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- Love will come by wire: The West is concerned about the creation of a single energy market in Central Asia
Love will come by wire: The West is concerned about the creation of a single energy market in Central Asia
The construction of a unified energy space is beginning in Central Asia. Over the next 10 years, they plan to launch the first regional electricity market there. The program, worth over $1 billion, was supported by the World Bank. However, the Eurasian Economic Union, within the framework of the EAEU, had previously announced plans to launch its own common electricity market by 2027. Details can be found in the Izvestia article.
Entering the Central Asian market
The World Bank has approved the 10-year program "Development of the Electricity Market and Integration of Energy Systems in Central Asia" (REMIT). It aims to use the complementary energy resources of the region, including hydropower in Kyrgyzstan and Tajikistan, electricity generation from thermal power plants in Uzbekistan, Kazakhstan and Turkmenistan, as well as the potential of solar and wind energy in all Central Asian states.
The World Bank Building in Washington
The World Bank report notes that "strengthening regional energy integration will create a more balanced and sustainable energy system, reduce power outages and reduce energy costs for households and businesses."
According to the bank, electricity trade in the region currently accounts for 3% of total demand, with about 4% more coming from renewable energy sources. "Although the region has rich and complementary clean energy resources, they are still not being fully utilized," the publication notes.
The total estimated amount of REMIT financing will be $1 billion. The investments will contribute to job creation in the construction of energy infrastructure and in the management of energy markets, market development and launch, digitalization of energy systems, modernization of transmission networks and strengthening of regional institutions.
According to the World Bank's idea, the REMIT program will increase the volume of electricity trade to at least 15,000 GWh per year, which should be enough to meet the annual needs of the region. In addition, it is planned that the program will help triple the capacity of power transmission lines to 16 GW.
The World Bank's Director for Central Asia, Naji Benhasin, believes that by 2050, deepening energy integration and developing electricity trade could bring up to $15 billion in economic benefits to the region.
The implementation of the program consists of three phases. Within the framework of the first of them, Uzbekistan, Kyrgyzstan and Tajikistan, together with the coordination and dispatch center of the Central Asian countries Energia, will receive grants and concessional financing in the amount of $143.2 million.
Of these, $140 million will come from the International Development Association of the World Bank and $3.2 million in grants from the Water and Energy Program for Central Asia (CAWEP, which the World Bank manages in partnership with the European Union, Switzerland and the United Kingdom).
The regional steering committee of the program will include the Ministries of Energy of the Central Asian countries and their executive agencies.
The Unified energy market of the EAEU
At the same time, large-scale work is underway to create a single energy market within the EAEU, which is planned to be launched in 2027. To do this, member countries, including Russia, Belarus, Armenia, Kazakhstan and Kyrgyzstan, need to approve a large package of documents. According to Arzybek Kozhoshev, Minister of Energy and Infrastructure of the Eurasian Economic Commission, over the past few years, the parties have adopted four key rules governing capacity allocation and access to the grid.
But there are also obstacles: given that most of the power plants in Central Asia run on gas, it is impossible to launch the electricity market without synchronizing with the oil and gas markets. Currently, the Eurasian Economic Commission is actively working on this issue with relevant agencies and businesses.
Meanwhile, Western countries, together with international financial institutions, are trying to use the topic of energy in Central Asian countries to advance their interests and turn it into an instrument of geopolitical influence. Thus, they seek to introduce regulatory mechanisms in order to try to distance the region from Russia.
Western states are trying to implement similar plans through the construction of the Kambartinskaya HPP-1, which involves Kyrgyzstan, Uzbekistan and Kazakhstan. The Coordinating Donor Committee, which includes the World Bank, the OPEC Fund, the Asian Development Bank, the Islamic Development Bank, and the European Bank for Reconstruction and Development. It is expected that these structures will invest their funds in the construction of the $4 billion project.
One thing doesn't hurt the other
In an interview with Izvestia, Rustam Burnashev, a security specialist in Central Asia, believes that there are no contradictions and the World Bank's plans with its program do not overlap with those of the Eurasian Economic Union (EAEU).
— A single energy ring in Central Asia has existed since Soviet times. After that, due to the inconsistency of national positions, its activities and the formation of a single energy market were suspended," the expert explained.
According to the political scientist, now we are talking about a broader format than the energy ring.
— In principle, this is a regional project that can be funded and supported by external participants, but in fact it is a regional project. I don't see any contradiction with the EAEU in this case, because almost all Central Asian countries cooperate with the EU in one way or another," the expert noted.
He also added that Uzbekistan and Tajikistan, which are not members of the EAEU, are involved in regional projects in one way or another.
— Uzbekistan is an observer in the EAEU, so I don't see a problem, because there are relevant regional projects that may, to a certain extent, contradict the EAEU guidelines, but in fact they are not, they are working normally, — said the source.
The analyst cites as an example the free trade zones between Kazakhstan and Uzbekistan and the transit of natural gas from Russia to Uzbekistan through Kazakhstan.
"Everything is being implemented quite normally, so I don't see any contradictions here," Burnashev summed up.
The West is flirting with the region
Kazakh economist and energy scientist Peter Svoik sees the EAEU initiative and the creation of a common market of three major joint markets — energy resources (oil and gas market), fuel (oil and gas products market) and electricity — as a fundamentally new economic stage.
"The geopolitical significance of this step will be huge, perhaps even greater than when the EAEU itself was created," the expert believes.
In his opinion, the energy market is vital for all the member countries of the association.
"It has a huge foreign economic and foreign policy component, it is a different level of the economy," the expert believes.
In turn, Elena Panina, director of the RUSSTRAT Institute for International Political and Economic Strategies, notes that the West is actively "flirting with Central Asia."
"What we are witnessing now in the post—Soviet space and along the perimeter of its borders are attempts to build a large arc around Russia, from the Baltic States to Mongolia, in order to lock up Russia in a strategic sense and strangle it," the political scientist believes.
According to the expert, risks for Russia exist not only in Ukraine.
"A hypothetical transition of Central Asia and Transcaucasia under the control of the Anglo-Saxons would provide Russia with major problems for the next 50-100 years," the expert is sure.
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