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KAZAKHSTAN

 

Committee for Regulation of Natural Monopolies and Protection of Competition at the Ministry of National Economy
Key Statistics - 2013
Population 18 000 million people
GDP/Capita 12.5 thousand U.S. dollars.
Generation

Fossil fuel 89%
Hydro: 10%
Renewables: near 1%
Total installed capacity of power plants as of January 1, 2012, is 19 798,1 MW,
Available capacity – 15 765 MW.
Electricity generation in 2011 comprised 97.9 billion kWh

Electricity Market Size 96.8 billion kWh
Surplus installed capacity over demand

-1,10 billion kWh

Summary
Established in 1999
Organizational structure The chairperson, four deputy chairpersons, the composition is approved by a Decree of the Government of the Republic of Kazakhstan
Number of Commissioners -
Number of staff 517 (taking into account the territorial divisions)
Budget Funded from the republican budget.
Indepence A legal entity financed from the republican budget
Function authorities

1) carries out international cooperation on issues related to competencies of the antimonopoly body;

2) intersectorial coordination of public bodies and other entities in the sphere of protection of competition and limitation of monopoly activities;

3) elaboration and approval of regulatory and legal acts within its competence;

4) performing analysis of spheres of natural monopolies with respect of classifying services (goods, works) provided by subjects of natural monopolies within the named spheres as regulated ones;

5) summarizing practices of application of the legislation of the Republic of Kazakhstan on natural monopolies and regulated markets;

6) monitoring of efficiency of implementation of investment programs and investment projects of subjects of natural monopolies;

7) performing analysis of information of subjects of natural monopolies on execution of investment programs (projects);

8) approval of tariffs (prices, rates of charges) or their cap levels for regulated services (goods, works) of subjects of natural monopolies;

9)  formation and maintenance of the State Registry of subjects of natural monopolies;

10) approval of tariff estimates for regulated services (goods, works) of subjects of natural monopolies;

11) conducting public hearings when considering applications from subjects of natural monopolies concerning approval of tariffs (prices, rates of charges) or their cap levels;

12) approval of standard technical losses of subjects of natural monopolies;

13) approval of technical and technological standards of utilization of raw materials, materials, fuel, energy by a subject of a natural monopoly, except for regional power network companies;

14) approval of the temporary reducing coefficient for tariffs (prices, rates of charges) for regulated services of subjects of natural monopolies;

15) approval of a temporary compensatory tariff for regulated services of subjects of natural monopolies;

16) calculation of the rate of return (net income) on the regulatory asset base that is part of tariffs (prices, rates of charges) for subjects of natural monopolies;

17) approval of the standard number of staff of a subject of a natural monopoly, except for regional power network companies;

18) making proposals to the central administration concerning types of activities that are technologically connected to regulated services (goods, works) for their approval;

19) performing financial and/or technical expertise of activities of subjects of natural monopolies;

20) coordination of staff schedules of subjects of natural monopolies with participation of the state in the statutory capital and of subjects of natural monopolies that are affiliated with legal entities that have participation of the state in their statutory capital;

21) coordination of ceiling for wages of managerial administrative staff of subjects of natural monopolies with participation of the state in their statutory capital, and of subjects of natural monopolies that are affiliated with legal entities that have participation of the state in their statutory capital;

22) coordination of the annual estimate of costs meant for current and capital repairs and other repair and restoration works that do not lead to increase of costs of fixed assets of a subject of a natural monopoly, except for regional power network companies;

23) coordination of a concession proposal, technical-economic justification of a concession project, tender documents, draft concession agreement, including cases when changes and amendments are made into them, changes and amendments in the concession agreement in the part of forming and approval of tariffs (prices, rates of charges) for services (goods, works) related to the sphere of natural monopolies;

24) determination of the justified volume of consumption by individuals of regulated services in the sphere of water supply in the procedure set by the Government of the Republic of Kazakhstan;

