(Corrects spelling of name of hydroelectric plant)
* First Kyrgyz hydro plant since Soviet Union
* More hydro projects planned
* Intense competition for C.Asian water
By Olga Dzyubenko
TOKTOGUL, Kyrgyzstan, Aug 30 (Reuters) - Kyrgyzstan launched a $200 million hydroelectric power station on Monday, its first since the collapse of the Soviet Union, in a move likely to intensify competition for Central Asia's scarce water resources.
Acting President Roza Otunbayeva pressed a symbolic red button to start the first unit of the Kambarata-2 hydro project. The project, funded partly by Russia, will allow Kyrgyzstan to generate more power but could divert water from its neighbours.
"This launch will help our nation to prosper," Otunbayeva said at the ceremony. "Our success shows that our country can live independently."
The interim government of Kyrgyzstan, which hosts U.S. and Russian military air bases, has struggled to impose its control since a popular revolt in April propelled it to power. Nearly 400 people were killed during ethnic clashes in June.
Kyrgyzstan resumed construction of the Kambarata-2 project, abandoned in the 1990s, three years ago. The project was later able to draw on a $300 million loan from Russia to help revive the country's economy and infrastructure.
"Electricity and gold mining are the two wings of our economy," Otunbayeva said. Each contribute around 10 percent of Kyrgyzstan's gross domestic product.
"We will be able to live well in both winter and summer, and are increasing our export potential," she said. "The wasteful discharge of water in summer will be stopped."
Kyrgyzstan's ambitions to control the flow of its rivers in order to generate more hydroelectric power are of particular concern to Uzbekistan, its immediate neighbour to the west and the most populous post-Soviet republic in Central Asia. Uzbekistan relies on rivers that originate or pass through Kyrgyzstan and another mountainous neighbour, Tajikistan, to irrigate its arid cotton fields and farmland. It has opposed plans for large hydroelectric projects in both countries. The first unit of the Kambarata-2 hydroelectric project will allow Kyrgyzstan to produce an additional 500 million to 700 million kilowatt hours per year of electricity. The country currently generates about 14 billion kilowatt hours annually.
It is only the first of several projects planned along the Naryn river, which rises in the Tien Shan mountains and is dammed at Toktogul, the largest reservoir in Kyrgyzstan, before running on to merge with another river to become the Syr Darya.
Otunbayeva said a second unit, also costing $200 million, was planned for Kambarata-2. This would be followed by a third unit and simultaneous construction of the larger Kambarata-1 project.
"Of course, we will cooperate on this plan with Uzbekistan," she told reporters.
She also said a delegation from Russian power firm Inter RAO IUES.MM would visit Kyrgyzstan to discuss future projects. (Writing by Robin Paxton; Editing by Angus MacSwan)