Kazakhstan Power Report Q2 2008

The new Kazakhstan Power Report from BMI forecasts that the country will account for 4.48% of Central and Eastern European (CEE) regional power generation by 2012. BMI's CEE power generation estimate for 2007 is 2,083 terawatt hours (twh), representing an increase of 3.84% over the previous year.

We are forecasting a rise in regional generation to 2,538twh by 2012, representing an increase of 26.49%.

CEE thermal power generation in 2007 is estimated by BMI at 1,293twh, accounting for 62.1% of the total electricity supplied in the region. Our forecast for 2012 is 1,577twh, implying 22.6% growth that leaves unchanged the market share of thermal generation to 62.1% - in spite of environmental concerns that should be promoting renewables, hydro-electricity and nuclear generation. Kazakhstan's thermal generation in 2007 is estimated at 66.2twh, or 5.12% of the regional total. By 2012, the country is expected to account for 5.95% 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. CEE regional energy demand is forecast to reach 1,723mn tonnes of oil equivalent (toe) by 2012, representing 24.5% growth over the period. Kazakhstan's estimated 2007 market share of 4.51% is set to rise to 5.55% by 2012.

Kazakhstan has longer-term plans for nuclear power generation, but will not contribute to nuclear consumption during the forecast period.

Kazakhstan is ranked third, comfortably above Russia and Turkey in BMI's newly revised Power Business Environment rating, thanks to its unrivalled power consumption growth outlook, region-topping energy demand growth, privatisation progress and relatively low level of energy import dependence.

Country risk factors offset some of the industry strengths, but the country has the long-term potential to challenge Poland and Romania for the top rungs on the ladder.

BMI is forecasting Kazakh real GDP growth averaging 9.46% per annum between 2006 and 2012, although the 2008 forecast is 8.0%. Population is expected to expand from 14.8mn to 14.9mn over the period, and 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 68.5twh in 2007 to 101twh by the end of the forecast period, providing theoretical exports rising from 8.3twh in 2006 to 12.8twh in 2012, assuming 7.7% annual growth in generating-capacity.