BMI's Executive Summary

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The new Kazakhstan Power Report from BMI forecasts that the country will account for 4.41% of Central and Eastern European (CEE) regional power generation by 2011. BMI's CEE power generation estimate for 2006 is 1,995 terawatt hours (twh), representing an increase of 3.39% over the previous year. We are forecasting an increase in regional generation to 2,398twh by 2011, representing a rise of 19.4%.

CEE thermal power generation in 2006 is estimated by BMI at 1,230twh, accounting for 61.6% of the total electricity supplied in the region. Our forecast for 2011 is 1,440twh, implying 17.1% growth that reduces the market share of thermal generation to 60% – in spite of environmental concerns that should be promoting renewables, hydro-electricity and nuclear generation. Kazakhstan's thermal generation in 2006 is estimated at 59twh, or 4.80% of the regional total. By 2011, the country is expected to account for 5.76% of thermal generation.

For Kazakhstan, coal is the dominant fuel, accounting for 49.3% of primary energy demand (PED), followed by gas at 29.0%, oil at 18.1% and hydro with a 3.6% share of PED. Regional energy demand is forecast to reach 1,676mn toe by 2011, representing 18.1% growth over the period. Kazakhstan's estimated 2006 market share of 4.18% is set to rise to 5.08% 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 attractive in a regional context, with moderate long-term economic risk, offset by high long-term political 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 relatively limited progress in deregulation and privatisation. In the BMI Business Environment Ranking matrix, Kazakhstan receives a composite score of 33, which ranks the country equal second out of nine states included in the CEE region, alongside Hungary.

BMI is forecasting Kazakh real GDP growth averaging 9.5% per annum between 2006 and 2011, although this year's forecast is 9.9%. 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 last year to 95.5twh by the end of the forecast period, providing theoretical exports rising from 8.6twh in 2006 to 10.3twh in 2011, assuming 7.6% annual growth in generating-capacity.