Privatization of the power and natural gas industries in Hungary and Kazakhstan

Hungary and Kazakhstan have privatised a large portion of their electric power and natural gas industries, but have followed different strategies. What lessons can other countries learn from their experience ? These countries began their reforms from different starting points. The Hungarian power and gas sectors had a long history of being relatively well managed. In contrast, Kazakhstan inherited pieces of the old systems that were designed to serve the needs of the Soviet Union and had to develop new organizations to manage the system. In the power sector, Hungary can boast that it has privatised six out of its eight generation enterprises (one coal fired and one nuclear plant ares still in state ownership) and all six of its distribution companies primarily to power companies from Europe and the United States. The transmission company (MVM) is still state owned and is the single buyer and seller of power on the wholesale market. In the gas sector, Hungary has privatised its single supply and transmission company that is the sole domestic producer and importer of gas (mostly from Russia). It sells gas to six regional distribution companies which have also been privatised. Though not perfect, the privatisation program in Hungary for power and gas was generally well planned, competitive, and transparent. The primary objective seemed to be to attract experienced foreign investors who could make the Hungarian firms efficient and profitable.