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Breakthrough projects of “Samruk”
The idea of creating a state-owned holding that would manage the state assets was put forward by the President Nazarbaev after his visit to Singapore in 2003. During the visit Nazarbaev considered the activity of “Temasec” holding, which is one of the famous holdings in the world; it was established by the government of Singapore in 1974, and it manages all of the state investments. Today “Temasec” manages the portfolio valued at 60 billion dollars. During the realization of the President’s project the international experience has been studied. The independent consulting company “McKinsey”, which has an experience in creation of similar institutions, was involved in the development of the plan of establishing the holding. The main objective of “Samruk” holding is the creation of development strategy for the industrial sector of the economy, which would comply with the government’s short-term and long-term interests, and maximization of the companies’ value in the long-term. It is the first initiative of such kind to appear on the territory of the CIS. It is unique, because it combines the stability of state-owned economy with the dynamics of business oriented company. “Samruk” holding will resolve the problems of improving the system of corporate governance, increasing transparency of the companies’ budgets. Acting as a shareholder, the holding will manage the activities of the companies through the boards of directors, without direct interference into the operational activity of the companies. “Samruk” will conduct the monitoring of large investments of the national companies through the process of approving of the investment budgets. Moreover, it has the right to implement its own investment projects financing them with its own resources. Such projects are already there.
Breakthrough projects
Electricity industry
Balhash heat power station
JSC “KazNIPII TES Energia”, by request from JSC “Samruk” Holding, conducts technical-economic research on the necessities and benefits of building new generating plants in Kazakhstan. The work is expected to be finished in end May. However, there are preliminary results available now; the results approve building a big coal power station nearby Balhash Lake to eliminate the power deficit in the Southern region of Kazakhstan. Two energy blocks of the plant, with the total capacity of 1000-1300 MW, are planned to be put into operation in 2012 – 2015.
North – South (second line)
JSC “KEGOC” is implementing the project on construction of the second line of electricity transmission facilities “North – South of Kazakhstan”. The goal of the project is to supply electricity to the southern oblasts of Kazakhstan, which are experiencing electricity deficit. It will be done due to increasing the annual transmission capacity of North – South line from 3,5 billion kW/hour to 7 – 7,5 billion kW/hour, improving the reliability and ensuring the operational safety of the National Electricity Network of Kazakhstan (NEN), and parallel operation of energy companies of Russia, Kazakhstan and Central Asia. The length of the line will be 1115 kilometers. The project includes the simultaneous construction of three legs of the electricity transmission facilities, construction of new power sub-station “Shu” with the capacity of 500 kW, and expansion of the operation power sub-station “Ekibastuz” and “Agadyr”. Realization of the project is financed by the loans from the International Bank for Reconstruction and Development (100 million dollars), EBRD (syndicated loans for the amount of 147,8 million dollars), Development Bank Kazakhstan (21 million dollars and 6970 million tenge), and the company’s own resources. The construction of all of the three legs of the electricity transmission facility is expected to finish by the end of 2009.
Moynak hydroelectric power station (HPS)
The project of constructing Moynak HPS on Charyn river in Almaty oblast is implemented by JSC “KazKuat”, 100% of the company’s shares are owned by “Samruk” holding. The cost of the construction is about 250 million dollars. The holding is working on financing the project.
Northern Kazakhstan – Aktyubinskaya oblast electricity transmission facility
Already in 2005 Aktyubinskaya oblast experienced electricity deficit of 157 MW. The deficite was covered by the imports from Russia. The deficit is expected to grow to 450 MW in 2020. The project of building inter-regional electricity transmission facility “Northern Kazakhstan – Aktyubinskaya oblast” will allow to include the electricity network of the oblast into the NEN of Kazakhstan and ensure the oblast’s independence from the imports. Implementation of the project is based on the state-private partnership through concluding the concessive agreement between JSC “Batys transit” (holding 20% of the shares) and the Ministry of Energy and Mineral Resources. Total cost of the project is approximately 18,9 billion tenge. It is planned to be completed in 2008.
