VZCZCXRO1117
RR RUEHAST RUEHBI RUEHCI RUEHDBU RUEHLH RUEHLN RUEHNEH RUEHPW RUEHSK
RUEHVK RUEHYG
DE RUEHNT #1904/01 3011243
ZNR UUUUU ZZH
R 281242Z OCT 09
FM AMEMBASSY TASHKENT
TO RUEHC/SECSTATE WASHDC 1459
INFO ALL SOUTH AND CENTRAL ASIA COLLECTIVE
CIS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SECTION 01 OF 04 TASHKENT 001904 
 
SENSITIVE 
SIPDIS 
DEPARTMENT FOR SCA/CEN, SCA/FO ROBERT DEUTSCH 
 
E.O. 12958: N/A 
TAGS: ECON ENRG KPWR UZ
SUBJECT: UZBEKISTAN IN OR OUT OF THE CENTRAL ASIAN ENERGY GRID? 
 
REF: 08 TASHKENT 1425; 09 DUSHANBE 121; 09 DUSHANBE 224 
09 ASTANA 1620; 08 TASHKENT 1052 
 
TASHKENT 00001904  001.2 OF 004 
 
 
¶1. (SBU) SUMMARY.  In recent weeks GOU officials have sent 
frightening signals to Uzbekistan's neighbors by saying that the 
country cannot guarantee reliable transit of power, wants payments 
for power overflows, and may even withdraw from the United Central 
Asia Power System (CAPS).  Now nearly energy independent, 
Uzbekistan appears to have decided that this is the time to flex 
its muscle and reap greater benefit from its location and key role 
in CAPS.  Although near-term withdrawal from CAPS is unlikely, the 
coming winter could be another cold and dark one for Tajikistan and 
Kyrgyzstan as Uzbekistan increases fees for transit and 
occasionally interrupts power for "technical" reasons.  END SUMMARY 
 
 
 
CAPS:  WHAT IS IT? 
 
------------------ 
 
 
 
¶2. (SBU) The United Central Asia Power System (CAPS) was developed 
in Soviet times to integrate the power generation and distribution 
infrastructure for the Central Asian Region (CAR).  Uzbekistan, 
Kyrgyzstan, and Tajikistan were the core members of this regional 
power transmission grid, which also included the transmission 
systems of southern Kazakhstan and portions of Turkmenistan. 
Uzbekistan generated 51 percent of the grid's power, followed by 
Tajikistan at 15 percent, Kyrgyzstan at 14 percent, Turkmenistan at 
11 percent, and southern Kazakhstan at 9 percent.  (NOTE: 
Kazakhstan, due to its geography, was connected to the Siberian 
Power System in the north and to CAPS in the south, with only 
limited connection between the two.)  Tajikistan and Kyrgyzstan 
generated electricity mainly in the summers via hydro-power and 
imported electricity during the winter consumption peaks.  Southern 
Kazakhstan was always a net importer of electricity, mainly from 
Uzbekistan. 
 
 
 
¶3. (SBU) CAPS was an advanced solution for its time.  It ensured 
reliable, stable, balanced, and harmonized power sharing between 
the republics by using one united and self-balanced 500kV 
transmission ring.  It was designed and built without consideration 
of the administrative borders between the republics, and it was 
coordinated directly by a dispatch center in Moscow. 
 
 
 
¶4. (SBU) After 1991 all CA states except Turkmenistan agreed to 
maintain this system under the direction of the Coordination Power 
Council of Central Asia (CPCCA).  The Council is chaired on a 
rotating basis by the energy ministers of the member states.  The 
technical operation of CAPS is provided by the Coordination 
Dispatch Center (CDC), which works under the direction of CPCCA and 
is located in Tashkent.  CDC is responsible for maintaining the 
balanced and synchronized operation of the 500 kV and 220 kV 
transmission systems of the four Central Asian states. 
 
 
 
¶5. (SBU) Although it is almost impossible to control the timing and 
location of so-called overflows of electrical power in member 
countries, CAPS does have a limited ability to anticipate these 
events.  It also has the ability to regulate the operation of the 
Naryn-Syrdarya and Amurdarya cascades.  The CA governments agree on 
the actual volumes of power swaps on an annual basis through 
bilateral negotiations. 
 
