Eurasian Integration Yearbook 2012

2011: Data and ReviewsKazatomprom has become one of the leading uranium handling companies;however it is unable to perform the enrichment stage of the nuclear fuel cycle.Under certain agreements with Russia, Kazakhstan may become a co-ownerof Novouralsk Chemical Plant, gaining access to a guaranteed share of itsproduction and the right to use the plant as it requires. In return Russia willreceive a 50% stake in several companies in Southern Kazakhstan, giving thecountry access to Kazakh raw materials.Inter RAO resumes electricity supplies to BelarusJuly 4, 2011Expert Kazakhstan, ExpertRussia’s electricity supplier Inter RAO UES has resumed electricity supplies toBelarus after the latter transferred the third and final tranche of its debt in theamount of 611 million roubles. The second tranche of debt was repaid on June29. Belarus borrowed from BPS-Bank (a subsidiary of Sberbank) to repay itsdebts for Russian electricity amounting to a total of 1.5 billion roubles.Chronology of conflict:Inter RAO UES first announced that Belarus had run into debt for electricity on June 8, 2011. Russia’s electricitysupplier warned that it would halt deliveries; however the parties managed to negotiate a delay in payment untilJuly 5. The debt was to be repaid in several tranches. The first tranche of 600 million roubles was transferredwithin the period stipulated. However, Belarus failed to make the second payment by the June 20 deadline,and Inter RAO UES threatened to discontinue electricity deliveries on June 22. Following talks, the partiesagreed to postpone the second payment for another week. However, Belarus once again defaulted and powersupplies were cut off on June 29, leading to another crisis in relations between Russia and Belarus.Unlike gas supply disruptions, power cuts are not critical for Belarus since it produces enough electricity powerto cover 90% of its domestic consumption and imports the remaining 10%. Because Belarus uses Russian gas toproduce electricity, the cost of domestically produced energy is 30% higher than that of imported power. HPPsproduce a small proportion of the country’s energy, and a nuclear power plant is currently in the design phase.At present Belarus is working on importing electricity from Ukraine. Minsk has tried to reach an agreementwith Gazprom on freezing gas prices in 2011 and anticipates a price cut in 2012. Belarus is keen to securepricing identical to Russia’s domestic tariff, since Russia and Belarus will be part of the Single Economic Spacefrom January 2012. But prices for Belarus are currently more than twice as high: in the second quarter of 2011Belarus was paying $245 per 1,000 m 3 of gas and prices are about to rise to $300-$305 per 1,000 m 3 by yearend. Smolensk region, Belarus’ reference point, buys gas for $106-$117 per 1,000 m 3 . The conflict continuesto escalate. On July 1 Belarus tried to raise tariffs for the transit of oil products by 15.9% to $1.9 per tonne per100 km. The decision was approved by Belarusian Energy Ministry. However, the head of Gazprom stated that“price conditions of the operating contract for gas deliveries are not liable to variation”. According to experts,Moscow is acting tactically to force Minsk to sell the remaining part of Beltransgaz, the operator of its nationalgas transportation system.Kommersant, RBK daily, Expert274 EDB Eurasian Integration Yearbook 2012