Modernization of the NEN of Kazakhstan
This project consists of replacing depreciated and obsolete high-voltage equipment in more than half of the power sub-stations of JSC “KEGOC”. The power sub-stations and communication equipment of the NEN of Kazakhstan will also be modernized. The cost of the project is about 374 million dollars. Realization of the project is financed by the IBRD (140 million dollars), EBRD (45 million dollars) and the company’s own resources. The project is expected to be completed in 2010.
Telecommunication
Communication in rural areas
JSC “Kazakhtelecom” is in the process of buying the company that holds the license for the CDMA-450 standard. Acquiring the frequency and the licence will greatly expand the capacities of “Kazakhstelecom” in rural areas. The issue of introducing changes to the taxation law and the law “About communication”, which would set the minimal profitability for communication operators in rural areas, has been raised. In this case the issue of covering all rural areas with telephone connection will be resolved within two years.
National Internet Traffic Exchange Center
The project of establishing the National Internet Traffic Exchange Center as a part of the country’s IT infrastructure has been developed. Preparation of the technical documentation has also been completed. Currently the Center is in the process of being registered as non-commercial entity independent of any communication operators. The Center will start functioning by the end of this year.
Transport
Investment project on constructing locomotive assembly plant in Astana
More than 70% of locomotives in Kazakhstan are considerably depreciated. The deficit of locomotives emerged in 2007 and it will grow to 1154 by 2030. the board of directors of JSC “NC KTZ”, which is a part of “Samruk” holding, decided to start building locomotive assembly plant in Kazakhstan. Realization of the project will allow to fulfill the necessity of modern locomotives. The share of Kazakhstani companies in the assembly of the first 100 of locomotives on the new plant will be 18%. This share is expected to grow over time. By 2020 the locomotives are planned to be sold to Baltic States, Azerbaijan, Tajikistan, Uzbekistan, Armenia and other countries.
The project of building railroad wheel pairs and axles producing plant
According to the Strategy of Industrial-Innovation Development of Kazakhstan for 2003 – 2015, “Kazsteel” Ltd suggests the project of construction railroad wheel pairs and axles producing plant with the capacity of 100000 wheel pairs and 40000 axles per year. Traditionally JSC “NC KTZ” imports these products from Russia and Ukraine. These imports amount to 15% of the company’s annual expenses. Moreover, due to the high demand the companies, which produce wheel pairs, delay the delivery of the products to JSC “NC KTZ”, which results in the deficit, reduction of capacity of the railroads, increase of cost of transportation and investments. The necessity to produce this kind of machinery in Kazakhstan has is rising. By the beginning of 2008 the number of wheel pairs required by the national company will become 464 000. The factory is planned to be built in Pavlodarskaya oblast. The total cost of the project is 40 billion tenge. The capacity of the plant will be 100000 wheel pairs, 40000 axles, and 233000 tons of pipes. The resources of finances are bank’s guarantees to the supplier of the equipment, investments of the project’s shareholders (“Kazsteel” Ltd and “ATK-2005” Ltd – 50%, Sharman Overseas – 50%), and loans. The project is expected to be completed in two years.
Petrochemical industry
The first gas-chemical complex in Atyrauskaya oblast
The project is realized within the framework of the program of JSC “KazMunayGaz” on development of petrochemical industry in Kazakhstan. The financial and legal consultants have been selected. The tender for managing the project has been conducted (PMC-contractor). The agreement for supplies of gas in the amount of 5 billion cubic meters per year for the duration of 13 years, which has been previously signed, is now being reconsidered. The area for the petrochemical complex has been identified, it is located 40 kilometers away from Atyrau. The preliminary assessment of the plant’s influence on the environment has been completed. Due to the change of the previously identified construction area and increased costs of some equipment, the technical-economic indicators of the project have been updated.
Project of building benzene hydrocarbon producing complex in AOR (Atyrau oil refinery)
The capacity of the oil refinery is 5 million tons of oil, including 1,5 million tons of light oil (Tengiz, Karachaganak). The equipments of the primary oil refinery, coke glowing, benzene separation and reforming will be modernized during implementation of the project.
