrgyz to Pay High Price for Power Privatisation, RCA No. 528, 25-Jan-08.)
Kyrgyzstan's mountainous terrain means it has the potential to produce enough hydroelectricity to meet its own needs and for export as well. For now, the cash-strapped authorities argue that privatisation is the only way of attracting investment to renovate infrastructure, build new plants and eventually become self-sufficient in electricity, and that the state does not have the funds to sustain current losses, let alone fund new projects.
Denationalisation of the power industry, launched in 1998, has been a protracted process, beginning with the breakup of the state-run Kyrgyzenergo into several constituent parts – one company to run the power stations, another in charge of the national grid, and others distributing electricity to consumers in various parts of the country.
The companies that have now been lined up for sale, or alternatively a management lease arrangement, under the current fast-track programme include the electricity distributors Severelektro in the north of Kyrgyzstan and Oshelektro and Jalalabadelektro in the south. Other assets on offer are Bishkekteploset, which pipes hot water to the capital, and the power station that supplies the heating for this system as well as the city’s electricity.
Apart from massive inefficiencies, theft and unpaid bills, Kyrgyzstan’s power industry is just recovering from an unusually harsh winter which placed a huge strain on existing generating capacity. Low water levels in the Toktogul reservoir, where one hydroelectric scheme accounts for 40 per cent of the power generated in the country, are continuing to create blackouts of up to 14 hours a day in many regions and even in Bishkek.
Pro-Bakiev members of parliament have defended the decision to cede control of the privatisation process.
Ak Jol deputy Osmonali Attokurov told IWPR that the decision placed responsibility for the process firmly on the government, where it belonged.
“I personally think the government was right to assume this responsibility,” he said. “Now it is entirely answerable for its own actions and will not shift responsibility onto parliament. Since it is proposing the energy-sector development programme, it should be responsible for the consequences.”
Tursun Turdumambetov, head of the government agency in charge of state property, was a strong advocate of the change and was pleased to see it sail through.
“Privatising any asset requires speed. The republic loses potential investors because of the long-drawn-out procedures for approving decisions,” he said. “That’s why we removed [parliament’s right of] approval, so that government can work with speed and agility.”
He added that ministers would remain accountable to parliament, whose members would be able to look into the privatisation process any time they wanted.
“We aren’t concealing anything from the public,” he said.
Opponents of the new arrangement disagree.
Tolekan Ismailova, the head of the Citizens Against Corruption group, told IWPR that the people have lost their right to scrutinise the privatisation process by means of an elected parliament.
“The decision to implement the programme without going through parliament is anti-constitutional and it will be easy to contest it in court,” said Ismailova. “Parliament is now closed, and no longer exists as a public institution.”
Ismailova and some other human rights activists were ejected from parliament on April 16 when the amendments were being discussed in committee.
According to Azimbek Beknazarov, a leading opposition figure from the Asaba party, recalled how the previous parliament, of which he was a member, used to be the scene of robust debates on this issue.
By contrast, he said, “The current tame parliament does what it’s told. The authorities now do whatever they want, and it’s useless to resist them as they do not listen to anyone else’s opinion. All the key decisions are made in private.”
Isa Omurkulov, a member of parliament for the Social Democratic Party, told reporters on April 23 that the only option now might be to seek a national referendum on the issue of privatisation.
“Today we, the parliament, have absolutely no influence over these processes. Thanks to a certain group of deputies – we know who they are – we’re unable to monitor the implementation of this programme,” said Omurkulov.
The government is currently developing two energy-related documents – a programme lasting until 2010 and a strategy for 2025, both of which are currently before parliament.
Public hearings were held on the two papers on April 23, during which industry and energy minister Saparbek Balkibekov said the energy sector needed at least five billion US dollars in investment, and this kind of money could only come from commercial investors.
FEARS THAT NEW PRIVATE FIRMS WILL HIKE PRICES
For critics of Bakiev’s policies, the underlying concern is that once private companies come in – most likely from more powerful countries like Russia and Kazakstan – they will simply replace the state monopoly with one of their own, and proceed to bump up utility prices as a way of recouping their investment.
