The performance audit of the implementation of the state policy in the electric power sector has been completed in Kazakhstan. The results were reviewed at a meeting of the Supreme Audit Chamber headed by the chairman Alikhan Smailov.

The audit covered the Ministry of Energy, JSC "Samruk Energy," JSC "KEGOC," JSC "Kazakhstan Electricity and Power Market Operator," LLP "Settlement and Financial Center for Support of Renewable Energy Sources" and others.

According to the Ministry of Energy, Kazakhstan has 233 power plants generating electricity. Thermal power plants account for 78% of the country's electricity needs. There is a positive trend in the growth of electricity production by gas turbine power plants, whose share has reached 9.6%. Hydropower plants contribute about 8.5% to total generation, while renewable energy sources account for approximately 3.9%.

As noted in the audit report of the Supreme Audit Chamber, energy generation and consumption are not locally balanced across regions. Most generation capacity is concentrated in the northern energy zone, while a quarter of total consumption occurs in the south. Overall, only Pavlodar, East Kazakhstan, and North Kazakhstan regions can be considered self-sufficient.

One of the main problems in the electric power sector is the failure to implement plans and measures which were stipulated for its development. In particular, those aimed at ensuring transparency of tariff policy, modernization of assets, etc. The electric power industry still depends on external supplies of equipment.

The growth in electricity consumption in the republic is taking place against the backdrop of the continuing deterioration of generating stations, many of which have been in operation since Soviet times. Over the years, their productivity has been declining, and the risks of accidents are growing. In general, the overall wear rate for all generating capacities in the Republic of Kazakhstan is 55%. The same indicator for power supply networks reaches 76%.

High wear rate of fixed assets in energy producing organizations creates risks for the stability of energy supply and requires significant investments in the modernization of the industry.

The program documents adopted in 2024 (National Project “Modernization of the Energy and Utilities Sectors”, National Infrastructure Plan of the Republic of Kazakhstan until 2029) provide for measures to reduce the deterioration of generating capacities, mainly due to the commissioning of new additional energy capacities. At the same time, the issue of replacing the existing worn-out equipment of energy-producing organizations is not being resolved.

The personnel shortage is growing: the industry lacks about 4.5 thousand power engineers. The main reasons are the lack of interest of young people in the profession of power engineer and low salaries.

“All this hinders the modernization of existing and construction of new capacities, and the retention of qualified personnel,” — indicates Supreme Audit Chamber’s report.

The Ministry of Energy does not have a function to monitor the costs of production and sale of electricity, which affects the validity of maximum tariffs for energy companies.

The audit found certain shortcomings in maximum tariffs for electricity, tariffs for capacity and tariffs on the balancing market. Tariffs for power plants are approved without public hearings, and estimates and reports on their implementation are not published.

JSC " Kazakhstan Electricity and Power Market Operator " ("KOREM") has been appointed as a settlement center for the purchase and sale of balancing electricity. However, these operations are carried out automatically through software that has not passed information security tests and has not been put into commercial operation.

The tariffs on the balancing market are approved based on formulas that create conditions for a selective and subjective approach when choosing certain values. As a result, the tariff was overstated by 34.7 billion tenge, which was ultimately paid by consumers.

The non-transparent calculations of imbalances and penalties in the balancing market are of serious concern. The formulas contain complex and unclear parameters, which makes forecasting difficult when submitting applications for balancing.

There is an increase in providers in the electricity market. Currently, there are 18 legal entities among them.

The cost of providers' services is not regulated, the volumes and prices of supplied electricity are based on contractual relationships. This creates conditions for concealing the real volumes of electricity consumption and generation, which leads to insufficient transparency in the market.

In 2024 alone, providers, bypassing market operators – LLP "Settlement and Financial Center" and JSC "KOREM", purchased from 187 organizations and sold electricity worth 13.7 billion kWh (approximately worth more than 200 billion tenge).

In addition, there are facts of miners purchasing electricity from third-party companies through a balancing supplier, bypassing the Single Purchaser - LLP "Settlement and Financial Center". The total volume of energy purchased by them in 2024 alone amounted to 901 million kWh (approximately worth more than 13 billion tenge).

During the meeting, the Chairman of the Supreme Audit Chamber, Alikhan Smailov, placed special emphasis on this.

"First of all, the Ministry of Energy should monitor production volumes, consumption and actual tariffs. Now it turns out that miners consume, according to audit data, up to 1 billion kilowatt-hours of electricity purchased bypassing the Single Purchaser. “How can we allow uncontrolled energy consumption by miners in conditions of its shortage?” Alikhan Smailov addressed representatives of the Ministry of Energy of the Republic of Kazakhstan.

In response, the Ministry’s specialists indicated that the necessary licensing and operating mechanisms for miners have been developed.

"Licensing is one thing. However, they buy energy through providers at unregulated prices. And these costs fall on all consumers. The problem is gaining momentum. There are more and more balance providers. It is profitable to make money out of thin air at the expense of the entire people. It turns out that you allow this. You allow this trend and do not implement effective control mechanisms,” — the Chairman of the Supreme Audit Chamber pointed out the problem.

Lack of proper control, insufficient market research and improper marketing research by designers led to the fact that contractors supplied JSC “KEGOC” with equipment for 4 projects that was 2-3 times more expensive, for a total of 2.2 billion tenge.

Over the past 10 years, only 4 new projects have been implemented by the JSC "Samruk Energy" group. This casts doubt on the success of plans to launch 25 projects in the next 10 years, as established by the Development Strategy adopted in 2024.

Inefficient expenses of JSC "Samruk Energy" on suspended projects amounted to 199 billion tenge.

Overall, the state audit revealed:

• financial violations – 66 million tenge;
• ineffective planning of budget funds – 9.5 billion tenge;
• ineffective use of funds and assets – 104.7 billion tenge.

72 procedural violations and 35 systemic deficiencies were recorded.

Source : https://www.gov.kz/memleket/entities/esep/press/news/details/994125?lang=kk