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Dreaming of Paris, Fighting for Power: Electricity in Central Asia

The COP28 UN Climate Change Conference in December 2023 highlighted the important role of developing countries – which include the Central Asian republics – in reducing dependence on fossil fuels thanks to the use of cleaner, renewable energy sources. Indeed, Central Asia is believed to have something to offer the world in the fight against climate change, being home to numerous sources of clean energy, including solar, wind, and hydropower.   The "electricity ring" Last year, fossil fuels accounted for 95% of the total energy supply in the five Central Asian countries, according to the UN. To meet their commitments under the Paris Agreement and the transition to a low-carbon and sustainable energy system, the region will need to make a giant leap from fossil fuels to renewable energy sources. The main issue is that this transition must be made by different electrical grids across Central Asia, most of which are linked to the Central Asian Power System (CAPS). CAPS, also known as the "electricity ring," is a joint power transmission network connecting Uzbekistan, Tajikistan, Turkmenistan, Kyrgyzstan, and some southern parts of Kazakhstan. It was created in 1960, with the aim of ensuring the reliable transmission of electricity and steady cooperation between the republics. The energy systems of these regions are united into a single structure, which allows for parallel operation even when individual sections of the grid go down, meaning that if one part of the ring goes down, the other parts continue to function, improving reliability and efficiency. This system plays an important role in ensuring energy security and promoting cooperation and interaction. The creation and maintenance of any power system requires coordinated work by all participants. In the past, some countries temporarily withdrew from CAPS for various reasons, but in most cases, they sought to resume cooperation and their link to the “electricity ring.”   Blackout On January 25, 2022, consumers in the ring experienced a blackout. The lights went out almost instantly in the south of Kazakhstan (the city of Almaty, as well as Turkestan, Kyzylorda, Almaty and Zhambyl regions), in Kyrgyzstan (the cities of Bishkek and Osh and the Issyk-Kul region) and Uzbekistan (the city of Tashkent, the Fergana Valley and Syr Darya, Jizzakh, Samarkand, Navoi and Kashkadarya regions). The widespread power outage paralyzed transportation, shut down important social infrastructure, and spurred popular discontent in the three countries affected. The Kazakhstani pundit Petr Svoik, a former professional power engineer who ran a thermal power plant (TPP), described the blackout as an unprecedented event, noting, however, that the technology worked perfectly and that the sudden loss of 1,500 MW of electricity did not lead to any major consequences. The Kazakhstani energy system consists of two insufficiently connected parts – north and south. The north is actually a continuation of the Russian power system, part of the Russian “energy bridge” - though, of course, it also has importance for the whole of Kazakhstan - whilst the south is part of the Central Asian ring. Looking at the...

U.S. and Central Asia Further Trade, Economic and Investment Cooperation

The 15th meeting of the U.S.-Central Asia Trade and Investment Framework Agreement (TIFA) Council was held in Astana on 13 June. TIFA was signed in Washington in June 2004 by the United States, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan to expand international trade, attract foreign investment, and establish trade relations between Central Asian countries and Afghanistan. The US-Central Asian Trade and Investment Council was established within its framework. Reporting from Astana, the Kazakh Ministry of Trade and Integration, said that the agenda had covered prospects for diversifying trade and expanding investment cooperation. Representatives of the six countries also discussed the development of new trade routes to improve supply chain resilience and diversify the economy. During the event, Kazakh Deputy Prime Minister Serik Zhumangarin remarked, “As one of the major economies in the region and a WTO member, Kazakhstan recognizes the high potential offered by TIFA to strengthen not only bilateral but also regional trade relations. This year's meeting of the TIFA Central Asia Regional Council is further proof of the progressive development of regional cooperation and sustainability, which in turn, plays an important role in stabilizing world economy by connecting the global markets of both the West and the East.” U.S. Trade Representative Katherine Tai, emphasizing the need to coordinate joint efforts to ensure sustainable growth of TIFA economies, stated: “Central Asia remains a very important economic and strategic partner for the United States. We are also experiencing climate change and facing the consequences of technological and industrial progress. It is necessary to jointly develop traditional supply chains, the stability of which will ensure sustainable economic growth. The US is interested in improving the quality of trade, supplying critical metals for the production of cars and semiconductors.”    

