1. ELECTRICITY LOSSES IN DISTRIBUTION COMPANIES IN KYRGYZSTAN NIKOLAY KRAVTSOV NGO "USTIN" KYRGYZ REPUBLIC BISHKEK, 26-27 SEPTEMBER, 2011

2. Structure of the Power Sector of the Kyrgyz Republic

3. COMMON PROBLEMS OF POWER COMPANIES IN THE KYRGYZ REPUBLIC WEAK AND NON-TRANSPARENT CONTROL OF POWER FLOWS CURRENT REGULATORY FRAMEWORK ESTABLISHES FOR COMPANIES A HIGH LEVEL OF POWER LOSSES, WHICH ARE INCLUDED INTO THE TARIFF FINANCIAL PLANNING AND INTERNAL AUDIT ARE FORMAL WAGE AND REMUNERATION SYSTEMS ARE IMPERFECT AND PROVOKE THE EMPLOYEES TO COMMIT OFFENCES CURRENT POWER RECORD KEEPING SYSTEMS ARE UNRELIABLE AND RESULT TO SCALE ERRORS IN DATA CURENT ACCOUNTING PRACTICE DOES NOT HELP TO IDENTIFY POWER THEFTS

4. POWER DISTRIBUTION COMPANIES IN KYRGYZSTAN COMPANY NAMENumber of PDS, units Stuff number, persons Power output, % «SEVERELECTRO»173,21552.0 «VOSTOKELECTRO»141,64114.7 «OSHELECTRO»152,20019.3 «JALALABADELECTRO»121,64014.0 TOTAL588,696100

5. POWER RECEIVED BY DISTRIBUTION COMPANIES January-June, 2008-2011 Company2008200920102011 «Severelectro»2,722,1592,159,5672,245,8592,779,665 «Vostokelectro»872,231663,288684,520786,240 «Oshelectro»1,163,450879,325870,8351,027,222 «Jalalabadelectro»750,317595,431669,700746,637 Total5,508,1574,297,6114,470,9145,339,764

6. STRUCTURE OF ENERGY CONSUMPTION FOR JANUARY-JUNE, 2011

7. PROBLEMS IN KYRGYZ DISTRIBUTION COMPANIES EVIDENT OVER-REPORTING OF THE STATED POWER TECHNICAL LOSSES (ALMOST 20%) IMPERFECT SYSTEMS FOR DATA READING AND PROCESSING, BILLING AND COLLECTION OF PAYMENTS OUTDATED DATABASE ON POWER NETWORKS AND CONSUMERS LACK OF POSSIBILITIES TO PREVENT, IDENTIFY AND COMPENSATE POWER LOSSES MANIPULATIONS WITH POWER CONSUMPTION FOR OWN NEEDS COLLUSION BETWEEN CONSUMERS AND DISHONEST STAFF OD POWER COMPANIES MANIPULATIONS WITH POWER METER READINGS

8. FINDINGS OF THE REVIEW OF COMPANIES' TECHNICAL LOSSES THE FOLLOWING HAS BEEN ESTABLISHED: REAL LOSSES IN 10/04 KV NETWORKS ARE BELOW 10% OF THE RECEIVED ELECTRICITY VOLUME CURRENT LOAD ON 04KV FEEDER PHASES ARE DISTRIBUTED WITH DISTORTIONS (SEVERAL TIMES) RESULTING IN SIGNIFICANT INCREASED POWER LOSSES AT SOME TRANSFORMER SUBSTATIONS THE LOADING IS BELOW 50% OF THEIR CAPACITY, WHICH RESULTS IN UNJUSTIFIED CONTINUOUS POWER LOSSES (OFF-LOAD) A HIGH LEVEL OF ADMISSIBLE TECHNICAL LOSSES ALLOWS TO MASK A PART OF COMMERCIAL POWER LOSSES (THEFTS AND FRAUDS)

9. TECHNICAL LOSSES OF POWER COMPANIES FOR 2008-2011 (1 st half) Technical losses of power companies totaled to almost 976 mln. kWh, or more than 18% of total power they received. thous. kWh Indicator2008200920102011 Received power5,508,1574,297,6114,470,9145,339,764 Power losses 1,048,874709,338670,918975,894 Losses, % 19.116.515.018.3

10. FINDINGS OF THE REVIEW OF COMMERCIAL LOSSES IN POWER COMPANIES THE FOLLOWING HAS BEEN IDENTIFIED: COMMERCIAL POWER LOSSES (THEFTS AND FRAUDS) RESULT FROM: POWER CONSUMPTION AVOIDING THE USE OF ELECTRICITY METERS CAUSING INTENTIONAL DAMAGE TO METERS DECREASING METER READINGS UNDER COLLUSION BETWEEN THE CONSUMER AND THE COMPANY'S REPRESENTATIVE ABSENCE OF METERS AT CONSUMERS' PRESENCE OF NON-REGISTERED CONSUMERS POWER THEFTS ARE RECORDED AS USED BY GHOST CONSUMERS CREATING CONSUMERS' ARREARS, WHICH ACTUALLY DO NOT EXIST

