The electricity sector in the Kyrgyz Republic faces challenges that have become more acute in recent years, driven by energy deficit due to insufficient generation, especially in winters. The total losses in the sector are about 20 percent of net generation, more than twice as high as commercial and technical losses in high- and some middle-income countries. About half of generation capacity and up to 70 percent of distribution assets are beyond their useful lives, leading to equipment failures and overloading across the country.  Moreover, the Kyrgyz Republic has one of the lowest electricity tariff rates in the world. The sector is heavily indebted, with cumulative debt of above KGS 137 billion (equivalent to over $1.5 billion) or around 20 percent of the GDP, placing a heavy fiscal burden on the country.

"Together we can implement anti-crisis measures to stabilize the economy and minimize economic risks for Kyrgyzstan", said Minister of Finance of the Kyrgyz Republic Almaz Baketaev. 

The project, with combined investments of $58 million, will finance urgently needed investments in four main areas: 1) rehabilitation and upgrade of distribution networks; 2) digitalization of distribution networks; 3) strengthening of social protection systems; and 4) institutional development to help design and implement priority energy sector reforms.

"Due to the cold weather, the Kyrgyz Republic has reached a historical peak of electricity consumption, and the energy sector professionals are working hard to pass through this winter season. There is an urgent need for the energy sector to modernize, grow sustainably and become an engine for the country’s green growth," said Naveed Hassan Naqvi, World Bank’s Country Manager for the Kyrgyz Republic. "The World Bank fully supports the comprehensive vision for the energy sector and reform roadmap over the next decade that have been developed by the Cabinet of Ministers of the Kyrgyz Republic."

Ambassador of Switzerland to the Kyrgyz Republic Olivier Bangerter noted that the new project will help to improve the financial performance, ensure a reliable electricity supply for the people and businesses, and create a supportive social protection mechanism to the vulnerable groups. "The project’s aim is to strengthen energy security of the Kyrgyz Republic; it will also lead to better use of water resources, something essential because of the consequences of climate change for the country. We hope that with investments in people, procedures and infrastructure, this project will contribute to a more reliable energy supply."

The Electricity Sector Modernization and Sustainability Project will be implemented through 2028 and will comply with strict international standards including procurement and financial management regulations and anti-corruption guidelines. 

The Kyrgyz Republic faces challenges in the electricity sector that have become more acute in recent years; increasing demand and insufficient generation have led to an energy deficit, especially in winters.  Because of this acute challenge, Switzerland supports Kyrgyzstan in the energy sector as well.

The At Bashy Hydropower Plant was rehabilitated together by Switzerland and OJC “Electric Power Plants”, with combined investments of approximately USD 25 million (20 million from Switzerland); this was urgently needed and touched three main areas: 1) Replacement of the electricity production equipment (4 generations units); 2) Civil construction works to enhance the dam’s safety; and 3) Institutional and corporate management development.

Thanks to this rehabilitation, the power output of the Hydropower Plant has increased from 40 to 44 MW. This will lead to financial performance improvements and better electricity supply services. This project will contribute to the development of Naryn region by ensuring a reliable supply of electricity to the population and businesses. In addition, the personnel of the Hydropower Plant received training on management skills as well as towards the operation and maintenance of the newly installed equipment.

"The hydropower potential of the Kyrgyz Republic is very high, we have about 40 thousand rivers, glaciers, with four of the highest peaks in the world. We are ready to use this potential and create all conditions for future investors. A direct proof of this is the reconstruction completion of the At Bashy Hydropower Plant. From now on the At-Bashy HPP will not only provide the population of the Naryn province with stable electric power, but will also make a great contribution to the social and economic development of the whole region," said the Chairman of the Cabinet of Ministers of the Kyrgyz Republic Akylbek Japarov and expressed his gratitude to the Swiss Government for the support in reconstruction of the At Bashy HPP.

“The project will strengthen the energy security of Naryn region for the benefit of the local population. It will also lead to a more efficient use of water resources, something essential because of the effects of climate change. We are sure that with investments in people, procedures and infrastructure, this project contributed to a more reliable energy supply”, said Ambassador of Switzerland to the Kyrgyz Republic Olivier Bangerter.

Since Kyrgyzstan's independence, Switzerland has invested around USD 55 million in the Kyrgyz energy sector and plans to continue to provide support in this sector in coming years.