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Kazakhstan Investment Conference
San Diego, California
9 September 2005
Investing for Kazakhstan’s Future Power Needs:
The AES Corporation Experience
1996 - 2005
Dale W. Perry
Vice President, AES Corporation
Regional Director
Kazakhstan, Russia and Central Asia
Growth Prospects
• GDP Growth:
– 8 – 10% last few years
– Stated goal to double GDP by 2008 – 2010
– Equates to 5% per annum growth in Electric
Power Demand (500 MW)
• Impact to AES:
– Winter 2005 AES Ekibastuz ran at level last
seen in 1994
AES in Kazakhstan
Ekibastuz GRES I
4,000 MW Coal
Maikuben
Coal Mine
Shulbinsk
702 MW Hydro
Sogrinsk CHP
301 MW Coal
Ust-Kamenogorsk
331 MW Hydro
1,356 MW Coal
260 MW Coal
Eastern Kazakhstan REC
280,000 Customers
19,000 KM Network
Semipalatinsk REC
180,000 Customers
18,439 KM Network
Ust Kamenogorsk Heat Net
95,000 Residential Customers
1,600 Industrial Customers
Re-Industrialization of Kazakhstan
Emerson
Filling the Demand Gap
The AES Announcement (November 2004):
Increase of 15% per annum in Price
How Does the AES Price Compare to the Alternatives?
World Bank REEPS Report
Table 5. 1: Levelized Tariffs for Generation Options
Electricity output
GWh
Levelized Tariff
Cents/kWh
Sangtuda I
2,673
2.44
Rogun I
4,643
2.91
Rogun I &II
14,157
3.24
Kambarata I
5,049
8.54
Kambarata II
1,105
3.95
Bishkek-II
2,355
2.67
Talimardjan I
4,265
1.75
Talimardjan II
12,796
2.92
Ekibastuz Rehabilitation
11,283
2.66
Ekibastuz New
6,850
5.05
Project
In 2004 prices
Kazakhstan’s Comparative Advantage…
Comparative Tariff Structures (2004)
Tariff Components - (¢/kWh)
Dominican
Republic
16
El Salvador
14
2.90
12
0.60
10
2.68
Brasil
8
0.00
6
Argentina
2.17
4
2
0
0.80
0.02
1.15
p
la
e
Ed
1.43
0.13
1.62
en
d
E
1.54
0.18
1.62
es
Ed
0.27
3.34
l
Su
2.12
0.09
4.57
5.35
0.00
0
USA
Kazakhstan
7.89
7.02
7.65
3.90
EP
C
C
a
ss
le
O
EE
EK
Generation
C
RE
-'
04
EK
C
RE
0.21
2.33
-'
09
E
ED
Transmission
3.79
2.88
0.75
0.50
0.60
0.50
1.00
es
e
a
11.03
2.02
te
Es
DVA
C
ED
Ukraine
2.20
0.59
1.14
0.00
0.84
0.00
0.30
2.64
2.47
2.46
3.00
*)
le (
n
So
E
KO
E
RO
L
IP
*
Government Agencies… a surmountable challenge
1.
GoK
2.
Ministry of Energy
3.
Ministry of Ecology
4.
Agency of Natural Monopoly
Regulation
electricity distribution, power
transportation, rail road tariffs
issues
Ministry of Industry
competition issues
Ministry of Finance
tax issues
Committee of State Property contract issues
Ministry of Transportation
rail road issues
KEGOK
power regulations and
transportation
KOREM
centralized power sales
Parliament
new legislations
Others
Local and Regional
5.
6.
7.
8.
9.
10.
11.
12.
investments in power sector
and contract issues
electricity industry reform
issues
regulations of air pollution and
ecological permit issues
World Bank REEPS (February 2005)
INTERIM
CG MEETING
Copenhagen
April 29, 2002
Central Asian Republics
Power Development and Trade Strategy
High
Export Capacity PPP:
Rogun & Talimardjan II
Pakistan
South Transmission
Links Development
Level of Risk
Afghanistan
Export Market
Negotiation
Iran
Russia
Power Trading
Capacity: Sangtuda
Transmission Links:
North-South Project
Domestic & Regional
Capacity Balance:
Bishkek II & Talimardjan I
Low
China?
Loss Reduction &
Rehab. Programs
Near-Term
1- 5 yrs
Medium -Term
3 - 10 yrs
Time Frame
This is exactly what
AES does in KZ, with
Generation and Distribution
Long -Term
8 - 15 yrs
Steps AES is Taking…
• Addressing the Predictable, Future Power Shortfalls
• Working with Government of Kazakhstan to Solve the
Sector Disincentives
• Cultivating Regional, Cooperative Opportunities
Through:
– Public Private Partnerships with Governments and IFIs
– Russia-Kazakhstan Regional Market Working Group
• Harmonizing Rules and Regulations
• Removing Barriers to Market Entry
– Regional Market Development, through new businesses in:
• Tadjikistan
• Kirghistan
• Interacting with New Market Entrants
– China
– US…?