Here is the English translation of the interview with Nabi Aitzhanov, General Director of Kazakhstan Utility Systems LLP, originally published in The Business Year: Kazakhstan 2016. (Kazakhstan Utility Systems|Periodicals|Interview with Nabi ...)

Interview with Nabi Aitzhanov, General Director of Kazakhstan Utility Systems LLP

Background: Nabi Erkinovich Aitzhanov is the General Director of one of Kazakhstan's largest private energy companies. With extensive leadership experience in the energy sector, he has led Kazakhstan Utility Systems (KUS) since 2010, achieving a 20% compound annual growth rate over the past five years. The company has established clear strategic development plans, transforming into a successful, vertically integrated energy enterprise. International expertise is being adopted, equipment and technologies are being updated and modernized, technical indicators are improving, and capacities are expanding. The company's partner geography includes countries such as Russia, the UK, Germany, China, Denmark, India, and Spain.

Q: Mr. Aitzhanov, how do you assess KUS's position in the local electricity market?

Kazakhstan Utility Systems is one of the successful vertically integrated companies in the electricity and heat energy sector in the Republic of Kazakhstan. Our activities encompass the full cycle of energy supply to consumers: generation of heat and electricity, transmission and distribution, as well as sales. The company operates in energy-deficient regions of the country, specifically in the South Kazakhstan and Karaganda regions. Additionally, we provide services such as maintenance and repair, expertise and design, billing, and other services related to our core activities. Currently, our group includes seven main companies operating within the national energy market, along with 15 companies under trust management.

KUS ranks among the top five largest energy companies in Kazakhstan. In total, 22 companies are part of KUS, providing employment for 10,700 people. Our operations are transparent, as the main companies are either natural monopolies or dominant players regulated by the Committee for Regulation of Natural Monopolies. Tariff formation under such regulation involves thorough review and public hearings.

Q: What are the company's recent achievements and milestones?

The foundation of KUS's success lies in our approach to fixed assets. We understand that high-quality equipment is a key indicator and invest all our efforts into technical improvement and renewal. Over the past four years, the company's capitalization has doubled, and asset value has also doubled. All earnings are reinvested back into stations, networks, and other equipment. From 2010 to 2015, we invested approximately 154 billion tenge into our projects, leading to significant improvements in equipment efficiency. For instance, in generation, our installed capacity factor increased from 0.48–0.49% in 2009 to 0.72% today, compared to the national average of 0.53%.

Furthermore, in recent years, we have significantly reduced specific fuel consumption, decreased accident rates, and improved all technical indicators. Our investments are productive and moving in the right direction. We have conducted a complete reconstruction of existing boilers and increased capacity by 120 MW through the addition of a fifth turbine. This year, we are completing the installation of a unit at the Karaganda CHPP, resulting in a total capacity increase of 115 MW.

We select partners for equipment supply and construction projects with global reputations and extensive international experience. In the field of electricity transmission and distribution, substantial investments in fixed assets have increased throughput capacity and transportation volumes. Previously, due to network overloads, we couldn't connect new consumers. Now, by modernizing existing substations, we've enabled enterprises and small to medium-sized businesses to connect and develop.

We are also proud to be one of the first companies in the CIS to implement an automated commercial electricity metering system (ASKUE) down to the end consumer level, which immediately reduced losses. Through the implementation of automated systems and modernization of existing equipment, as well as investments, we've halved losses from 20% to 10–10.5%.

We sell energy in two regions: Karaganda and South Kazakhstan. The electricity we produce in Karaganda can be sold throughout Kazakhstan. In sales, our company is developing a large program aimed at developing and strengthening relationships with consumers. We provide billing services that cover not only utility payments for our services but also consolidate payments for other providers like gas, internet, waste, intercom, etc., into a single payment document. This reduces costs and improves service quality for consumers.

In addition to billing centers in both regions, we've opened unified settlement centers (URCs). For consumer convenience, we've enabled payment for all services through various modern payment methods, including online, SMS, and payment terminals installed throughout the city.

We are aggressively focused on growth and improving our companies. For example, in one of our companies, "Karaganda Zharyk," we've completely updated 23% of the company's networks over the past five years. We've also undertaken a program of theme management, full automation of business processes, and established an internal control system. Currently, 50% of all business processes, from company leadership to controllers, are automated. We aim to increase this to 80% in the first five-year plan. Automation provides a simplified approach and faster calculations. We aim to reach a level where budgets are formed automatically, and our procurement and supply processes are correctly formed, eliminating any issues mid-process. These are the tasks we've set for ourselves and are currently working on.

Q: What are your future plans?

KUS's main strategic development goal is to become one of the top four largest energy companies in Kazakhstan. To achieve this, the company has set the following objectives:

1. Development and expansion of existing generating capacities. Increasing electricity generation in the Karaganda region through modernization of existing capacities at CHPP-3, commissioning of turbine unit No. 6 with an electrical capacity of 110 MW and thermal capacity of 160 Gcal/h, and a steam boiler with a thermal capacity of 400 Gcal/h. (Kazakhstan Utility Systems|Periodicals|Interview with Nabi ...)

2. Reconstruction and modernization of main and auxiliary equipment at Karaganda CHPP-1 and CHPP-3.

3. Reconstruction and modernization of electrical networks to optimize electricity transport and distribution and minimize losses. This includes:

   a) In the Karaganda energy hub: reconstruction of 0.4 kV networks using SIP; reconstruction of "Tikhonovka" substation with voltage class upgrade to 110 kV; implementation of SCADA systems as part of Smart Grid development; construction of new substations 220/110/10 kV "Zharyk" and 110/35/6 kV "Sanitary"; reconstruction and expansion of existing 35–110 kV substations; implementation of ASKUE to the final 4th level of metering; construction of 35–110 kV overhead lines;