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Is Daghestan's Energy Crisis Caused By Inefficiency -- Or Corruption?

Residents of Makhachkala, Daghestan, protest over inadequate heating and electricity in 2008
Residents of Makhachkala, Daghestan, protest over inadequate heating and electricity in 2008
At a time when the population of eastern Europe is suffering from a cut-off of gas supplies as a result of the Russian-Ukrainian gas dispute, residents of Daghestan risk falling victim to an excess of gas.

On January 10, the entire Magomedov family in Khasavyurt, Daghestan's second-largest city, died from gas fumes from a malfunctioning gas stove. They were not the first: there have been dozens of such cases over the past year, all of them the direct consequence of an acute electricity shortage beginning in the fall of 2007 that has left the population with no alternative but to try to heat their homes with gas stoves. Most of the fatalities can be attributed to gas stoves of inferior quality.

Khasavyurt is not the only city affected by power shortages. In January 2008, more than 1,000 residents of Makhachkala, the capital of the republic, took to the streets and began to erect barricades to register their anger at the chronic electricity outages. Mayor Said Amirov denounced the mass protest as a political provocation, while the republic's Ministry for Emergency Situations, anticipating more extensive outages as temperatures fell even further below zero, blamed the cuts on a combination of obsolete infrastructure and excessive demand.

But an investigation undertaken by the Daghestan prosecutor's office established that the primary cause of the power cuts was not obsolete energy infrastructure, but lack of coordination between the main generating company, Dagenergo, and the republic's main distribution company. The Federal Antimonopoly Service, which intervened in the dispute, fined both agencies for abusing their positions as monopoly suppliers, and their respective appeals against those fines were rejected by the Court of Arbitration. The Makhachkala Municipal Energy Distributor was also named as sharing responsibility for the reduction in power supplies to city residents who had faithfully paid their electricity bills.

But neither that investigation nor other measures intended to stabilize energy supplies helped to solve the problem. One year later, those Makhachkala residents who diligently pay their electricity bills on time are increasingly asking how such a crisis could arise in Daghestan, which has long been regarded as the energy hub of the entire North Caucasus. Can the big hydro-electric power stations that have been built on the republic's mountain rivers over many years generate enough electricity to meet the population's needs? And if they can, why are residents facing shortages?

Viable Or Not?

Almost 20 years ago, in June 1990, Daghestan's State Committee for the Environment tasked a group of experts with evaluating plans for constructing a series of hydroelectric power stations in the republic over the next two decades. Those experts concluded that building large hydro-electric plants on the Sulak river and its tributaries was not viable, and was in fact a complete waste of resources.

They cited the example of the Irganai hydroelectric power station then under construction. Its planned annual capacity was 1.26 billion kWh, but the experts pointed out that due to the limited amount of water that would accumulate in the reservoir, it would be capable of generating power in winter only for just over two hours per day, meaning only for very limited periods at times of peak consumption. But construction went ahead despite those reservations, and the Irganai power station, the second-largest in the North Caucasus, was completed in 2008.

The ongoing wave of power outages in Daghestan has prompted some people to ask whether the arguments against building Irganai were indeed valid. But when RFE/RL's North Caucasus Service put that question to B.N. Yurkevich, the first deputy director of Lengidroproyekt, one of the construction companies involved, his response was a categorical "no." Yurkevich said that the technical studies undertaken showed that the project was viable, and he implied that local journalists had distorted the experts' findings.

But the ongoing electricity shortages suggest that either the skeptics were right, and Irganai is generating only minimal amounts of electricity, or it is generating far more than actually reaches consumers in Daghestan, with the remainder being illegally diverted to third parties whose identity is virtually impossible to ascertain.

What's more, there is a second, no less important aspect to the Irganai controversy: the failure, even after 19 years, to pay compensation to inhabitants of Untsukul Raion whose orchards or arable land were flooded when the Irganai dam was built. According to a local stringer for RFE/RL, they have abandoned all hope of receiving compensation from the Daghestani government and are preparing to take their case to a European court.

Meanwhile, work has begun on a second hydroelectric power station -- Gozatl -- some 25 kilometers upstream from Irganai, in Khunzakh Raion. An official with the republican Land Registration Committee told RFE/RL on condition of anonymity that the government of Daghestan has not taken any formal decision on allocating land for its construction, and residents of Khunzakh whose lands will be flooded are seriously concerned that they will fare no better in terms of receiving compensation than the former residents of the Irganai valley.

Searches And Extortion

There is a third, political aspect to the energy problem. On December 15, 2007, the authorities launched a "counterterrorism" operation centered on the village of Gimri in Untsukul Raion. Russian Interior Minister Major General Sergei Chenchik, who commanded that operation, announced at the outset that he would lift the curfew imposed in the village and withdraw his special forces only when the "Islamic militants" and "wanted criminals" who were the target of the operation had been apprehended. But only one suspect has been killed over the past 13 months.

The residents of Gimri make a living primarily by growing and selling fruit -- it is one of the few districts of the North Caucasus to produce pomegranates and persimmons -- but the restrictions imposed during the security crackdown prevent them for weeks at a time from transporting their highly perishable fruit to market to sell. A police officer who was in Gimri for two weeks in late December, 2008, told RFE/RL that Russian servicemen and Daghestani police regularly extort money and appropriate valuables from Gimri residents under the pretext of routine house searches.

Many Gimri residents are convinced that the "counterterrorism operation" was triggered by the murder on December 9, 2007, of influential former Daghestan parliament deputy Gazimagomed Magomedov. His associates reportedly included some senior officials of the hydroelectric complex Sulakenergo, which receives huge sums in subsidies from the federal budget.

Some observers believe that the management of Sulakenergo, vulnerable to blackmail or close scrutiny of its finances, appealed for help to highly placed patrons within the federal Russian government, who responded by giving the green light for the crackdown. That hypothesis has been partially substantiated by someone close to the Daghestani government, who told RFE/RL's North Caucasus Service on condition of anonymity: "An influential State Duma deputy who represents the Unified Russia party is lobbying the interests of top Sulakenergo officials within the upper echelons [of the Russian leadership]. If you take into account the role played in Russian political and economic life by the phenomenon known as kickbacks, then it's unlikely he is acting out of sheer altruism."

In December 2008, Sulakenergo was subsumed into the federal agency RusGidro in a move that will only compound the lack of transparency surrounding the entire energy sector in Daghestan. Whether that merger will result in improved power supplies to the long-suffering population is anyone's guess.

Murtuz Dugrichilov is a broadcaster with RFE/RL's North Caucasus Service.