Kazakhstan has definitively abandoned Russia's participation in the construction of three combined heat and power plants (CHPs) in the cities of Kokshetau, Semey, and Ust-Kamenogorsk. Samruk-Energo, a subsidiary of the National Wealth Fund Samruk-Kazyna, announced that a Kazakh-Singaporean consortium will now lead construction. The plants will use Chinese technology, raising the likelihood that Chinese firms such as China Energy Engineering/PowerChina will be brought on board.
The decision to build these CHPs with Russian investment was formalized in two stages. In the fall of 2023, a memorandum was signed during President Putin's visit to Kazakhstan — a framework document outlining intentions to build the plants. In April 2024, an intergovernmental agreement followed. Samruk-Energo was designated as the Kazakh partner and Inter RAO–Export as the Russian one. Financing was to come through a preferential Russian export credit tied to the supply of Russian equipment.
Soviet-Era Infrastructure, Twenty-First-Century Consequences
Kazakhstan's push to build new CHPs stems from the catastrophic deterioration of its energy infrastructure, much of which dates to the Soviet era. The average age of the country's CHPs was 61 years; roughly 76 percent had been in operation for more than 50. Private owners of several plants invested almost nothing in modernization, and the situation was compounded by ineffective tariff policy and heavy debt burdens on energy enterprises.
In December 2022, then-Energy Minister Bolat Akchulakov noted that the average equipment wear across the country's CHPs stood at 66 percent, with plants in Uralsk, Stepnogorsk, Taraz, Kyzylorda, and Kentau exceeding 80 percent. Between 2022 and 2023, serious accidents struck CHP-2 in Petropavlovsk, the Ekibastuz CHP, the Ridder CHP, and CHP-3 in Karaganda. In February 2023, heating network failures linked to the local CHP in the city of Rudny left dozens of buildings without heat, prompting a local state of emergency.
An additional pressure was a growing electricity deficit. In 2025, Kazakhstan significantly increased electricity imports from Russia, primarily to cover shortfalls during evening peak consumption — but at higher prices.
Against this backdrop, the government adopted the National Project for Modernization of the Energy and Utilities Sector (2025–2029) and the National Project for the Development of Coal-Fired Generation (2026–2030) to modernize aging CHPs and construct new ones. Twelve CHPs in municipal and quasi-state ownership were to be financed from the state budget; 22 privately owned plants were to be upgraded at the owners' expense. Foreign investment was also sought.
How the Russian Deal Collapsed
Kazakhstan's Energy Ministry acknowledged that the Kokshetau, Semey, and Ust-Kamenogorsk projects had encountered difficulties from the outset, particularly given international financial institutions' refusal to fund coal-fired generation. That constraint is precisely what led Kazakhstan to turn to Inter RAO–Export. But negotiations dragged on.
On June 15, 2025, new Energy Minister Yerlan Akkenzhenov declared that Kazakhstan could begin building the three CHPs independently if talks with Russia failed. By July, construction of the Kokshetau CHP had already begun without Russian participation. Prime Minister Olzhas Bektenov stated that Kazakhstan had never received firm guarantees of the promised preferential financing from Russia. By January 2026, President Tokayev publicly criticized the delays, singling out both the government and Samruk-Kazyna. Bektenov then directed Samruk-Kazyna to finalize construction contracts for all three cities by the end of January 2026, with work to begin in April.
Samruk-Energo met that deadline. The Semey plant — 360 MW and 1,000 Gcal — is budgeted at 578 billion tenge. The Ust-Kamenogorsk plant, of equivalent capacity, will cost 602 billion tenge. Construction and installation at both sites is set to begin in April 2026, with equipment deliveries spanning 2027–2029 and commissioning targeted for December 2029. The Kokshetau plant will cost 355.6 billion tenge and is scheduled for commissioning in February 2029. All three facilities will incorporate artificial intelligence and clean coal technologies.
Sanctions, Costs, and Misaligned Expectations
Inter RAO–Export's withdrawal was the product of overlapping financial, sanctions-related, institutional, and strategic factors. The estimated cost to Russia as investor and creditor was approximately $2.5–2.8 billion for all three plants. Since the start of the war in Ukraine, Russian energy companies have lost access to cheap Western capital, face secondary sanctions risks on foreign projects, and have grown more cautious about long-term infrastructure commitments amid deepening financial strain at home. Russia also confronted a deficit of imported equipment needed for CHP construction — a problem sharpened by Kazakhstan's insistence on modern AI-integrated technologies. Russian firms struggled to supply turbines and control systems, most of which depended on Western components now subject to restricted access.
