Interview with Chairman of the Board of JSC "KEGOC" B. Kazhiyev "Kazakhstanskaya Pravda"

English

The System Operator of Kazakhstan’s UES marked the 15th anniversary of its establishment.

For fifteen years the KEGOC has proved itself as an effective and stable growing company, providing reliable and quality electricity to the consumers of the country. Its strategic importance in the national economy is confirmed by successful implementation of large-scale projects for the development of electricity infrastructure and its activities on the level of advanced technologies. 

Today in his interview to the "KP" the board’s chairman of the JSC «KEGOC» Bakytzhan KAZHIYEV told about their achievements and goals for future. 

- Looking back on the path covered by the company, what major milestones in its development would you single out?

- It should be noted that the development company KEGOC can not be considered in isolation from the power development of the republic as a whole.

In the first years of sovereignty RK Government took timely steps to restructure the energy sector. In particular, the generating stations were put in a competitive environment and the regional network companies were created. Then the National Power Grid was set up which includes transmission lines and substations of 220 kilovolts and more, of inter-regional and interstate significance. The assets of the National Power Grid as an infrastructure facility of strategic importance for the republic were transferred to the newly established national company KEGOC. These and other measures led to significant positive changes in the electricity sector. For example, in a short period the price of electricity declined by 4 times, which was very significant achievement.

The KEGOC Company since its formation has been dynamically evolving. We carry out a comprehensive large-scale modernization of the National Power Grid. With the support of Head of State and Government of Kazakhstan we successfully implemented large-scale projects aimed at improving the reliability of power supply and the development of Grid infrastructure. Among them there is the first stage of modernization of the NPG, the construction of the second line of the 500- kilovolt transit “North – South”, a joint project with the "Batys transit" of the construction of 500 -kV lines “Zhitikara – Ulke”, which connected the Aktobe power center directly with the power system of Kazakhstan.

- What is the company's contribution to the state program AIID?

- Today we are implementing three major projects within the state program of accelerated industrialization: the second stage of modernization of the NPG and the construction of the Moinak HPP, which we divided into two stages.

The first stage has been already completed, i.e. construction of an open-type indoor switchgear of a 220- kV line for the Moinak HPS and a 220 kilovolt line of Minak HPP - Shelek. As known, the Moinak hydropower plant is already engaged in generating electric power. 

The second phase of this project, to be completed this year, includes the construction of 220 kilovolt power line from the power plant Moinak to the substation Robot. And the third project, within the PAIID is the construction in Almaty region of a 500 kV -substation “Alma” with transmission lines of 220 and 500 kilovolts. The project is scheduled for commissioning in 2014.

In general, there are 15 investment projects for the National Power Grid in our development strategy up to 2025. This is an ambitious and at the same time, a real plan totaling about $ 3.5 billion.

It’s worth noting that the tasks of electricity network infrastructure are closely linked with the development plans of the generating sector. And taking into account the fact that annual growth of electricity consumption in the country is 4-6%, the necessary to actively develop generation is indisputable. Thus, in the north of the republic the company "Samruk-Energo" has recently successfully completed the project to restore the unit number 8 at the Ekibastuz GRES, the capacity of 500 megawatts, and in near future they plan to build two more units of 500 megawatts, as well as the third unit at the Ekibastuz GRES-2. 

In the coming months we plan to launch another major project - to build a power line North - East - South West with a total length of 1 500 km, which will ensure the transfer of electricity from energy sources to satisfy the growing demand for electricity in the southern and eastern regions of Kazakhstan. Also in the longer term, we intend to connect the power grid of western Kazakhstan with the northern and central regions of the Unified Power System of the republic.

Implementation of these and other projects and plans for the development of the Unified Power System of Kazakhstan will create intelligent, balanced and high-tech power grid of the country. By the way, this is one of the important tasks, which, along with the development of the National Power Grid, the regional power companies, has been included in the program for the sector’s developed up 2030 worked out on the order of RK Government and with the involvement of the KEGOC.

- The emphasis in the program of the accelerated industrialization is on innovative component. How do you encourage the introduction of know-how and new technologies?