25) licensing in accordance with the legislation of the Republic of Kazakhstan on licensing;

26) coordination of the size and mechanism of charging payment for acquisition and installation of metering devices for utility services (goods, works);

27) coordination of conducting revaluation of fixed assets of a subject of a natural monopoly;

28) coordination of the choice of the appointed rehabilitation manager and the plan of rehabilitation of the subject of the natural monopoly;

29) coordination of the methodology for maintenance of separate accounting for revenues, costs and used assets by types of regulated services of subjects of natural monopolies;

30) coordination of the accounting policy of a subject of a natural monopoly;

31) coordination of approval of the list of station tracks, facilities of electric power supply, alarm systems, communications, devices, equipment, buildings, constructions, structures and other facilities that are technologically necessary for functioning of the backbone railway network;

32) approval of investment programs and/or investment projects subjects of natural monopolies, that are taken into consideration in the course of approval of tariffs (prices, rates of charges) or their cap levels, together with the relevant public body;

33) regulation of prices for goods (works, services) of participants of the regulated market in the sphere of railway transport, power and heat energy, production of oil products, transportation of oil, civil aviation, port activities, and also gas, taking into consideration specifics stipulated in the Law of the Republic of Kazakhstan On Gas and Gas Supply;

34) regulation of prices for products, goods and services according to the nomenclature set by the Government of the Republic of Kazakhstan;

35) conclusion of an investment agreement with energy generating organizations;

36) approval of an individual tariff for energy generating organizations according to the procedure set by the Government of the Republic of Kazakhstan;

37) maintenance of the registry of licenses;

38) establishment of compliance of the applicant with qualification requirements in the course of issuance of licenses and /or annexes to licenses;

39) maintenance, placement and update every ten days in the internet resource of the registry of organizations that are licensed to carry out activities related to purchase of electricity for the purpose of energy supply;

40) ensuring within its competence of mobilization work and protection of state secrets;

41) informing through mass media about cases of violation of the legislation on natural monopolies and regulated markets and bringing to responsibility offenders;

42) coordination of investment programs of producers of oil products, except for small capacity oil product producers;

43) coordination of design and construction of parallel power transmission lines and substations and sale and purchase, transfer for rent or for fiduciary management of electric power facilities and/or their separate parts, irrespective of forms of ownership;

44) coordination of alienation and/or making other transactions with property of a subject of a natural monopoly meant for production and provision of regulated services (goods, works), if the book value of the property that is being alienated or of the property of a subject of a natural monopoly, with respect to which other transactions are being made, accounted in the balance sheet as of the beginning of the current year exceeds 0.05 per cent of the book value of its assets according to the balance sheet as of the beginning of the current year, provided they would not entail increase of tariffs (prices, rates of charges) or their cap values for regulated services (goods, works) of a subject of a natural monopoly, violation of agreements with consumers, violations of the continuous technological system, disruption or significant reduction of volumes of provided regulated services (manufactured goods, works), except for small capacity subjects of natural monopolies that provide a notification on the fact that such action takes place;

45) coordination of acquisition by a subject of a natural monopoly of goods (works, services) not for own use, which are transported or transferred by it, except for small capacity subjects of natural monopolies that provide a notification on the fact that such action takes place;

46) coordination of renting by a subject of a natural monopoly of property used for provision of regulated services (goods, works) the book value of which is accounted in the balance sheet at the beginning of the current year exceeds 0.05 percent of the book value of its assets according to the balance sheet at the beginning of the current year, provided that conclusion of a contract for lease of property would not entail increase of tariffs (prices, rates of charges) or their cap values for regulated services (goods, works) of a subject of a natural monopoly, violation of agreements with consumers, violations of the continuous technological system, disruption or significant reduction of volumes of provided regulated services (goods, works), except for small capacity subjects of natural monopolies that provide a notification on the fact that such action takes place;

