Kazakhstan has declined the services of Russian companies for the construction of Thermal Power Plants (TPPs) in Semey, Kokshetau, and Ust-Kamenogorsk. At a government meeting, it was revealed that Kazakhstan decided to build the Kokshetau TPP independently, while the other two will be constructed by a Kazakh-Singaporean consortium involving Samruk-Energy. This decision marks a significant shift away from the preliminary agreements reached with Russia in late 2023.
Key details of the policy shift:
- Financial Deadlock: The primary reason for the withdrawal was the lack of clarity regarding subsidized financing from the Russian side. Russian banks were expected to provide 15-year loans, but complications arose regarding interest rate subsidies for equipment procurement, making the projects economically unfeasible for Astana.
- New Partnership Structure: The Kokshetau TPP (estimated at 300 billion tenge) will be built by Kazakhstan alone. The TPPs in Semey and Ust-Kamenogorsk (roughly 400 billion tenge each) will be developed with Singaporean expertise, moving away from the initial plan involving the Russian giant Inter RAO.
- History of the Agreement: The initial deal, valued at $2.7 billion, was signed in November 2023 during Vladimir Putin’s visit to Kazakhstan. However, after two years of stagnation, Kazakhstan has opted to redesign the projects without Russian involvement.
Analytical Summary:
Kazakhstan’s withdrawal from the energy deal with Russia is a clear example of how high interest rates and sanction pressure on Russian banks are stripping Moscow of its status as an “infrastructure exporter.”
The Collapse of Financial Diplomacy: The Kremlin’s traditional influence model—”we build, our banks provide the credit”—is no longer functional. Under current market conditions in the Russian Federation, providing preferential financing for long-term foreign projects has become an unaffordable luxury for Moscow. Astana has pragmatically chosen Singaporean investments, which are unburdened by sanction risks and offer a more transparent structure.
Technological Independence: Replacing Inter RAO with domestic capabilities and Asian partners suggests that Kazakhstan no longer views Russian energy technology as indispensable. Utilizing Singaporean experience likely indicates a transition to more modern environmental and digital standards for TPP management, which is critical for the modernization of the country’s aging energy grid.
Geopolitical Drift: The public rejection of agreements reached at the presidential level highlights the growing distance between Astana and Moscow. Kazakhstan continues its multi-vector policy, demonstrating that being an “EAEU ally” does not grant Russia an automatic right to major infrastructure contracts if they are not backed by real, competitive financing.