Eurasian Integration Yearbook 2012

Advanced Economic Cooperationin Sectors and Industriesin short-term and long-term pricing, restrict competition, and complicate, to asignificant extent, their balanced and efficient development. Therefore, statemanagement and regulation need to be maintained to improve the efficiency andreliability of power supplies. Efforts to create and operate wholesale electricitymarkets in Russia and other countries (Podkovalnikov, 2011) have shown thatassumptions regarding the market’s role as a regulator were misplaced. Many ofthese countries are now reconsidering their attitude towards liberalisation. Thisis why Russia, as expected, is continuing its market reforms, which are aimed atgiving the power market a more efficient structure.Difficulties also arise in creating a common market because the countries areemploying different market models and vary in the level of liberalisation andreform they have achieved.Although more than twenty years have passed since the collapse of the SovietUnion, the countries that emerged from former Soviet republics still face someintractable problems. These are mainly connected with their interaction in theuse of natural energy resources and pricing, in particular the use of Caspianenergy resources and the pricing of Russian gas and its transportation toEuropean countries.One of the problems associated with the common power market, and which ispeculiar to Central Asia, is the need to resolve disagreements over the use of thepower and water resources of trans-border rivers such as the Naryn and Vakhsh,among others. These disagreements have been caused by (a) the construction ofcascades of HPPs in Tajikistan and Kyrgyzstan, (b) the requirement to providean optimal water use schedule to all countries located downstream of the transborderrivers in use, and (c) significant differences in seasonal water demandand energy efficiency of hydropower plants.To overcome these disagreements, generating facilities, transmission lines(including interstate lines) and reservoirs need to be developed further andmechanisms of regional cooperation need to be created (Vinokurov et al.,2007). The EurAsEC Integration Committee is involved in efforts to resolve thisproblem.There are several organisational, legal and methodological challenges whichalso obstruct the creation and development of the common electric powermarket in the CIS.Global experience (Belyayev et al., 2008), of creating common electric powermarkets shows that it is a lengthy and complex process. First, countries enterinto bilateral agreements on parallel operation of their national power grids.In the CIS, such agreements were made between Russia, on the one hand,and Kazakhstan, Belarus, Ukraine and Kyrgyzstan on the other. They governrelationships but do not provide a basis for free trade.210 EDB Eurasian Integration Yearbook 2012