 
 
CAPS:  THE BILATERAL COMPONENT 
 
------------------------------ 
 
 
 
¶6. (SBU) The bilateral agreements between Uzbekistan and Kyrgyzstan 
are based mainly on energy swaps.  Kyrgyzstan generates almost all 
 
TASHKENT 00001904  002.2 OF 004 
 
 
of its power from hydroelectric plants located in the Naryn River 
basin, which is also an important source of water for Uzbekistan's 
eastern provinces and for Kazakhstan.  Historically, in summer 
Kyrgyzstan produced more power than it needed because it released 
water for the irrigation needs of its neighbors, to whom it also 
exported its surplus power.  In winter it released only small 
amounts of water and thus needed to import electricity and gas from 
Uzbekistan and Kazakhstan. 
 
 
 
¶7. (SBU) This balance began to fail after 2000.  Uzbekistan and 
Kyrgyzstan generated a long list of mutual charges of 
infringements.  Several times Uzbekistan suspended gas supplies to 
Kyrgyzstan due to Kyrgyz debts, and Kyrgyzstan, in response, began 
to generate power in the winter, releasing water and creating 
floods in Uzbekistan and Kazakhstan.  Kyrgyzstan also began urging 
its neighbors to buy its excess electricity at low rates (4 cents 
per 1kWh).  The political will for compromise was lacking in both 
countries.  Instead, Uzbekistan built a new 169 km, 500kV line from 
the Novo-Angren power plant to the Fergana Valley, thereby making 
it fully independent of power imports from Kyrgyzstan.  Kyrgyzstan 
in turn announced plans to build two new power plants on the Naryn 
River (Kambarata 1 and 2), which would give it even greater power 
to regulate water releases to downstream Uzbekistan.  Kyrgyz 
national electrical grid operator NESK recently signed a memorandum 
of understanding with the Chinese company TBEA to build "Datka" 
hub-station in southern Kyrgyzstan, and construction of 500kV lines 
to the north and south of the country, which will allow Kyrgyzstan 
to transmit power independently on its territory by avoiding 
Uzbekistan's transmission grid. 
 
 
 
¶8. (SBU) Tajikistan also relies on hydro-power.  Like Kyrgyzstan, 
Tajikistan exports excess power in summer and imports it in winter. 
Because of its limited generation capacity, however, Tajikistan is 
a net importer of electricity.  In 2008 the country exported about 
1 billion kWh and imported 3.25 billion kWh.  The country has two 
separate electrical networks, the northern and southern grids, and 
energy passing between the two must transit the Uzbek network. 
Next year, however, the "South-North" transmission line, a 
four-year project funded by the Export-Import Bank of China that 
will link the two grids, is due to be completed. 
 
 
 
¶9. (SBU) Even with the South-North line, Tajikistan remains heavily 
dependent on winter energy imports.  According to bilateral 
arrangement, Uzbekistan has agreed to supply 600 million kWh to 
Tajikistan in winter in exchange for imports of 900 million kWh in 
summer.  This summer Tashkent declined to accept some of 
Tajikistan's energy, claiming it had adequate capacity, leaving 
open the possibility that it may decline to send Tajikistan energy 
in the winter under the swap arrangement.  Under a separate 
agreement, Turkmenistan provides an additional 1.2 billion kWh to 
Tajikistan in winter.  This electricity passes through the Uzbek 
grid in exchange for transit fees (refs B and C). 
 
 
 
¶10. (SBU) These arrangements with Tajikistan have also been 
problematic.  The Uzbek power system suspended its supply to 
Tajikistan during the anomalously cold winter of 2007-08.  It did 
the same in the winter of 2008-09, when it also refused to allow 
the transit of most of the Turkmen electricity until winter was 
almost over.  In both cases Uzbekistan explained the disruption as 
being due to "technical problems." 
 
 
 
¶11. (SBU) Tajikistan continues to dream of completing the Rogun 
hydro-plant that remains unfinished from Soviet days.  In 2008 
President Rakhmon is reputed to have said, "I will bring Uzbekistan 
to its knees" (ref E).  Uzbekistan has officially denounced Tajik 
plans, which Uzbekistan claims will lead to water shortages in 
downstream countries.  At the same time, before the end of the year 
Uzbekistan expects to complete its new Guzar-Surkhan 500kV power 
line that connects its southern regions with the core power grid 
without crossing Tajik territory (ref A).  This development does 
not bode well for Tajikistan in the coming winter of 2009-10. 
 
