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The CIS Common Electric Power Market

Trade in electric power and mutual investments are at a low level and do not correspond with the sector’s potential. The CIS is a net exporter of electric power, but the actual volumes of import and export are small. CIS countries are capable of more, having large coal and gas reserves with huge potential for energy production, vast hydropower potential, and competitive advantage in power engineering. In spite of the considerable revival during recent years, mutual investments remain at a low level and are characterised by a one-sided structure. Power markets (power industry, hydrocarbons, coal, uranium) are specific: it is necessary to combine a complex approach to fuel and energy balance with functional integration in these unique markets. In the 2000s, the EurAsEC began work on creating a common power market (CPM). It goes without saying that, at the level of conception, power markets must be regarded as interrelated, which allows the implementation of the principle of comparative advantages in the process of integrating different countries. Alongside this, power industries may form separate markets with their own specific regulations. The idea of a common power market, which is the basis of the systematic work of the EurAsEC, inadequately reflects the peculiarities of the power industry. In our opinion, the subject that should be considered is the creation of a number of common markets, such as: an electric power market, an oil and gas market, and a coal market. The creation of a uranium market may then follow. In spite of their evident dependence on each other, each of these markets is very specific and consequently should be regulated independently Creating a common power market entails a number of solvable problems. The completion of the liberalisation of the Russian market, which is the biggest, networked market of the CIS, is one of the most important preconditions for the development of a common power market. In general, the integration of the power market is dependant on the institutional peculiarities of the national electric-power industry in the key countries. Despite this, if an optimal regulative environment is established, a common power market can still be created even with the preservation of a considerable presence of public companies in the generation and distribution of energy. Advancement towards a continental Eurasian common power market is economically rational. Russia and its neighbours are interested in Eurasian integration, which would not be constrained by the boundaries of the post-Soviet space. The very logic of a CPM urges us to go beyond the boundaries of the post-Soviet area. Russia and Kazakhstan are keen promoters of the CPM, as are a number of other CIS countries including Armenia, Azerbaijan, Kyrgyzstan, Tajikistan, Uzbekistan, Turkmenistan, Ukraine and Belarus. Practically all of the CIS countries could gain real advantages as exporters and transmitters of electric power if real electric energy market mechanisms are introduced, thereby dealing with countries of Eurasia such as China, Iran, India, Turkey and EU countries. A CPM for Eurasia would develop gradually, founded on a number of bi- and multilateral agreements.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 20910.

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Date of creation: Mar 2009
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Handle: RePEc:pra:mprapa:20910
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