- The company has elaborated and consistently implements the strategy of innovation and technological development. Much importance in the projects is attached to innovative- technological and management solutions and use of advanced technologies. In particular, for the first time in CIS we applied a 220 kV transformer for the induced distribution of flow of electrical energy and installed controlled shunt reactors for voltage of 500 kV in the three-phase. These elements of the network increase the manageability and reliability of the grid on the whole. The other side of the innovations is energy efficiency.

As part of the modernization project we install at the substations electric and gas vacuum switches used instead of the obsolete and outdated air and oil circuit breakers. The result achieved is a 10% reduction in energy consumption for own needs of the substations, as well as a significant reduction in the volume of used transformer oil.

- KEGOC declares its transformation into a competitive global company. How does the company attract means for these ambitious plans?

- I’d like to note that the KEGOC has not used public money in the large-scale infrastructure projects. From the very beginning we bet on the attracting funds from international and domestic financial institutions. It was a difficult task, taking into account the fact that we had no sufficient experience and understanding of the working methods of the foreign business standards then. 

The company reached a partnership with such financial institutions as the European Bank for Reconstruction and Development, the International Bank for Reconstruction and Development. For example, we borrowed loans from the EBRD at over a billion dollars, of which about 50% - were unsecured loans, that shows the great trust in us and our properly organized work. 

Thanks to such cooperation, domestic power industry had access not only to funding but also to advanced technologies and management methods. The KEGOC annually confirms the Integrated Management System Certification, and holds a leading position in terms of corporate management in the group of companies of FNW "Samruk Kazyna".

All these factors determined the choice of our company as a candidate in the first echelon for the “People's IPO”.

- At what stage is now the company’s listing for the IPO?

- Let me remind that “The People's IPO” is held, first of all for people's participation in the equity of large national companies, the development of Kazakhstan's stock market, and secondly, for involving funds in investment projects of national companies. It is clear that KEGOC does not depend on fluctuations in the value of hydrocarbons in the market. Therefore, being a stable company, it was proposed as an issuer in the domestic stock market. We involved consultants and fully carried out the preparatory activities - technical, financial and legal expertise.

Intending to be listed on the KASE, we conducted preparing to it in accordance with best international standards. This has been done for greater transparency in order to provide the investors and the population with the objective and transparent information about our company. Currently we are working with the Agency for Regulation of Natural Monopolies and MEDT to change the tariff methodology in run up to the IPO.

- What changes are expected in the sector in connection with the adoption of the legislation on the power market?

- In the near future a new concept - market of power will appear in Kazakhstan, along with the existing electricity market. The KEGOC being the system operator will also become an operator of the power market. The new mechanism was designed to provide investment attractiveness of the projects on construction of new power plants at the account of the guaranteed repayment of investments, and to create conditions for increasing capacity at existing plants. The relevant rules are enshrined in the recently adopted Law "On amendments to some legislative acts of RK on the power industry, the investment activities of natural monopolies and regulated markets."

- Last winter the situation with the unauthorized intake of electrical power by the power system of Uzbekistan was a serious challenge for the domestic power industry. Was the probability of exit of Kazakhstan’s energy system from the unified system of Central Asia considered? What decision was made on this issue?

We have done a lot of work with our colleagues from Central Asia. At the end of December last year and January this year we signed contracts with Uzbek energy system to pay for unscheduled electricity supply from Kazakhstan to Uzbekistan from November of 2011 to March of this year, as well as the contracts for the provision of services for power regulation in 2011 and 2012. At the recent meeting of the Coordinating Electric Power Board of Central Asian countries we brought the issue to head. As we were assured by Uzbek colleagues, this year they are expected addition growth of electric power of about 1000 megawatts, which will allow them to avoid non-contractual flows of electricity.

In conclusion I’d like to note that the passport to success and to all achievements of our company is a high human potential. We have the team of highly skilled professionals who preserve and honor traditions and love their work. 

I would like to congratulate our colleagues on the 15th anniversary of the company, and wish them happiness and success in all their endeavors!