These fears will be heightened if the bidding process is less than transparent. At the moment there are believed to be four prospective investors waiting in the wings for privatisation to move forward, but the government has not revealed their identity.
Officials insist that electricity prices will be held down once the private sector takes over, but local human rights groups doubt it will have the legal mechanisms at its disposal to ensure this happens.
“The is a strong possibility that an investor will increase prices and start cutting off the power to hospitals and other public-service institutions,” said Aziza Abdirasulova, head of the Kalym Shamy human rights centre.
One of the other laws passed last week designates electricity as a “commodity” rather than a service. This might seem an academic distinction, but it has become yet another bone of contention between the government and its critics
Those in favour of the re-designation say it is consistent with other pieces of legislation, while minister Balkibekov argues that it will make it easier to prosecute those who steal or waste electricity. or default on unpaid bills
Yury Danilov, an Ak Jol member who chairs the parliamentary committee on energy affairs, told IWPR that the law was in the best interests of the public.
“Until now, electricity has been regarded as a service, so [offences were] only punishable by administrative [civil] law. Now that it is designated a commodity, the criminal code is applicable and it can be dealt with as theft of property,” he explained. “This law is in the interests of honest electricity consumers who don’t steal it, but pay for it,”
Activist Anara Dautalieva said the change deprived people of one of their basic rights.
“Electricity and water are not goods, they are services of social importance to the population; this is about access to a local resource that we produce ourselves,” she said.
“Why have a state at all, if the president says the state cannot be an efficient manager and everything should be handed over to private ownership?”
Parliament's recent decision to mark the 1916 revolt of the Kyrgyz against Russians as a memorial day in August sparked a small international row between Kyrgyzstan and Russia. Russian Foreign Ministry issued a statement on April 22 saying that his decision is "counterproductive to the current friendly relations between our country and people."
In 1916 ethnic Kyrgyz revolted against the Tsar's decision to draft the local population to provide rear service in the WWI. The Kyrgyz revolted killing thousands of Russian settlers. The Russian army responded accordingly. The Kyrgyz then fled the Russian army to China (most returned after the 1917 Communist Revolution). Estimates put the death toll at 150,000 Kyrgyz (roughly 30% of the population).
However, it is accepted that the draft was just a trigger to revolt against the oppression of the colonial Russia, who had been seizing the most fertile land from Kyrgyz (and Kazakh) and giving it to settlers from Russian during the previous 20 years. As a result by 1916, Russian settlers, who made 6% of the whole population of Semirechie (roughly Northern Kyrgyzstan and Southern Kazakhstan), owned 57.7% of all arable land, while the local population (94%) owned the remaining 42.3%. (Source)
The Russian government, subsequently the Russian people, including those in the former Soviet Union, are often nervous about admitting wrongdoings in its history, either by the Tsarist Russia or the Soviet Union.
This unwillingness to accept past mistakes has been counterproductive to the Kyrgyz-Russian relations.
Here are some pictures from my recent trip to Naryn. This one was taken as you come down the Dolon Pass on the way to Naryn. There was still a lot of snow in Naryn in April.
The road between Bishkek and Naryn connects Kyrgyzstan to China, which has been exporting tons goods (food, clothes, electronics, etc.) to Kyrgyzstan. This one is one smaller trucks. They also have bigger trailer trucks.
China imports scrap metal from Kyrgyzstan, although some are saying they are looking for sources in neighboring Uzbekistan because there is not much scrap metal left in Kyrgyzstan. This is a picture of a crash scene with a broken trailer and all the scrap metal laying on the road.
My blogging hiatus of 2 weeks is explained by traveling in Kyrgyzstan (1305 kms in 4 days) and amount of work that had gathered while I was traveling. It is interrupted by some worrying tendencies in the country.
