The most wasteful
At some point the Soviet economy and lately the economies of the post-Soviet states have completely left out from the global process of reducing the energy intensity of the industries. Of course, one can argue that availability of energy resources is a natural competitive advantage. However, the tendency to introduce energy preserving technologies, which was started by the oil crisis in 1973, is developing continuously. Moreover, at the times of high (relatively long-term) average prices of energy resources, the tendency becomes stronger.
According to the data for 2003, all of the economies of the CIS, excluding Armenia and Georgia, were among the top 20 countries by the consumption of energy resources per unit of GDP at current exchange rate (table 1). When the GDP data is based of the purchasing power parity of the national currencies, the picture doesn’t change. Uzbekistan, Kazakhstan, Ukraine Russia, Moldova, Tajikistan and Byelorussia are among the leaders by energy intensity.
Kazakhstan, Byelorussia, Russia and Ukraine, the four countries of the CIS which could expect development of manufacturing industry, used 2,8 – 3,3 times more energy than Germany, 2,5 – 3 times more than Hungary, 2 – 2,5 times more than Poland and 1,8 – 2,1 times more than Czech Republic (Diagram 2). If the GDP is considered based on the current exchange rate, the gap with Germany increases to 10 – 19 times, and to 3 – 6 times with the transit economies of Eastern and Central Europe (Diagram 3).
More detailed analysis of the industries and separate companies is necessary for more robust conclusions. Taking into account that energy expenses are one of the main parts of the industry costs at almost any modern production, regardless of its industry specialization, the conclusion implies uncompetitiveness of the CIS producers compared to the European ones.
The situation is no better in the niche of less technologically intensive products. During the last 20 years China, the rising global trade empire, has significantly reduced energy intensity of its industries and has come close to the high standards of the USA. Depending on different calculation method, Uzbekistan spends 5 – 6 times more energy per unit of GDP than China. This indicator is 1,9 – 2,4 for Kazakhstan, 1,7 – 2,4 for Russia, and 1,4 — 1,6 for Kyrhyzstan (Diagram 4 and 5). It is clear, that with such high energy expenses, one wouldn’t expect exports of industry products to the world markets.
Oraz Zhandosov, the President of joint-stock company KEGOC in 1999-2000:
“To the personnel of the company I wish to be proud of their work place, and receive a deserved payment for their hard work. To the company I wish that within its functional responsibilities KEGOC reaches the international level of development. It has all the requirements to do so.”