A structural misalignment in expectations compounded the problem. Russia was asked to finance and build three plants without receiving equity stakes. Kazakhstan wanted preferential financing to solve its energy crisis quickly. Russia wanted guaranteed returns, tariff-based cost recovery, and minimal risk on a faster timeline. Kazakhstan's "Tariff in Exchange for Investment" program allows investors to channel tariff revenues toward equipment upgrades, but under strict state oversight. Meanwhile, the Kazakh government is reluctant to raise electricity and heating tariffs sharply, fearing social unrest — especially as the country prepares for a political transition. Tariffs in Kazakhstan are politically sensitive, yet without increases, project viability is doubtful. Russia, for its part, faces more immediate concerns: Ukrainian drone strikes on its own energy infrastructure and escalating military expenditures.
Closing the File Before Putin's VisitAlthough Russia's withdrawal generated frustration in Astana, it is unlikely to damage bilateral relations — particularly ahead of Putin's state visit to Kazakhstan in May 2026. The matter was likely addressed during Prime Minister Mikhail Mishustin's working visit to Kazakhstan in March, when Kazakh officials could have notified the Russian side of the investor change, effectively closing the issue before Putin's arrival.
If Russia Can't Build Power Plants, Can It Build a Reactor?
Russia's failure on three CHP projects raises a more consequential question about the viability of a far more expensive undertaking: Kazakhstan's first nuclear power plant, to be built by Rosatom. It is worth noting that the construction of Kazakhstan's first nuclear power plant has generated significant public opposition. This stems from the country's history as a Soviet nuclear testing ground: the Semipalatinsk test site hosted 468 nuclear tests between 1949 and 1989, causing a spike in fatal illnesses among the local population living near the site. In 1989, the international anti-nuclear movement Nevada-Semey was founded to demand the polygon's closure, which came on August 29, 1991. Kazakhstan also relinquished what was then the world's fourth-largest nuclear arsenal. The result is a deep historical aversion to all things nuclear.
Public unease was compounded by the fact that Russia would be building the plant in a seismically active zone. In the fall of 2024, authorities held a referendum on nuclear power plant construction; official figures showed 71.12 percent of voters in favor. Many questioned that result, however, citing a lack of transparency in vote counting. Nuclear power plant construction remains a politically sensitive issue in Kazakhstan.
The planned facility — 2.4 GW, consisting of two VVER-1200 units — is expected to break ground in 2029 and reach completion by 2035–2036. Its most recent cost estimate stands at $15 billion, up from an initial projection of $10 billion. Russia has pledged preferential export financing. But whether Moscow can deliver is uncertain, given that Rosatom's construction of new reactor units at Turkey's Akkuyu plant has been plagued by financial delays, sanctions-аrelated payment blockages to subcontractors, equipment delivery disruptions, labor protests over unpaid wages, and contractor difficulties.
These risks may explain why Kazakhstan has hedged its bets: in addition to the Rosatom project, Astana plans two additional nuclear plants with China's CNNC — one of the company's first overseas projects. If Rosatom encounters financial or technological difficulties, China may be positioned to deliver faster.
The Broader Retreat
More broadly, China could emerge as the leading source of foreign direct investment in Kazakhstan within five to six years. For now, the Netherlands leads with $2.88 billion, followed by China at $2.6 billion. Russia sits third at $2.1 billion. Russia's investment challenges in Kazakhstan reflect a convergence of factors: sanctions pressure, weakened financial capacity, loss of access to Western technology, and rising competition from China and Middle Eastern investors willing to fund Kazakh infrastructure.
Russia is no longer the dominant investor — it is becoming one player among several. This shift has accelerated since the United States, the European Union, and the United Kingdom imposed sanctions on major Russian oil and gas companies — Lukoil, Transneft, and Tatneft — all of which had significant investment projects in Kazakhstan, from upstream oil and gas development to the construction of a butadiene petrochemical complex in Atyrau region.
The Visit, the Pipeline, and the Reactor
Since the start of the war in Ukraine, Russian investment activity in Kazakhstan has moved through several phases. From 2022 to 2024, investment rose as Russian businesses relocated to Kazakhstan — a temporary boom driven largely by sanctions evasion and business transfers. In 2025, Russian investment activity dropped sharply: inflows fell from $1.2 billion to $180 million over nine months. In 2026, stagnation is the most likely trajectory, as the relocation effect exhausts itself.
Putin's state visit to Kazakhstan will almost certainly produce declarations about expanded Russian investment. The more important question is what new projects that investment will actually fund. During Mishustin's visit, officials cited 122 major projects between the two countries worth approximately $25 billion — but these likely refer to legacy commitments. Among genuinely new large-scale projects, only the nuclear power plant and Gazprom's investment in the Ishim–Astana gas pipeline for Kazakhstan's northern and northeastern regions stand out. The pipeline investment figure has not been disclosed, but analogous projects of this scale typically run to several billion dollars — a significant commitment for Gazprom, given the company's unstable financial position in recent years.
Dosym Satpayev is the founder and director of the Kazakhstan Risks Assessment Group, an independent consulting organization established in 2002. He received his PhD from Abai Almaty State University in 1999 and is the author of four monographs. In 2015, he founded the Söz cultural and literary foundation, which has published 30 books by Kazakh and international authors, established a museum and library, and produced five documentary films.