TASHKENT 00001904  003 OF 004 
 
 
¶12. (SBU) For their part, Tajik officials have publicly pronounced 
that they are prepared to weather the winter with no electricity 
imports.  They say additional energy from the recently-completed 
670 MW Sangtuda-1 hydropower station will help overcome other 
deficits.  Given Sangtuda's relatively modest size, few believe 
Tajikistan can make it through the winter on domestic supplies 
alone without serious rationing.  The recent visit of President 
Rahmon to Turkmenistan suggests that the Tajik leadership is eager 
to secure power from Ashgabat. 
 
 
 
AS CAPS EVOLVES 
 
--------------- 
 
 
 
¶13. (SBU) It is clear that CAPS is in transition from a unified 
regional power grid to a combination of separate national power 
systems.  Turkmenistan removed itself from CAPS ten years ago, 
connecting instead to the South Caspian power grid.  Kazakhstan 
recently completed construction of a second North-South 500kV line 
that serves as an interconnection between the Siberian Power System 
and CAPS, and President Nazarbayev used the occasion to declare 
that Kazakhstan has "become fully independent from all other 
exporters" and would no longer need to depend on its southern 
neighbors for electricity (ref D).  Earlier a Kazakh industry 
official said that the function of regional power regulator should 
be moved from Tashkent to Almaty, because CAPS now has 
interconnections with Russian and Afghan grids and should therefore 
be reviewed as part of a broader system. 
 
 
 
¶14. (SBU) This year Uzbekistan has been sending its own strong 
signals of future intentions.  In late August an official Uzbek 
newspaper published an article saying that Uzbekistan's electrical 
network cannot guarantee reliable transit of "irrationally" large 
volumes of power from one neighboring country to another, an 
obvious reference to the power supply contract between Turkmenistan 
and Tajikistan.  Calling such contracts irresponsible, the article 
explained that when the Uzbek grid receives energy from sources 
located in a neighboring country, it affects the operation of Uzbek 
power stations, leads to inadmissible load decreases on hub 
substations, and, as consequence, to equipment failures. 
 
 
 
¶15. (SBU) On October 15 Kazakh media reported that Uzbekistan is 
about to withdraw from CAPS.  At the last minute, Kyrgyzstan's 
Minister of Energy Davydov travelled to Tashkent and pleaded with 
UzbekEnergo to refrain from doing so.  They gave him a 48-hour 
reprieve; and then, on 17 October, UzbekEnergo announced in a 
letter to the national grid operators that they would indefinitely 
delay the action.  At the same time UzbekEnergo notified Kyrgyzstan 
that Uzbekistan will begin charging for what previously had been 
free electricity transmission to Kyrgyzstan through Kazakhstan. 
 
 
 
¶16. (SBU) Meanwhile, despite hopes and bluster, the power systems 
of Kyrgyzstan and Tajikistan remain vulnerable, and it is in the 
interest of both countries to maintain the system as it was in 
Soviet and early post-Soviet times.  The breakdown of CAPS likely 
will lead to network failures in these countries and undermine 
their energy security.  In reaction, Kyrgyzstan has renewed 
warnings to Uzbekistan that it may charge for water.  Unexpectedly, 
in early October President Berdimuhamedov of Turkmenistan -- 
previously a supporter of the Uzbek point of view on water issues 
-- came out in favor of compensating Tajikistan for water releases, 
infuriating Uzbek leaders. 
 
 
 
COMMENT 
 
------- 
 
 
 
¶17. (SBU) Although Uzbekistan's power system is now almost 
completely self-sufficient, permanent withdrawal from CAPS in the 
near future is not likely.  Both Uzbek and Kazakh officials are 
 
TASHKENT 00001904  004 OF 004 
 
 
enjoying their new-found independence as a way to make political 
statements, but engineers such as those at CDC understand that 
balancing a smaller national system is more difficult than 
balancing a large regional grid that was designed from the ground 
up with balance as an operational requirement. 
 
 
 
¶18. (SBU) What is more likely in the near term is that Uzbekistan 
will continue to increase its pressure on Tajikistan and Kyrgyzstan 
by imposing or increasing transit fees.  It is also likely to 
continue making political statements by periodically shutting off 
the flow of electricity.  Given the energy-swap failures of the 
last two years, whether or not Uzbekistan formally withdraws from 
CAPS may not ultimately change much for some of its upstream 
neighbors, who are likely to see another cold and dark winter this 
year. 
 
 
 
¶19. (U) This cable was cleared by Embassies Astana, Ashgabad, 
Bishkek, and Dushanbe. 
NORLAND