Kazakhstan takes €294 mn from EBRD for gas sector

Signing ceremony in Astana  (Photo credit : KazTransGaz)

KazTransGaz, the transmission subsidiary of state-owned KazMunaiGaz, has attracted  €294mn in loans from the European Bank for Reconstruction and Development (EBRD), it said.

EBRD signed projects worth over €350mn in Kazakhstan aiming to improve the quality of public services, raise food quality standards and help combat climate change this week.

The loan agreement was signed by EBRD’s president Suma Chakrabarti, visiting the central Asian republic as part of a trip to three Caspian states, and KazTransGas CEO Kayrat Sharipbaev, on the sidelines of the Astana Economic Forum.

The first project is the upcoming modernization, reconstruction and major overhaul of underground storage in Bozoi, to support gas export pipelines in the region, such as the Kazakh section of  Central Asian gas pipeline from Turkmenistan to China, as well as the Beineu-Bozoi-Shymkent pipeline (BBS), the Kazak operator said. 

BBS ensures the stable supply of gas from the west of the country to the populous south-eastern regions and ultimately reduces dependency on coal-fired power.

A loan of €242mn to the KazTransGas subsidiary Intergas Central Asia will enable a storage capacity upgrade, from 2.6bn m³ to 4bn m³. Another loan, worth €52mn, will go to KazTransGas-Aimak to expand and modernise the natural gas distribution network in the Mangistau and Aktobe regions of western Kazakhstan.

The upgrade will allow the company to connect new households and industrial customers to gas supplies, replacing coal.

The country has adopted a ‘green’ economic strategy and one of the government’s priorities is to develop a domestic gas transmission and distribution system connecting the country's producers with its consumers, EBRD said.

Replacing coal-fired facilities and allowing the population to switch from coal to gas will benefit the environment and contribute to Kazakhstan’s efforts to fulfil its COP21 commitments. It is estimated that the EBRD-financed projects will lead to a cut in CO2 emissions of around 830,000 metric tons/year.

Chakrabarti said the bank had worked consistently with Kazakhstan on projects to develop the green economy and switching to gas for the power sector was among the quickest ways of achieving that goal. “We are very pleased to start our cooperation with KazTransGas and to continue our enhanced partnership with Kazakhstan with these two major steps towards a sustainable future,” Chakrabarti said.

EBRD has also provided two loans to boost the energy efficiency of district heating companies in Kazakhstan, each equivalent to about €11.6mn (over €23mn in total) to subsidiaries of the Central Asian electric power corp (CAEPCO) in Petropavlovsk, Pavlodar and Ekibastuz. The project is expected to benefit over 500,000 residents in north-eastern Kazakhstan.

The two EBRD loans will be co-financed by the government with up to €23.3mn in local currency equivalent.

The district heating sector is a major consumer of energy in Kazakhstan but a lack of investment means that it remains one of the most energy-intensive in the country. These ventures will help improve energy efficiency, reduce heat losses and improve environmental standards in the sector, EBRD said.

“The agreement signed will allow us to continue our district heating network rehabilitation programme, which CAEPCO started in 2011 in partnership with the EBRD. Thanks to government support, total financing of tenge 25.95bn will be applied in 2016-20 to improve the reliability and sustainability of the district heating systems,” said the president of CAEPCO Erkyn Amirkhanov during the signing in Astana, on the fringes of the Astana Economic Forum.

To date, the EBRD has invested over €6.3bn in Kazakhstan through more than 200 projects in infrastructure, energy, agribusiness, industry and finance.

Kama Mustafayeva