09ASTANA419, KAZAKHSTAN WITHDRAWS FROM REGIONAL POWER GRID

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Reference ID Created Released Classification Origin
09ASTANA419 2009-03-06 09:33 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Astana

VZCZCXRO3777
OO RUEHBI
DE RUEHTA #0419/01 0650933
ZNR UUUUU ZZH
O 060933Z MAR 09 ZDK
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4842
INFO RUCNCIS/CIS COLLECTIVE 1317
RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 0696
RUEHKO/AMEMBASSY TOKYO 1399
RUEHUL/AMEMBASSY SEOUL 0383
RHEBAAA/DEPT OF ENERGY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEAIIA/CIA WASHDC
RHEFAAA/DIA WASHDC
RHEHNSC/NSC WASHDC 0878
RUEKJCS/SECDEF WASHDC 0791
RUEKJCS/JOINT STAFF WASHDC
RHMFIUU/CDR USCENTCOM MACDILL AFB FL
RUEHAST/USOFFICE ALMATY 1295

UNCLAS SECTION 01 OF 03 ASTANA 000419 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/CEN 
STATE PLEASE PASS TO USTDA FOR DAN STEIN 
 
E.O. 12958: N/A 
TAGS: PGOV ECON EAID ENRG EINV ZK
SUBJECT:  KAZAKHSTAN WITHDRAWS FROM REGIONAL POWER GRID 
 
REF: ASTANA 0251 
 
ASTANA 00000419  001.3 OF 003 
 
 
1.  (U) Sensitive but unclassified.  Not for public Internet. 
 
2.  (SBU) SUMMARY:  On February 26, for the second time in ten 
years, Kazakhstan withdrew from the Central Asian Power Grid (CAPG) 
by disconnecting all high-voltage lines to Kyrgyzstan and 
Uzbekistan.  The last time Kazakhstan took such drastic action was 
in 2000, although it has threatened to do so many times in the past. 
 The Kazakhstan Electric Grid Operating Company (KEGOC) justified 
its decision as the only way to ensure continued power supply to 
domestic customers in southern Kazakhstan.  KEGOC also said they 
acted to protect the stability of the national power grid itself, 
which they claim was threatened by over-consumption of electricity 
in Tajikistan, whose high-voltage network is interconnected with the 
Uzbekistan and Kyrgyzstan lines from which KEGOC disconnected.  In 
October 2008, Turkmenistan pledged to supply Tajikistan with 1.2 
billion kilowatt hours of electricity via Uzbekistan annually until 
2012.  That arrangement broke down in January, with Uzbekistan's 
decision to refuse to allocate transit capacities for delivery of 
Turkmenistan electricity to Tajikistan.  Tajikistan received no 
electricity from Turkmenistan from that time until resumption of 
deliveries on 28 February, when Uzbekistan agreed to resume transit. 
 KEGOC officials said they will continue to monitor the situation 
and may rejoin the CAPG as early as April 15.  END SUMMARY. 
 
UNSANCTIONED USE OF POWER FORCES KEGOC'S HAND 
 
3.  (SBU) The high-voltage systems of Uzbekistan, Kyrgyzstan, 
Tajikistan, and southern Kazakhstan (including major load-centers of 
Almaty, Dzhambul, and Shimkent) were constructed in the Soviet 
period as a single, integrated system, and continue to operate in 
this manner.  After the dissolution of the Soviet Union, generation 
dispatch coordination deteriorated substantially, complicated by 
protracted disagreements on the management of water resources and 
their intersection with hydroelectric power generation.  (NOTE: It 
is widely understood that Uzbekistan's decision to deny transit of 
Turkmenistan power to Tajikistan was a protest against Tajikistan's 
plans to complete construction of the Rogun hydroelectric plant. 
See reftel.  END NOTE.) 
 
4.  (SBU) Kazakhstan, recognizing inherent risks to stable supplies 
to its southern load centers caused by these water/power nexus 
disputes, constructed a 500kV transmission line in 1997 to 
supplement its southern regions (including Almaty) with power 
generated in capacity-abundant northern Kazakhstan.  The normal 
operating capacity of this line is 630 MW, with intermittent peaking 
up to 800 MW.  Northern Kazakhstan's system is interconnected with 
Russia's system, which supplies balancing electricity for the 
Kazakhstan grid.  With over-consumption by Tajikistan this winter, 
the load on the Kazakhstan north-south 500 kV line increased to 1100 
MW to compensate for the consequential load imbalance.  As this line 
itself became overloaded, its automatic system protection 
interrupters temporarily opened the line to shed load and maintain 
system integrity.  Southern Kazakhstan consumers were then subjected 
to intermittent blackouts as a consequence of these automatic 
disconnections.  We also understand from sources within KEGOC that 
the significant increase in required balancing electricity elicited 
complaints from Russian power network operators who said they would 
not tolerate this situation indefinitely. 
 