47) coordination of execution by a subject of a natural monopoly of other activity allowed by the Law of the Republic of Kazakhstan On Natural Monopolies and Regulated Markets, except for small capacity subjects of natural monopolies, subjects of natural monopolies that provide airport services, which provide a notification on the fact that such action takes place;

48) coordination of acquisition by a subject of a natural monopoly of shares (percentage holding), and also other forms of its involvement in commercial organizations that carry out activities allowed for it by the Law of the Republic of Kazakhstan On Natural Monopolies and Regulated Markets, except for except for small capacity subjects of natural monopolies that provide a notification on the fact that such action takes place, and also cases of involvement of a subject of a natural monopoly in activities of the accounting and finance center for support of renewable energy sources in accordance with the legislation of the Republic of Kazakhstan in the sphere of support of utilization of renewable energy sources;

49) coordination of reorganization and liquidation of a subject of a natural monopoly, except for small capacity subjects of natural monopolies that provide a notification on the fact that such action takes place;

50) examination of a notification on acquisition by individuals or legal entities (or a group of persons) of more than ten percent of voting shares (percentage holding) in the statutory capital of a subject of a natural monopoly;

51) control over activities of subjects of natural monopolies in terms of their compliance with requirements of the legislation of the Republic of Kazakhstan On Natural Monopolies and Regulated Markets;

52) conducting inspections of activities of subjects of natural monopolies;

53) initiation and examination of cases on administrative violations, and also imposition of administrative penalties;

54) exercise of license control;

55) issuance of an instruction in case of violation of the legislation of the Republic of Kazakhstan;

56) elaboration and coordination of proposals concerning inclusion in the list of regulated services (goods, works) of subjects of natural monopolies approved by the Government of the Republic of Kazakhstan with the public body that carries out intersectorial and inter-regional coordination of development of main areas of the state socio-economic policy;

57) elaboration of model agreements concluded by subjects of natural monopolies with consumers of regulated services (goods, works);

58) elaboration and application of non-discriminatory methodologies for calculation of tariffs (prices, rates of charges) or their cap levels for regulated services (goods, works) of subjects of natural monopolies and regulatory and legal acts that are binding for public bodies and subjects of natural monopolies;

59) elaboration of draft qualification requirements and rules for licensing of certain types of activities;

60) elaboration and application of the special costing procedure applied in the course of approval of tariffs (prices, rates of charges) or their cap levels for regulated services (goods, works) of a subject of a natural monopoly;

61) determination of technical conditions of non-discriminatory access in the sphere of railway transport, electric power and heat, civil aviation, port activities;

62) control over pricing of participants of regulated markets and also over their compliance with obligations envisioned in the legislation of the Republic of Kazakhstan On Natural Monopolies and Regulated Markets, and set prices, for which state regulation was introduced;

63) participation in elaboration of proposals within granted authorities on formation of the state policy in the spheres (areas) of state governance that are in the competence of the Committee;

64) coordination of the level of marginal prices for wholesale sale of commercial and liquefied oil gas in the domestic market;

65) development of the procedure for determining the marginal price for retail sale of oil products, for which state regulation of prices was introduced;

66) formation and maintenance of the State Registry of Market Participants that hold a dominating or monopoly position;

67) exercise of control and regulation of activities that belong to the sphere of the state monopoly;

68) exercise of control over compliance of subjects of state monopolies with restrictions stipulated in the Law of the Republic of Kazakhstan On Competition;

69) exercise of control over economic concentration;

70) exercise of state control over compliance with the anti-monopoly legislation of the Republic of Kazakhstan;

71) suppression of acts (omissions to act) of state bodies aimed at restriction and/or elimination of competition;

72) prevention and elimination of cases of abuse of the dominant or monopoly position in the corresponding commodity market;

73) prevention and elimination of anti-competitive agreements and concerted actions of market participants, unfair competition;

74) performing analysis and evaluation of the state of competitive environment in commodity markets;

75) performing analysis and monitoring of activities of market participants that hold the dominant or monopoly position in the relevant commodity market;

