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Kazakhstan’s rising utility prices could lead to violence [1]

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Date: 2023-06

Kazakhstan’s decision to hike utility prices amid already rising inflation will “inevitably” cause living standards to plummet and could lead to a repeat of the January 2022 anti-government protests, experts have warned.

Utility prices in Kazakhstan will increase by 10-30% from 1 July, a move that the government justifies with the need to raise money for investment in infrastructure. Announcing the rises in April, President Kassym-Jomart Tokayev said: “Unless we gradually raise tariffs and bring them closer to the market, we will be left without infrastructure in all cities and villages.”

But experts have told openDemocracy they see the move as an inconsequential policy that will hit household incomes without sufficiently improving infrastructure. Economist Kuat Akizhanov warned that the increases will also exacerbate social tensions because people will be both unable and unwilling to pay.

“The formal trigger of the January 2022 protests was the increase in prices for liquefied gas,” said Akizhanov. “And even if the disorders were ultimately orchestrated by the elite, the significance of this factor should not be underestimated.”

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The sudden rise in liquefied natural gas prices in Kazakhstan early last year sparked a series of rampant protests, looting and police violence that came to be known as Qandy Qantar, or ‘Bloody January’. Some 227 people died in the unrest, according to Kazakh officials.

Inflation in the country has been high since last year, when it reached a peak of more than 20%, according to official data, which often underestimates the real picture. Economist Kasymkhan Kapparov says that for many Kazakhstanis, this offset last year any small income growth (wages rose by 2.8% on average, according to the Center for Applied Economics Research).

“An increase in prices for utilities will lead to a reduction in the real income of households, especially among citizens with low incomes,” Kapparov argued. “This is because utility expenses are prioritised in their expenditure, and these cannot be postponed or left unpaid.”

Kazakhstan’s Ministry of National Economy explained that utility tariffs will be raised according to the socio-economic situation of each region. The government’s aim is to allow for a progressive increase, with both ministers and private utility operators insisting that users currently enjoy low tariffs. They say the burden of financing modernisation falls onto their shoulders and causes infrastructural decay.

A lack of transparency

For President Tokayev, people should contribute to private investment in infrastructure, while the government supports the plant’s owners through national funding initiatives. He has made clear that he sees no alternative. But economists have questioned whether all the money being paid out by the government is going towards improving infrastructure.

According to Kazakhstan’s Ministry of Industry and Development, regional governments assisted 174,000 people with paying their utility bills last year, paying out a total of five billion tenge (£8.7m).

Every year, the state budget earmarks a specific amount – billions of dollars – for the maintenance of housing and public services in Kazakhstan. Energy and services companies receive credits under this programme for infrastructure maintenance and energy subsidies for citizens in need.

The budget, however, is not itemised and the amount each company receives is not known. The Ministry of Industry and Development, regional governments and the ministries of energy and national economy did not respond to openDemocracy’s request for comment.

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[1] Url: https://www.opendemocracy.net/en/odr/kazakhstan-rising-utility-prices-bloody-january-privatisation-protests-energy/

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