Kazakhstan eyes digital tenge for energy upgrades

Kazakhstan’s government is exploring the use of the digital tenge to improve transparency in spending on energy and utility sector projects, according to a statement from the cabinet.

«Prime Minister Olzhas Bektenov chaired a meeting to discuss the implementation of the President’s directive to modernize the country’s housing and utilities sector. The plans aim to reduce the wear and tear on critical infrastructure: in heat supply from 53% to 40%, in electricity supply from 62% to 45%, in water supply from 39% to 34% and in water disposal from 54% to 40%. By 2029, 6.8 trillion tenge (approximately $13 billion) will be allocated for these efforts. The use of digital tenge to ensure transparency in spending is under consideration,» the cabinet said in a statement.

The national project to modernize the energy and utility sectors focuses on reducing accidents and minimizing wear and tear on infrastructure while enhancing the reliability and quality of public services for residents. As part of the project, 15 new power plants, with a combined capacity of 5,259 megawatts (MW), are set to be launched. Additionally, 14 existing power plants will undergo overhauls. As a result, total capacity is expected to increase by 7.3 gigawatts (GW), and depreciation is projected to decrease by an average of 15%. Furthermore, plans include the modernization of 86,000 kilometers of utility networks. The government will prioritize repairs in regions where network wear and tear exceeds 65%.

Additionally, the project plans to construct 27 new production facilities, which will help stimulate the development of related economic sectors such as metallurgy and manufacturing. This initiative is expected to reduce Kazakhstan’s reliance on imports and create new jobs.

In July, analysts from Halyk Finance highlighted that Kazakhstani banks should begin preparing for the potential loss of a portion of individual deposits following the introduction of the digital tenge and the rise of new fintech companies integrating their systems with this digital currency. Nonetheless, digital currencies continue to face skepticism from both businesses and the public, not only in Kazakhstan but worldwide.

In November 2023, Kazakhstan launched the first phase of implementing the digital tenge (DT), a new form of currency. The DT is issued as unique digital tokens stored in specialized electronic wallets. It is intended to complement, rather than replace, traditional money, offering an additional option for transactions.

Four banks — Eurasian Bank, Bank CenterCredit, Halyk Bank and Altyn Bank — have introduced digital account-linked cards. In early 2024, the International Monetary Fund (IMF) recommended that the National Bank of Kazakhstan conduct a more detailed analysis of the demand for the digital tenge to ensure its smooth operation, particularly in stress scenarios.

According to Ruslan Konurbayev, a business analyst from the Digital Tenge project, discussions in July 2023 explored the potential use of the DT platform in government procurement, cross-border transfers, leasing, mortgages, offline payments and exchanging DT for other assets, including cryptocurrency and conventional foreign exchange. He expressed confidence that Kazakhstanis would have strong incentives to adopt DT in the future.

A fully developed DT platform is expected to be ready by the end of 2025, with all planned services officially launched by that time.