76) detection of monopolistically high (low) and monopsonically low prices set by a market participant that holds the dominant or monopoly position, except for market participants that sell goods in regulated markets;

77) conducting investigations based on facts of violation of anti-monopoly legislation of the Republic of Kazakhstan by market participants and public bodies, according to the procedure set by the legislation of the Republic of Kazakhstan on competition;

78) requesting and obtaining in the course of the procedure set by laws of the Republic of Kazakhstan from public bodies, including from the authorized body in the field of state statistics, tax and customs bodies, market participants, and also officials and other individuals and legal entities, of information necessary to exercise authorities envisioned in the anti-monopoly legislation of the Republic of Kazakhstan, including information that represents commercial and other secrets protected by the law;

79) issuance of binding instructions to market participants concerning the following:

Elimination of violations of the anti-monopoly legislation of the Republic of Kazakhstan and their consequences;

Restoration of the initial situation;

Termination or change of agreements that contradict the anti-monopoly legislation of the Republic of Kazakhstan;

Conclusion of an agreement with some other market participant in case if the violation is represented by an unjustified refusal or avoidance of conclusion of an agreement with certain sellers (suppliers) or buyers;

80) at own initiative, or upon request of a stakeholder – revising the instruction (its own, or that of a territorial body), and also verification of instructions issued by territorial bodies of the anti-monopoly body in cases stipulated by the anti-monopoly legislation of the Republic of Kazakhstan;

81) issuance of recommendations to central administration concerning organization of events aimed at protection and development of competition in commodity markets of the Republic of Kazakhstan;

82) preliminary coordination of establishment of state-owned enterprises, legal entities more than fifty percent of shares (stakes) of which belong to the state, and of entities affiliated with them, except for cases when such establishment is directly envisioned by the laws of the Republic of Kazakhstan;

83) presenting to law enforcement bodies of analytical information and monitoring data on the situation with competition in commodity markets;

84) determination of borders of relevant commodity markets;

85) development of model forms:

Petitions on performing economic concentration;

Petitions on establishment of a state-owned enterprise, a legal entity, more than fifty percent of share (stakes) of which belong to the state, and entities affiliated with them;

Quarterly information presented by market participants on monopoly types of products, on volumes of production and sale, on sale prices and on the level of profitability of sold monopoly goods.

86) carrying out expert examination of prices for goods that are manufactured and sold by a subject of a state monopoly;

87) granting to market participants of a preliminary written consent for carrying out transactions (actions), for the state registration, re-registration of market participants, and also rights for real estate in cases stipulated in the anti-monopoly legislation of the Republic of Kazakhstan;

88) presenting to the registration bodies of the registry of market participants that have a dominant or monopoly position in the relevant commodity market, and the list of state owned enterprises, legal entities more than fifty percent of shares (stakes) of which belong to the state, of entities that are affiliated with them, that were established with consent of the anti-monopoly body;

89) elaboration of a model methodology for performing analysis and evaluation of the state of competitive environment in the commodity market with determination of criteria for interchangeability of goods, availability of their acquisition, and also limits of the commodity market with respect to financial organizations – in coordination with the state body that exercises regulation and oversight over the financial market and over financial organizations;

90) elaboration of the methodology for detection of monopolistically high (low) and monopsonically low prices;

91) implementation of the state policy in the field of protection of competition and restriction of monopolistic activities;

92) issuance for public bodies of binding instructions on cancellation or change of acts adopted by them, on termination of violations, and also on cancellation or change of agreements concluded by them that contradict the anti-monopoly legislation of the Republic of Kazakhstan;

93) in cases stipulated in the anti-monopoly legislation of the Republic of Kazakhstan, action demand on mandative unbundling of a market participant or on divestiture from its composition on the basis of its structural divisions of one or several legal entities, and also with a petition on exemption of the market participant from withdrawal of the monopoly revenue received as a result of making anti-competitive agreements or concerted actions;

