Construction and Operation of a Hydropower Plant in the Kyrgyz Republic: 10 Frequently Asked Questions

Kyrgyz law requires energy companies to execute electricity transmission agreements to ensure the transmission of electricity generated by the HPP. The agreement must be signed with the National Electric Grid of Kyrgyzstan OJSC or with power distribution companies which own grids. These agreements are executed on a standardized form which has been approved by the SDRFEF. Any changes to the standardized terms of the agreement must be approved by the SDRFEF.

As of March 2013

Pursuant to Kyrgyz law, companies must execute electricity sales agreements with power distribution companies to ensure that electricity which has been generated can be sold. Such agreements are executed on a standardized form approved by the SDRFEF.

There are four power distribution companies in the Kyrgyz Republic which own provincial distribution networks and supply electricity to consumers: Severelectro OJSC, Vostokelectro OJSC, Oshelectro OJSC and Jalalabatelectro OJSC.

An environmental impact report is a report issued by the State Agency on Environmental Protection and Forestry under the Government of the Kyrgyz Republic, certifying the project as environmentally sound after completing the review and appraisal of the FS for the HPP construction project. Each company wishing to construct an HPP must obtain an environmental impact report for each proposed project. The report is a prerequisite for obtaining a construction permit. The environmental impact report must also be publicized and endorsed by public opinion polls.

Before starting the construction of any HPP, it is necessary to develop a special document, a feasibility study (the “FS”) defining specific location, capacity, and other technical qualities of the future HPP. To develop the FS, the customer (owner of the land plot on which the HPP construction is planned) must enter into the FS development agreement with the organization having relevant experience and qualification. Afterwards, the FS will be used as a basis for drafting the HPP planning documentation.

Under Kyrgyz law, the Ministry of Energy and Industry of the Kyrgyz Republic is charged with regulating the operations of all HPPs. A company generating electricity must obtain a license to generate electricity from the State Department for the Regulation of Fuel and Energy Facilities of the Ministry of Energy and Industry of the Kyrgyz Republic (SDRFEF) .

According to Kyrgyz law, the rights to construct a new HPP (except for major electric energy production capacities and main lines of electric grids) must be awarded by tender by the Ministry of Energy and Industry of the Kyrgyz Republic which is charged with organizing and conducting tenders on an annual basis.

Construction of major electric energy production capacities is carried out in accordance with the National Energy Program or separate resolution of the KR Government.

The construction license costs 300 Kyrgyz Soms (approximately $ 6.26 USD) each. The construction permit is issued free of charge.

A contractor performing construction work must obtain a construction license from the State Agency for Architecture, Construction and Housing and Public Utility Sector under the Government of the Kyrgyz Republic. The contractor must also be able to construct the HPP within a certain capacity (MW). The construction license does not have an expiry date and is valid throughout the country.

The construction license is issued within 30 days of the date of filing a full set of documents required.

Any company wishing to construct an HPP must hold title to the land where the HPP will be constructed or hold temporary land use rights. In addition, this land must be zoned for industrial use.

Foreign entities, which Kyrgyz law defines as any entity registered in the Kyrgyz Republic with at least 20 percent of shares being owned by a foreigner, or in any other manner putting them under control of a foreigner, are subject to certain limitations which include a prohibition on land ownership and a 50 year cap on obtaining temporary land use rights to lands.

To design, construct and operate an HPP, each entity must obtain the required licenses, permits and consent. Depending on the project, these may include:

- obtaining rights to construct the HPP;
- obtaining rights to the land plot upon which the HPP will be constructed;
- obtaining all necessary construction licenses and permits for the project;
- obtaining licenses to generate and to sell electricity;
- commissioning an environmental impact report;
- executing an electricity sales agreement and an agreement for connection to the electricity grid.