For the people of Kyrgyzstan the coming winter might prove as cold as the last one, but mainly due to the energy shortage. In order to save water in Toktogul reservoir for the country’s energy needs during the winter, in mid-August the government adopted 8-hour long rotating energy cuts in the northern part of Kyrgyzstan, including Bishkek. At night some districts of the capital are completely dark, leaving even central traffic lights dead, causing troubling traffic jams and generating a ground for petty crimes. Yet, these seem to be just minor problems, while clearly giving an immediate impression that the energy crisis is becoming larger than expected.
A usual political lull erupted during mid-summer as an effect of the government’s clamor of a looming energy crisis and double-digit inflation. On July 24, President Kurmanbek Bakiyev held a meeting dedicated to the economic goals achieved within the first half of the year by the cabinet of ministers led by Igor Chudinov. Left deeply unsatisfied, he disapproved the cabinet’s reports viewing them as too ambiguous and lacking in-depth analysis, also criticizing the ministers’ inactivity. The government thus decided to switch the country to an energy saving mode by using alternative energy sources such as coal and oil. This measure, reducing electricity consumption by 30 percent, provided that electricity in wintertime would be used only for light.
By different estimations the Toktogul currently reservoir contains 8-9 billion cubic meters of water, which is 30 per cent less than the same period last year. This ominous fact seems to force the government to downplay the essential role of the Toktogul power plant to the public. Saparbek Balkibekov, the Minister of Energy and Fuel Resources, indicated that usually the Toktogul power plant covers about 40 per cent of the national electricity needs. However, other sources reveal a far greater number: 90 per cent. At the meeting with the ministers, Bakiyev also stressed that problems with the Toktogul reservoir should not be seen as the main cause of the energy shortage and there must be other solutions.
Nevertheless, the Toktogul reservoir remains an inseparable component of Kyrgyzstan’s energy security. The electricity export revenues from the Toktogul reservoir in part allow the government to purchase coal and mazut for heating. It feeds Bishkek’s aging and reportedly unprofitable Thermal Energy Center (TEC), which heats the capital and usually complements electricity needs in the north of Kyrgyzstan. Estimations alarmingly suggest that if the energy limits are not strictly followed, the power plant will stop functioning already in January, the coldest period of the winter.
Due to the limited time and a lack of financial resources to readjust the heating systems of schools, half of the country’s schools, numbering more than one thousand, are expected to be closed during the wintertime. Hospitals might be affected by the widespread blackouts as well. Pro-government media outlets throughout the summer propagated, aiming at the rural population, the accessibility of dried homemade dung as an ample source of heat. To make things worse, prices for coal doubled during the past year, owing to the general anxiety caused by electricity cuts and the petrol price rise.
In July Bakiyev addressed the government, prioritizing the safety of the ordinary people from blackouts at the expense of saunas, villas, and entertainment centers, which were ordered to reduce their electricity consumption and switch to coal. Despite this warning the government resorted to electricity cuts in Bishkek, stating that during the previous round of electricity cuts in May, the city exceeded its limit. Bishkek, being the most industrialized city in the country with a population of at least one million, provides job opportunities in small and medium businesses like construction and the food industry. These businesses are likely to experience significant losses through the electricity cuts.
The president of the Union of Entrepreneurs, Chynybai Tursunbekov, metaphorically remarked that the dim light lights Kyrgyzstan’s future. He says that the government has shifted all the blame on outside factors and fails to provide support for medium and small business. In Tursunbkeov’s view, continuing energy inconveniences will result in crippled business activities, which, accounting for up to 40 per cent of the GDP, in its turn, will narrow the government’s social spending and will directly harm vulnerable layers of the population. According to observers this year many business ventures already have had to suspend their work and lay off the workforce, which, along with high living costs, push the labor force to seek jobs abroad.
Nevertheless the government feels forced to increase revenues for the state budget no matter what. In April the state adopted a tax inspection moratorium that aimed to bring business up to the legal market, to improve the investment climate, and to increase tax revenues. However, it required business ventures to pay more taxes, increasing by 30 per cent every year, otherwise they would fall under punitive measures as “deceitful taxpayers”.
As a result, the tax inspection was decreased by half, but it failed to yield expected results. Estimations had it that taxes from entrepreneurs would account for no more than that of the last year, which notably had not been affected much by inflation. Ordering to amend the moratorium and to find other effective ways of collecting taxes, at the July meeting with the ministers Bakiev warned businesspeople that if taxes revenues continue to decrease the government would take adequate measures against those evading taxes, who, in his view, fail to appreciate the government’s attempts to build a favorable environment for business.
In a nutshell, government officials and pro-government media are still inclined to scapegoat “a continuing recession of the world economy” and local traders for inflaming price hikes. The wheat shortfall in September 2007, which surged inflation by about 30 per cent, and an abnormally cold winter which drained the hydropower reservoirs, failed to spur the government to take enough preparatory measures for the coming winter. Thus, the winter is likely to have long lasting harmful effect on the Kyrgyz economy, forcing ordinary people to the verge of survival. Analysts duly mark increasing complacency of the government over disturbing economic, political, and social issues. The government will be tested for endurance in the years to come, as the water level will remain below the safe point, as it is believed, until 2010.