Because of an unusually harsh winter this year, Kyrgyzstan had used up a lot of water in our dams to produce enough electricity that the government decided to introduce measures to accumulate water in dams by regularly switching off of electricity around the country.
Bishkek, which by is producing almost 40% of country's GDP, is fortunately not being much affected by this. Power is cut off from midnight to 5 am daily and some neighborhoods have power cut off during the day for couple of hours. The government decided not to publish the schedule of when and which areas of Bishkek will not have electricity because it is afraid that powerlines might be stolen and stores and offices might be robbed when there is not electricity.
However, everywhere else the electricity is turned on only in the morning and in the evening for people to make breakfast and dinner and watch some TV. I was meeting with a radio station in Karakol, Issykkul, and they complained they could not air their programs during the day because they don't have power generators to feed the radio station and the transmitters. And they are losing income from advertising. I am sure it is of bigger concern for companies using bigger machinery who have to cope with this.
In addition, the government this week decided to increase the price of electricity by at least 11.3% (from 0.62 to 0.69 KGS for a kilowatt-hour) for ordinary citizens, while companies might be charged 28% more. It also decided to increase fees for heat and hot water, but has not published the details of the increase, although some are saying it will be a 150% increase. The Bishkek City Council also decided today to increase fees for public transportation by 60% for daytime and 100% for nighttime (from 5.00 to 8.00 and 10.00 respectively). All these increases will come into force starting from July 1, 2008.
All in all, the Kyrgyz economy is not in the best shape. The government, at least Economic Development Minister Japarov, seems to understand it and is predicting an inflation of 19-25% in 2008.
Transfer of Üzöngüü-Kuush to China triggered the Aksy events, which then led to the flight of Askar Akaev from Kyrgyzstan on March 24, 2005. The current government might be doing similar mistakes in trying transfer several strips of land and 4 resort centers on the shore of Issyk-Kul to Kazakhstan. This simply becomes ammunition for the opposition, which today is still a weak and diverse group.
The opposition is will hold a kurultay (convention) tomorrow to discuss a number of issues, including tranfers of land to Kazakhstan. As a preparation, the opposition, jointly with some youth activities, held a rally against this yesterday. And of course, the police rounded them up and arrested all of the 50 protesters. Pictures (courtesy of AKIpress and morrire) are belo
The International Crisis Group released a report on challenges of judicial reforms in Kyrgyzstan. The reports comes at a time when it is most needed. The complete report is available here. It draws a pretty gloomy picture for Kyrgyzstan.
"A lack of faith in the independence of judges, widespread corruption and the extremely slow speed of many legal processes have all fuelled a worrying public disaffection with the court system”, says Paul Quinn-Judge, Crisis Group’s Central Asia Project Director. “People are turning elsewhere to resolve disputes, and informal local leaders – many with criminal connections or promoting Sharia law – are filling the void".
"The judicial system has failed to act as a check on growing authoritarianism”, says Saniya Sagnaeva, Crisis Group Senior Analyst. “Without thorough reforms, it is impossible to develop a pluralistic and stable political system over the long term".
My week-long excitement with the gradschool prospects has been overridden by yesterday's comments of Parliament Speaker Adaham Madumarov, also leader of Ak Jol Party, who said that the Central Election Commission does not have to report to anyone on anything, when he was asked why the December 16 elections results have still not been published. These remarks were made on the 100th day of the Ak Jol-controlled parliament.
The Election Code clearly states in Article 77.7 that elections results have be published within 2 weeks after the election day. It is a very bad tendency for the government and the country in general if laws, let alone the rules of the game, are not respected and dismissed by government officials as high as the Speaker of the Parliament.
It is similar to when Zimbabwe's Mugabe did not want to publish elections results, but claimed victory. The different being that Mugabe is getting a lot of regional and international pressure (it was one of top stories in international news), while it seems the world has forgotten about Kyrgyzstan, once known as the "island of democracy."
Thanks to the excellent Registan, I came to appreciate the Japanese rendition of geopolitics of Central Asia. Enjoy! 
