Kazakhstan Power Report Q1 2008

The new Kazakhstan Power Report from BMI forecasts that the country will account for 4.28% of Central and Eastern European (CEE) regional power generation by 2011. BMI's CEE power generation estimate for 2006 is 2,006 terawatt hours (twh), representing an increase of 4.00% over the previous year.

We are forecasting an increase in regional generation to 2,451twh by 2011, representing a rise of 22.14%.

CEE thermal power generation in 2006 is estimated by BMI at 1,247twh, accounting for 62.23% of the total electricity supplied in the region. Our forecast for 2011 is 1,527twh, implying 22.54% growth that raises the market share of thermal generation to 62.32% - in spite of environmental concerns that should be promoting renewables, hydro-electricity and nuclear generation. Kazakhstan's thermal generation in 2006 is estimated at 61.7twh, or 4.95% of the regional total. By 2011, the country is expected to account for 5.62% of thermal generation.

For Kazakhstan, coal is the dominant fuel, accounting for 49.2% of primary energy demand (PED), followed by gas at 30.2%, oil at 17.6% and hydro with a 3.0% share of PED. Regional energy demand is forecast to reach 1,724mn toe by 2011, representing 19.8% growth over the period. Kazakhstan's estimated 2006 market share of 4.19% is set to rise to 5.12% by 2011. Kazakhstan has longer-term plans for nuclear power generation, but will not contribute to nuclear consumption during the forecast period.

Kazakhstan's overall business environment can be considered highly attractive in a regional context, with moderate long-term political risk, complemented by below-average long-term economic risk. Its strongest suit is the growth potential of its electricity consumption and generating-capacity. It also scores highly for a low level of energy import dependency, but is let down by only moderate progress in deregulation and privatisation. In the BMI Business Environment Ranking matrix, Kazakhstan this quarter receives a composite score of 35, which ranks the country equal first out of nine states included in the CEE region, alongside Poland.

BMI is now forecasting Kazakh real GDP growth averaging 9.58% per annum between 2006 and 2011, although in 2007's forecast is 8.8%. Population is expected to contract from 14.8mn to 14.7mn over the period, but GDP per capita and electricity consumption per capita are forecast to increase significantly.

The country's power consumption is expected to increase from an estimated 63.4twh in 2006 to 95.5twh by the end of the forecast period, providing theoretical exports rising from 8.3twh in 2006 to 9.4twh in 2011, assuming 7.5% annual growth in generating-capacity.