11. COMMERCIAL LOSSES OF POWER COMPANIES FOR 2010-2011 (1 st half) The volume of companies' commercial power losses totaled 210 mln. kWh The data is considered to be unreliable due to negative absolute values of losses thous. kWh Company20102011 Decrease % «Severelectro»274,440110,394164,04659.8 «Vostokelectro»116,11668,51447,60241.0 «Oshelectro»95,80030,81664,98467.8 «Jalalabadelectro»168,030-196168,226100.1 Total654,386209,528444,85868.0

12. Power losses of companies for January-June, 2010-2011 SeverelectroVostokelectroOshelectroJalalabadelectro Total

13. Power losses of companies for January-June, 2008-2009 VostokelectroJalalabadelectroSeverelectroTotalOshelectro

14. POWER CONSUMPTION FOR COMPANIES' OWN NEEDS IDENTIFIED THAT: IN THE 1 ST HALF OF 2011 MORE THAN 15 MLN. KWH WAS USED FOR OWN NEEDS, WHICH IS ALMOST 1.7 TIMES MORE THAN IN 2010 POWER CONSUMPTION HAS INCREASED DRASTICALLY IN ALL COMPANIES, EXCEPT FOR «OSHELECTRO» thous. kWh Company20102011 IncreaseGrowth in % «Severelectro»3,8915,4581,56740.2 «Vostokelectro»2,9653,95899333.5 «Oshelectro»1,6001,81421413.3 «Jalalabadelectro»4643,7883,324716 Total8,92015,0186,09868,4

15. ACCOUNTS RECEIVABLE OF DISTRIBUTION COMPANIES COMPANIES FACE PROBLEMS WITH ACCOUNTS RECEIVABLE DUE TO: THE PRESENCE OF UNVERIFIED (FAKE) DEBTS BUILDING UP OF BAD DEBT BY CONSUMERS INEFFECTIVE MEASURES TAKEN BY COMPANIES TO COLLECT ARREARS Increased companies' accounts receivable in 2011 thous. soms Company Beginning of 2010 Beginning of 2011 End-half a year Half-a-year growth % «Severelectro» 1,060,503295,143347,94352,80017.9 «Vostokelectro» 414,509278,023357,94279,91928.7 «Oshelectro» 766,349480,625569,95489,32918.6 «Jalalabadelectro» 137,617114,598170,32655,72848.6 Total 2,378,9781,168,3891,446,165277,77623.8

16. COMPENSATION OF LOSSES CAUSED TO DISTRIBUTION COMPANIES PROBLEMS WITH LOSSES CAUSED TO COMPANIES RESULT FROM: EXISTING PROCEDURES AND THE QUALITY OF DOCUMENTS PREPARED TO COMPENSATE LOSSES, THEIR POOR ORGANIZATION AND THEY ARE NOT PROTECTED FROM CORRUPTION OPPORTUNITIES FOR COLLUSION BETWEEN CONSUMERS AND COMPANY REPRESENTATIVES COMMON CASES OF FAKED REPORTS ON CONSUMPTION OF ELECTRICITY BY CONSUMERS AVOIDING THE USE OF METERS LOW SKILLS OF COMPANIES' LAWYERS COMPANIES' LAWYERS LACK PERSONAL ECONOMIC MOTIVATION TO SEEK FOR COMPENSATION OF COMPANIES' LOSSES

17. CONCLUSIONS AND RECOMMENDATIONS HIGH POWER LOSSES IN DISTRIBUTION COMPANIES, INCLUDING TECHNICAL, COMMERCIAL (THEFTS AND FRAUDS) LOSSES AND UNJUSTIFIED POWER CONSUMPTION FOR OWN NEEDS, AS WELL AS ARREARS ON FICTITIOUS AND BAD DEBTS AS A FORM OF CONCEALING ELECTRICITY THEFTS, ARE FIRST OF ALL PRECONDITIONED BY INEFFECTIVE (NON-TRANSPARENT AND IRRESPONSIBLE) MANAGEMENT INTRODUCTION OF GOOD GOVERNANCE PRINCIPLES IN COMPANIES (OPENNESS, TRANSPARENCY, ACCOUNTABILITY AND RESPONSIBILITY) CAN PROVIDE FOR A SIGNIFICANT REDUCTION IN POWER LOSSES (UP TO 1 BILLION KWH IN 2011)

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