94) coordination of activities of territorial bodies responsible for approval of tariffs of subjects of natural monopolies taking into consideration socio-economic factors of tariff setting in the domestic market of the Republic of Kazakhstan;

95) performing other functions provided for in this Law and other laws of the Republic of Kazakhstan, the acts of the President of the Republic of Kazakhstan and the Government of the Republic of Kazakhstan.
Rights

The CRNM and PC, within its competence is entitled to the following:

1) to issue legal acts within the limits of its competence;

2) to request and to receive from public bodies, organizations, from their officials necessary information and materials;

3) to make proposals concerning development of regulatory and legal acts within the limits of its competence;

4) to conduct meetings, workshops, round tables, tenders and other events on issues that are in the competence of the Committee;

5) to create advisory and consultative, collective bodies in the areas the Committee is in charge of;

6) to act as a state governing body with respect to subordinated organizations;

7) to apply to court within the limits of its competence;

8) to exercise international cooperation within the limits of its competence;

9) to delegate part of its authorities and functions to territorial bodies;

10) to exercise other rights stipulated in legal acts of the Republic of Kazakhstan.
Legal basis Law of the Republic of Kazakhstan “On natural monopolies and regulated markets” of July 9, 1998; Law of the Republic of Kazakhstan “On electricity” of July 9, 2004; Law on Licensing; Law on Competition; Law on Regulatory and Leal Acts

Industry and Market Structure

Electricity Market Structure:

As a result of market transformations, the following organizational-technological structure appeared in the power sector:
 1) energy generating organizations perform generation and sale of electricity to wholesale consumer;

 2) the national power network (JSC "KEGOC") performs functions on transmission of electricity through interregional and interstate level, and also functions on operational dispatch control over the unified Kazakh grid (hereinafter UES of Kazakhstan);

 3) regional electricity network companies (hereinafter referred to as RECs) carry out transmission, distribution and supply of electricity on the regional level;
 4) wholesale and retail electricity consumers;
 5) energy supply organizations;
 6) the wholesale market operator (JSC “KOREM” – Kazakh electricity and capacity market operator – performs functions of the operator of centralized electricity trading market).

Services on transmission of electricity belong to the sphere of the natural monopoly, and tariffs for them are set by the AREM.

Services on production, transmission, distribution and supply of heat belong to the sphere of the natural monopoly, and tariffs for them are regulated by AREM.

Price regulation is carried out for energy supply organizations that have dominant positions and that are included by the Agency for Protection of Competition in the registry of entities that hold dominant positions.  Energy supply organizations apply for individuals differentiated tariffs depending on volumes of consumption or by time of the day, for legal entities tariffs are differentiated by the time of the day.

Current Energy Issues:

Strategic directions of the tariff policy: to increase investments in regulated sectors, to solve issues of energy supply and to use efficiently of resources.

According to the Law of the Republic of Kazakhstan “On Electricity” for energy producers the long-term policy “tariffs in exchange for investments” is implemented.

According to resolution No. 392 of the Government of the Republic of Kazakhstan, from March 25, 2009 the maximum tariff for electricity is set based on energy producer station type until 2015.

Based on this policy electricity producers can set own tariffs, but not higher than the maximum tariff determined by the Government of the Republic of Kazakhstan for groups of power plants.

 These producers also have to complete an agreement each year with the authority (Ministry of Industry and New Technologies) regarding its investment obligations.

Currently, the Parliament of the Republic of Kazakhstan is considering the introduction of the electric power market from 2016.

Starting 2013 RECs are using new method of comparison analysis (benchmarking) for setting tariffs and for defining operating efficiency.


Contact Information:
Address: 8 Orynbor Str., Block 4, 010000, Astana, Kazakhstan
Tel.: 7 (7172) 74 94 52 | Fax: 7 (7172) 74 94 60
E-mail: k.kensekremzk--.at.--economy.gov.kz
Web: http://www.kremzk.gov.kz