5.  (SBU) According to KEGOC Vice President Valeriy Li, Tajikistan 
had been drawing power without contract for several months prior to 
KEGOC's decision to disconnect from the regional grid.  He said that 
KEGOC was willing to tolerate Tajikistan's unsanctioned use of 
electricity until it began to threaten the stability of supply to 
Kazakhstan's own citizens.  By February 26, Tajikistan's national 
power company Barq-i-Tojik had used 84,000 Megawatt-hours (MWh) 
since the beginning of the year.  According to Li, if Kazakhstan had 
remained in the CAPG, Tajikistan's unsanctioned consumption of power 
would have exceeded 100,000 MWh by early March.  (NOTE:  The current 
market value of this power is from $4 million to $6 million.  END 
 
ASTANA 00000419  002.2 OF 003 
 
 
NOTE).  The additional load of Tajikistan's over-consumption would 
have continued to threaten stable supply of electricity to consumers 
in southe
rn Kazakhstan.  On February 26, KEGOC presented this 
information to Minister of Energy and Mineral Resources Sauat 
Mynbayev, who authorized KEGOC to withdraw from the regional grid. 
Murat Sandybayev, Deputy Director of KEGOC's Grid Services 
Department, subsequently told Energy Officer on March 5, "The Tajiks 
were simply stealing our electricity.  We had to do something." 
 
REGIONAL INTERDEPENDENCE ON WATER AND ENERGY 
 
6.  (SBU) Sandybayev said KEGOC hesitated to withdraw from the 
regional power grid because Kazakhstan is dependent on water 
supplies from Kyrgyzstan and Uzbekistan.  "There are many 
intergovernmental agreements on water and power," he said, "and we 
knew there would be political implications if we got tougher on 
Tajikistan."  Sandybayev said that KEGOC felt it had no choice but 
to act.  The regional power grid has limited reserve capacity and 
Kazakhstan's North-South transmission line, which has a rated 
capacity of 630 Megawatts, soon began to approach 1,000 Megawatts, a 
potentially dangerous overload. 
 
BLACKOUTS AND POWER CUTS 
 
7.  (SBU) The grid's automated monitoring system began to disconnect 
power flow as often as 30 times a day (or a total of 403 times in 
January and February), which triggered emergency power cuts in 
southern Kazakhstan.  Once Kazakhstan withdrew from the CAPG, 
residents in Zhambyl oblast in southern Kazakhstan began to receive 
additional power from the firing of additional units at the 
relatively high-cost gas/mazut-fired Zhambyl power plant, which 
typically supplies electrical power only during winter emergencies. 
KEGOC also began operating one of its 220kV lines connecting Zhambyl 
and Almaty at the 500 kV voltage level, but with lower load 
capacities than the dedicated 500 kV line that crosses Kyrgyzstan's 
territory to connect these two cities.  Although consumers there 
experienced one-hour power cuts several times a day on February 25 
and 26, KEGOC's Sandybayev said power supply to the southern region 
is now stabilized. 
 
KEGOC MAY REJOIN REGIONAL GRID BY APRIL 15 
 
8.  (SBU) KEGOC's Sandybayev told Energy Officer that KEGOC would 
rejoin the CAGP by April 15, or as soon as the energy dispute with 
Tajikistan is settled.  When asked how the dispute could be 
resolved, he confided that on March 6-7, the presidents of the 
national power grid companies for all five Central Asian republics 
plan to meet in Almaty to discuss the situation.  "We expect them to 
come to an agreement," he said, "and we expect them to keep their 
promises."  (NOTE:  KEGOC Managing Director Sergei Katyshev did not 
confirm the March 6-7 meeting.  We have heard from other sources 
that the heads of the power companies may gather on March 26-27 in 
Shchuchinsk, approximately 200 kilometers north of Astana in Akmola 
oblast.  END NOTE). 
 
9.  (SBU) COMMENT:  Kazakhstan justified its decision to withdraw 
from the Central Asian Power Grid on technical grounds, but clearly 
the move carries a political message as well.  In particular, the 
government's decision signals the importance it attaches to its own 
energy security and the integrity of its own power system.  KEGOC's 
decision furthermore serves notice to the other countries in the 
region that it cannot tolerate uncoordinated operation of the CAPG 
and unsanctioned power consumption that threatens the system's 
stability.  At first glance, Kazakhstan's withdrawal from the 
regional power grid seems an ominous way to mark the beginning of 
USAID's new Regional Electricity Market Assistance Program 
(REMAP-II), just awarded this week (septel).  However, KEGOC's 
decision may actually provide an unexpected boost to REMAP-II, by 
underscoring the importance of establishing a functioning market 
with clear regulations and enforceable rules.   It is no coincidence 
that the resumption of Turkmen supplies to Tajikistan through 
Uzbekistan resumed just as KEGOC disconnected from the grid. 
 
ASTANA 00000419  003.3 OF 003 
 
 
Ironically, KEGOC's temporary withdrawal from the CAPG may help to 
convince Tajikistan, Kyrgyzstan, and Uzbekistan of the value of 
participating in the creation of a rules-based, coordinated, common 
regional power market.  END COMMENT. 
 
HOAGLAND

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