Home 
Regions and Countries Regional Cooperation Central Asia Regional Economic Cooperation CAREC Program Priority Areas Energy
 | |
Energy
IssuesCentral Asia is abundantly endowed with energy resources. It also stands between two of the world's largest markets for energy: Europe to the west and Asia to the east. Following some badly needed improvements, such as extensive repair and expansion of the transport infrastructure, Central Asia could become an important regional market for trading, transport, and sales of energy. Within the region there is a sharply uneven distribution of energy resources in each country. This means that each republic has something the others need:
ChallengesApprehension on Energy TradeThe energy sector is a natural magnet for economic cooperation. But because of each government's post-independence apprehension of being dependent on outside sources for energy, agreements are not so easy. Generally, national policies so far have favored self-sufficiency and substitution even at the expense of trade and rationalization of energy use. The failure to move to new agreements, based on market realities, has left energy trade in a complex structure of state-to-state barter arrangements that are neither efficient nor able to effectively meet the changing needs of the countries. Infrastructure ConstraintsNational policies are not the only constraint on developing greater intra-regional trade. There are also the tremendous problems with the physical infrastructure, and slow economic growth. Physical infrastructure, such as new pipelines and electric transmission lines, as well as improved rail capacity and storage facilities, would be required in some cases to expand energy trade. These infrastructure projects are expensive, and detailed studies would be needed to determine whether they are feasible. In other cases, a coordinated program of rehabilitation and operation is necessary. Economic SlowdownEconomic contraction and the slow pace of economic growth in the region have had a negative impact on the ability of countries to pay for energy imports and this has slowed the development of energy trade. In addition, the countries have been unable to agree on acceptable prices for energy resources. Need for Efficiency in Production and Transportation Costs to CompeteIn the long run, production and transportation costs will have to be in line with world markets to keep the trade competitive. If the cost of producing and shipping Kyrgyz electricity to Xinjiang, for instance, is more than the cost for the PRC to build its own coal-fired electric plant in Xinjiang, then the PRC will have little interest in buying electricity from the Kyrgyz Republic. Similarly, Uzbekistan gas and Kazakhstan oil will need to be produced efficiently to compete in world markets. 
Opportunities for CooperationDespite these problems, there have been several favorable movements toward mutual solutions to meet respective energy needs. Supported by ADB, the Central Asian governments have set the rehabilitation and improvement of an interconnected electric power system in the region as a high priority. This system will provide the basis for expanding electricity production and export as well as stabilize electricity supplies throughout the region. Another potential project is the completion and renovation of the gas pipeline from Turkmenistan and Uzbekistan through the Kyrgyz Republic to Almaty in Kazakhstan. The project could eventually involve the transshipment of gas from Central Asia to East Asia. But before the massive investments needed for the longer-term project are considered, the policies and infrastructure within Central Asia towards energy sales and transshipments need to be improved. In November 2005, seven countries— Azerbaijan, People's Republic of China, Kazakhstan, Kyrgyz Republic, Mongolia, Tajikistan and Uzbekistan signed a memorandum of understanding establishing CAREC Members Electricity Regulators Forum (CMERF), a forum of electricity regulators in the Central Asia region. CMERF is designed to help members capitalize on their shared experiences as they seek to reform their power sectors and work towards closer cooperation in meeting power demand in the region and facilitating power exports. Energy Sector ReportsSector Report Update on Energy: Projects and Studies Supported by IFIsThe report [ PDF ] contains projects and studies supported by international financial institutions (IFIs) in CAREC member countries in the energy sector. Electric EnergyThis report is a product of a regional technical assistance (RETA) 5818 (Phase II): Regional Economic Co-operation in Central Asia. It discusses the current electricity pool of Central Asia, particularly for Kazakhstan, Kyrgyz Republic, Tajikistan and Uzbekistan. It proposes project for the rehabilitation and uprating of the Central Asia power system operation.
The Study on Water and Energy Nexus in Central AsiaThis study provides an analytical basis for the Asian Development Bank (ADB) to formulate a regional strategy of timely assistance in the Aral Sea Basin of Central Asia. It focuses on the inter-linkage between water use management and energy trade with an action plan for the short to medium-term (1-3 years).
|
|
| © 2009 Asian Development Bank Privacy | Terms of Use |
 Top of page |
