Electricity prices to soar in Kazakhstan

A new tariff cap for electricity is going to be adopted in Kazakhstan on July 1. The price increase is estimated to be from 3% to 25% for certain power stations, according to the rule signed by the minister of energy.

The document says that there are 47 groups of electricity producers that sell the power in Kazakhstan. The new rule makes the tariff cap for 26 such groups higher while it doesn’t hit the other 21 groups of electricity producers. However, the ministry has a detailed tariff plan for each power station up until 2025.

The tariff for group No.2 is going to be increased from $0.012 to $0.014 (+10.4%) starting next month. For the 17th group, the increase is going to be bigger: from $0.027 to $0.032 (+17.7%).

According to the Ministry of Energy, the new rule is driven by 26 electricity-producing entities that had been asking the government to review the tariff caps. They argued that the old tariff couldn’t cover all their expenses. For example, coal price is going to be raised from $4.91 to $5.25 per ton (+7%) in August. An additional 5% price increase for coal is expected to happen in October, then in November (+5%) and December (+5%). As a result, the coal price is going to be raised by 30% to $6.39 per ton by the end of the year.

Another electricity price driver is the cost of railway transportation. In 2020, this type of transportation got more expensive (+5%). Moreover, commercial-grade gas for electricity producers will become more expensive in July (+15%).

On top of these reasons, electricity producers all over the county were obliged to raise salaries for their personnel due to the order of President Kassym-Jomart Tokayev.

In June, the Committee on the Regulation of Natural Monopolies reported lowered tariffs in seven regions. The move was based on an examination of the activity of natural monopolies.

Last year was quite tough for the electricity production sector in Kazakhstan: the sharp spike in the digital mining industry in Kazakhstan turned a burden on the national power grid system. In response, the industry has started to raise tariffs and salaries for its workers.