Power International negotiates agreement in Kazakhstan

The government of Kazakhstan has signed an exclusive agreement with Power International, a subsidiary of US-based CINergy, to develop and implement privatization programs for the Republic`s power industry. The goal of the agreement is to provide the republic with reliable, economic and environmentally clean electric power to support economic growth into the next century, according to Michael Mallinen, Power International managing director.

“This is one of the most progressive agreements in the history of the international energy industry,” Mallinen said. “One firm will develop an entire nation`s energy plan, privatize all of the assets which have been chosen for divestiture and have the opportunity to support the process as an active investor.”

Under the terms of the agreement, Power International will develop the national plan along with case-by-case privatization plans for individual generation, distribution and transmission facilities within the system, while acting as the exclusive agent for the government in selling and privatizing energy sector assets.

According to Vladimir Karmakov, Kazakhstan`s minister of Energy and Coal Industries, the “aggressive” plan was required to ensure a modern power industry to support planned economic growth. Financial terms of the plan have not been disclosed.

“We reviewed proposals from many western power industry developers,” Karmakov said. “We wanted to model our privatization efforts after those of other countries making the successful transition. Power International was one of the leading companies in developing a privatized power industry for the Czech Republic.”

The economy of Kazakhstan is in a transitional phase from a centrally planned economy to a market economy. The outlook is considered good because the country has large energy and mineral reserves and is politically and socially stable.

Kazakhstan, with a population of 17 million, became an independent republic in December 1991, and is led by Nursultan Nazarbaev–president since 1990.

Kazakhstan has attracted the largest investment commitment of any of the 15 former Soviet Republics. By the close of 1993, more than 220 foreign companies were operating there. Foreign investments are already in place to develop the republic`s oil industry, and the government is now committed to developing the power industry to encourage and support foreign investment in all sectors of its economy.

According to Mallinen, most of the country`s power stations will require capital projects to upgrade and modernize them, and a “significant” amount of new generation capacity will also be needed.