PepsiCo to Build Snack Production Plant in Kazakhstan

PepsiCo has announced plans to build a full-scale new plant to produce salty snacks, including Lays crisps, in Kazakhstan’s Almaty region. Implementation of the project was discussed at a meeting between Kazakhstan Prime Minister Olzhas Bektenov and David Manzini, President of PepsiCo in Central Asia, Russia, Belarus, and Caucasus. According to the Kazakh prime minister’s press service, the project has already received $160 million in foreign investment. The plant, anticipated as the largest of its kind in Central Asia, is scheduled to open in 2026. Its original capacity of up to 16,000 tons of finished products per year, will increase to 21,000 tons from 2027, for distribution to both the Central Asian market and abroad. Up to a thousand people will be employed during the plant’s construction, with 350 skilled jobs created when it opens. David Manzini stated PepsiCo’s intention to use locally sourced raw materials. The conclusion of contracts with Kazakh farmers on the delivery of test batches of potatoes is ongoing but all going to plan, the company will purchase up to 50-66 thousand tons of potatoes in 2026-2030, and increase the volume in later years. Prime Minister Bektenov emphasized the importance of the project for the development of agriculture, increasing Kazakh farmers’ income and strengthening the economy. He mentioned that besides its positive impact the food industry and agribusiness, the plant will have a multiplier effect on related industries including transport, logistics, packaging, and processing of agricultural products.  

Kazakhstan’s Unexploited Potential of Deep Processing of Coal

During the 5th Coal Industry Forum at the 14th International Mining and Metallurgical Congress on 6-7 June in Astana, Yerzhan Yelekeyev, Chairman of the Management Board of Kazakh Invest, presented new investment opportunities to produce high-tech goods from Kazakh coal. Substantiating his claim that the coal chemistry industry has the means to help grow Kazakhstan’s chemical industry and developments in manufacturing, Yelekeyev stated: "Having an extensive resource base and an advantageous geographical location, we must realize the potential of the coal chemical industry. In total, more than 400 different products can be obtained by processing coal, the cost of which is 20-25 times higher than the cost of coal itself. With the deep processing of coal, it is possible to obtain products that cost 25-30 times more than raw materials. Currently, the share of coal products in Kazakhstan is 3%; an indicator of the low level of development of coal chemistry. The price of coal is lower and more stable than that of gas and oil. According to preliminary calculations, the unused potential is  worth $25 billion.” In his presentation on "Partnership of Kazakhstan and the European Union in the field of critical minerals,” Timur Izbasarov, Deputy Director of the Strategy Department at Kazakh Invest, added that according to the World Bank, Kazakhstan has over 5,000 undiscovered deposits valued at over 46 trillion US dollars, and hence, significant opportunities for investment and cooperation in the field waiting to be untapped.  

Chinese to Build Industrial Park and Bonded Warehouses in Kyrgyzstan

A memorandum of cooperation has been signed between the Ministry of Economy and Commerce of the Kyrgyz Republic and the Xinjiang Xing Long Corporation on the establishment of an industrial park in Kyrgyzstan and construction of bonded warehouses in the territories of both countries. The agreement was made during a visit by the Chinese company to Bishkek where delegates met with Deputy Minister of Economy and Commerce Nazarbek Malaev. The Chinese company has constructed innovative industrial parks in the city of Urumqi, Xinjiang, and owns the Xing Long Industrial Park in Urumqi spanning over 300,000 square meters and home to over 200 large and medium-sized companies. Deputy Minister Malaev welcomed the corporation’s plan to build an industrial park on the territory of Kyrgyzstan and pledged support for its to implementation. He also  expressed interest in pursuing joint industrial ventures in Kyrgyzstan.  

New Concept Announced for the Development of Oil Refining in Kazakhstan

The Ministry of Energy of Kazakhstan has drafted a new Concept for the development of the country’s oil refining industry until 2050. The aim of the initiative is to ensure the country's energy security including a stable balance of production, consumption, and reserves in the domestic market of petroleum products, as well as a 100% supply of the domestic market’s oil products and their future exports. The previous medium-term Comprehensive Oil-Refining Development Plan provided for the reconstruction and modernization of the capacities of the Atyrau, Pavlodar and Shymkent refineries from 14 million to 17 million tons of motor fuel per year for the domestic market. The new Concept defines the basic principles and target indicators for the sustainable development of the oil refining industry until 2050, taking into account regional and global challenges, in order to provide the economy with domestic petroleum products, export domestic petroleum products, and increase the industry’s contribution to the country’s GDP. The ultimate goal of the Concept is to ensure the competitiveness of Kazakhstan’s refineries through sustainable and advanced development, attracting investments and concentrating resources in response to modern regional and global challenges.