The deficit of the KR energy sector totalled 8.1 bln KGS. Electricity prices will increase

The Ministry of Energy has drafted a resolution approving the Medium-Term Electricity Tariff Policy for the period from 2025 to 2030. According to the draft, it envisages a gradual increase in electricity tariffs for all categories of consumers, which is due to a shortage of funds in the energy sector.

The main reason for the increase is the excess of the cost of electricity production over the current tariffs. In 2024, the deficit of funds in energy companies is expected to be 8.1 billion KGS. The existing tariffs do not cover the costs of generation, transmission and distribution of electricity, as well as the purchase of imported equipment and electricity. The sector is additionally burdened by the obligation to buy electricity from renewable energy producers at set tariffs. By 2030, the cost of purchasing RES electricity may reach KGS 36.4 billion.

For households, tariffs will change as follows: for consumption up to 700 kWh per month, the tariff will increase from KGS 1.11 to KGS 1.37/kWh (by 23.8%) in 2025, with an annual increase of 20%. For consumption above 700 kWh, the tariff will increase from 2.39 to 2.6 KGS/kWh (by 8.5%) with annual indexation in line with inflation and changes in the dollar exchange rate.

For non-domestic consumers, such as commercial, social and budgetary organisations, as well as industrial enterprises, tariffs will be adjusted annually depending on inflation and changes in the dollar exchange rate (3.5%).

The project also includes a reduction in the number of tariff groups from 14 to 7. Consumers with similar consumption characteristics, such as pumping stations, electric transport, children's institutions and religious organisations, will be merged into one group ‘Social and Public Consumers’.

The tariff increase is expected to reduce the shortage of funds in the energy sector, attract investment in the development of the industry and ensure the country's energy security. The expected additional income of energy companies from the tariff increase in 2025 will be about 6.5 billion KGS. However, the tariff increase will require additional expenditures from the republican budget to pay for electricity consumed by budgetary organisations, which will amount to 612 million KGS in 2025.