Kazakhstan to Pass Its Two Hydro Power Plants Over to Foreign Investors

This deal is going to be signed on special terms for buyers

The government has decided to sell Ust-Kamenogorsk and Shulba hydro-electric power stations to a consortium of investors from Kazakhstan and Abu Dhabi. The deal is a part of a $6 billion investment contract. Investors have agreed to make both stations private and to build new energy facilities in the country.

The acquisition of the largest hydropower stations in the East Kazakhstan region was supposed to take place in May. However, the signing of a contract is scheduled for December 1, according to the website of the Committee on State Property and Privatization.

«Both stations are going through an assessment by an independent auditor in accordance with the best practices adopted across the globe. This work hasn’t been done yet; therefore, we have no final information on the hydropower stations’ assessment,» said Bakytbek Tashenev, head of the committee while responding to the Kursiv edition’s inquiry.

As the official noted his agency has never discussed the acquisition of the stations by other companies.

«As of October 14, there were no offerings from other companies,» he said.

On October 8, Kazakhstan’s Prime Minister Askar Mamin signed a draft declaration by the governments of Kazakhstan and the United Arab Emirates. According to the document, “both sides recognize that the government of Kazakhstan is going to sell 100% of its shares in Ust-Kamenogorsk and Shulba hydro-electric power stations to the consortium of investors from Kazakhstan and Abu Dhabi.”

On October 11 this declaration was signed by the two countries. The document also includes an intention to build a counter regulator between Shulba and Bulak hydropower stations. This project was designed in Soviet times but never realized. Now, international investors agreed to build it once a feasibility study is prepared.

In addition to a bunch of preferences Kazakhstan offers any foreign investor, the agreement with investors from the Kazakhstani-Abu Dhabi consortium includes some exclusive terms. For example, the consortium will receive a right to buy any amount of available electricity from both stations for its purpose and will keep this right until the end of 2025. After that, the consortium will be able to consume up to 50% of the electricity which is produced by Shulba and Ust-Kamenogorsk power stations.

The last foreign investor interested in these stations was AES corporation from the U.S., which had owned those companies for over 20 years (from 1997 to 2017) and invested about $1.2 billion in them. However, because of several changes that had been introduced into Kazakhstan’s legislation, AES couldn’t sell electricity through broker companies it created. The company tried to sue Kazakhstan through international court but failed.

Some of Kazakhstan’s politicians, including Sergey Reshetnikov from Mazhilis, have also criticized the sale. The deputy insists that once both stations are in the hand of investors, they would start to change pricing policy for their own benefit and the locals would suffer.

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