Kyrgyzstan: Energy Crisis Hits Hard Small Businesses
Kyrgyz small businesses will be affected severely by the looming energy crisis. This will inevitably result in the significant economic slowdown, observers say.
The winter of 2008 promises to be the hardest in decades as Kyrgyzstan is getting prepared to massive energy cuts in autumn and cold winter. Low river and reservoir levels and the need to save energy forced the government to introduce energy cuts in August and prohibit using electricity for heating.
Economy of politically volatile Central Asian nation, one of the poorest in the former Soviet Union, has been already stalled due to sluggish reforms, corruption and red-tape. In March 2005 economic frustration was one of the strongest reasons for street protests which led to change of power.
Prime-minister Igor Chudinov said power cuts would be “extensive”, however promised to help businesses and industries to overcome crisis. In order to do that, Kyrgyzstan has to save at least 600 megawatt before the winter starts. President Kurmanbek Bakiev suggested to cut the electricity off in individual houses or residential areas without affecting small and medium businesses. “Power cuts should be applied on the individual basis,” Bakiev said.
However, specialist doubt that with the current 9,1 billion cubic meters of water in the Toktogul reservoir, which is one billion less than needed, government will able to fulfill the promise.
Usen Kydyraliev, executive director of the Union of Businessmen in Kyrgyzstan said the power cuts will upset most seriously small and medium entrepreneurs.
“Big industries have big connections and can lobby for a spare power cuts regime or for full supply,” Kydyraliev told Ferghana.ru.
“Small businesses do not have this advantage. If electricity is cut in residential areas usually the power goes off in small businesses too because most of them are located downtown, not in the industrial areas outside of the city,” Kydyraliev said.
He also noted that many of the small businesses started closing now as the power cuts are being introduced in August.
Earlier, the Ministry said it is “pessimistic” about the country’s economic development as food security remains threatened and inflation might rise to 29 percent by the end of 2008.
Authorities are also decreasing 2008 economic growth forecasts to six percent, compared to the previously anticipated eight percent. An expected inflation rate of 29 percent would mean a 12 to 15 percent jump over original forecasts.