President of Kazakhstan instructed to reduce cost of electricity

Head of State, Nursultan Nazarbayev, held a meeting of the Security Council, at which issues related to the formation of effective tariffs for electricity and heat, as well as the activities of state bodies that control pricing in the energy services market, were discussed, the press service of Akorda informed.
Astana city08 November , 08:41

Opening the meeting, the Head of State informed the audience about the results of verification of tariffs for electricity and heat on part of the General Prosecutor's Office.

“Before we presented this year’s Address, we conducted a special survey among citizens to determine the most pressing problems. This sociological research showed that the high cost of utilities is in the first place. Therefore, the General Prosecutor's Office was instructed to carry out an inspection in this area. The results of the audit made it necessary to consider this issue at the meeting of the Security Council”, the President of Kazakhstan said.

Nursultan Nazarbayev emphasized that in the current Address a special instruction was given to restore order in the tariffs for housing and communal services and natural monopolies.

The Head of State dwelled on the implementation of the “Tariff in return for Investments” program and spoke about violations identified as a result of checking the quality of its implementation.

“With a specific purpose, at one time we adopted the “Tariff in return for Investments” program. Since 2009 for 7 years, it has allowed the monopolists to earn billions of money to modernize production. It was to improve the entire fund of generating capacity, we went for a twofold increase in tariffs. Instead of upgrading capacities with this money, large energy companies were illegally enriched at the expense of consumers, including premiums, bonuses to their employees, and unreasonably overestimated production costs”, the President of Kazakhstan said.

Nursultan Nazarbayev noted that the societal damage from such actions of energy transmission companies amounted to 14 billion tenge, illegal income of energy supplying companies - 15 billion tenge. The audit also revealed the inefficient use of subsidies allocated by local executive bodies to reduce tariffs.

“This state of affairs can arise for two reasons: either it is a conscious opposition to the President’s Address, or it is mismanagement that occurs as a result of irresponsibility and misunderstanding of its role. Both reasons I consider a crime. There is one example from the city of Kapchagai. For the period of the program, the tariff has doubled. Power wear increased from 53% to 77%. All violations became possible due to inaction and lack of control by the ministries of national economy, energy and local executive bodies”, the Head of State emphasized.

In addition, the President of Kazakhstan instructed to check the authorized state bodies for price collusion and corruption offenses in this area.

“Expenditures on housing and communal services, including payment for heat and electricity, occupy a significant share in total expenditures of the population. The higher the tariffs, the greater the burden on the family budget. The increase of tariffs mustn’t be carried out without a real economic justification”, Nursultan Nazarbayev said.

Further, in accordance with the agenda, the report of Prosecutor General K. Kozhamzharov was heard. During the meeting, heads of central and local executive bodies also spoke.

Taking into account the reports voiced at the meeting, Nursultan Nazarbayev gave a number of specific instructions.

In particular, the Head of State pointed the feeble work of the anti-monopoly committee of the Ministry of National Economy and instructed the Prime Minister to bring order to its work and assess the effectiveness of work at the level of all regional anti-monopoly agencies.

“The Ministry of Energy must be responsible for every tiyn paid by consumers. This money must work on the development of our economy. Taking the decision to raise tariffs each time, first of all, it is necessary to take into account the solvency of the population. A public discussion of all planned tariff changes is either not held at all or it is formal. It is necessary to change the existing mechanism, providing the wide involvement of the public, non-governmental organizations and the media”, the President of Kazakhstan instructed.

The Head of State pointed out the lack of an effective “feedback” system of the Committee for the Regulation of Natural Monopolies, Protection of Competition and Consumer Rights with Citizens.

Nursultan Nazarbayev also noted the need for measures by the Ministry of Energy to reduce the cost of electricity for the population.

The President of Kazakhstan demanded from the Government and the General Prosecutor's Office of the appropriate execution of all legal acts in relation to persons involved in the unreasonable overstatement of tariffs.

“Electricity and heat tariffs are only part of the problem. There are other monopoly companies. This applies to providing the population with water and gas supply, sewage, telephone and Internet services. The antimonopoly committee needs to sort out these issues as well”, the Head of State emphasized.

Nursultan Nazarbayev also commissioned a comprehensive analysis of targeted spending of funds allocated from the budget as subsidies.

“All these measures must not be a one-time action. I demand maximum publicity, regular reporting, effective activity of the competent state bodies. The population must be informed of the measures taken to return funds that have been illegally appropriated”, the President of Kazakhstan said.

In conclusion, the Head of State appealed to all managers and owners of energy supplying companies.

“The population should know: where, for what purpose money is spent. It is necessary to restructure work, to feel social responsibility, to be open and to earn the trust of people”, Nursultan Nazarbayev concluded.