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Creating a free market in power

Kazakhstan has had more success than most former Soviet states in reforming its power sector. Electricity suppliers hope prices can be pushed higher but the abundance of oil and gas will limit rises.

"Communism is Soviet power and the electrification of the whole country!" This was one of Lenin's rallying cries during the early days the Communist revolution. The electrification of the country was so closely identified with modernizing the former Soviet Union that some women still bear the name Elektrifikasiya, given to them by ardent Party-supporting parents.


Since the collapse of communism the equation has been rearranged: without Soviet power, electricity production also disappeared. All the countries of eastern Europe are struggling to reform their dilapidated utility sectors, but Kazakhstan is among the few that has made any progress.


Catastrophe steeled the government's mettle to act, and act decisively. In 1996 and 1997 rampant corruption and non-payment caused two power and heat plants to close down in the depths of the icy winter of central Asia's steppes.


Fuel supplies are largely in the hands of commercial companies and with no cash coming in the power stations in the towns of Kokchetav and Temirtow ran out of fuel, leaving the population to cook on open fires in the snow-covered streets. Many other utilities were also on the brink of bankruptcy.


Happily no one died as a direct result, but citizens forced to withstand sub-zero temperatures in their own apartments spurred the Kazakhstan government to launch a complete overhaul of the system through privatization.





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