Nabi Aitzhanov: Consumer trust comes first!

Nabi Aitzhanov, CEO of Kazakhstan Municipal Systems, the largest energy holding company, talks about the trends in domestic energy and the Development Strategy of the Group of Companies, which is one of the TOP-5 leading players in the republic's energy market.

In a matter of days, domestic power engineers celebrate their professional holiday. As you know, this date falls on the third Sunday of December. Today, it can be confidently called one of the main holidays of the year, since energy is a fundamental industry that gives impetus to the development of the entire economy of the country. No industrial enterprise, factory or factory can operate without electricity and heat, not to mention social facilities and residential buildings.

— Nabi Yerkinovich, the Kazakhstan Municipal Systems Group of Companies you head has long been known in the energy world as a steadily developing structure and one of the largest employers in the republic. Tell us, what is the ideology of the KKS Group of Companies based on today?

— I just want to outline the priorities that our Group follows in its daily activities. Kazakhstan Municipal Systems Management Company and all its subsidiaries have always placed unity and parity relations with their customers at the forefront. First of all, we are a social partner for the residents of the regions in which we are present. Today, about 11,000 employees work in the Group of Companies, and absolutely everyone, from management to ordinary employees, understands the mission of Kazakhstan Municipal Systems. In fact, we have common goals and objectives with our customers. This is a high-quality and uninterrupted supply of light and heat to Kazakhstanis. Our Group is present in two regions of the republic – South Kazakhstan and Karaganda regions. As you know, these are densely populated regions. In total, almost 4.5 million people live in them. This is about 25% of the population of the whole country. In the Karaganda region, the Group focuses on the production, transmission, distribution and marketing of electric and thermal energy. In the South Kazakhstan region, it specializes in the transmission, distribution and marketing of electricity.

— Your Group of Companies turned 8 years old this year. With what indicators did "Kazakhstan Municipal Systems" celebrate this anniversary?

— We have specific tasks that we set for ourselves, and which we have achieved. Compared to 2011, our Group's electricity production increased by more than 40%, and its sales increased by 16%. Electricity transmission has increased by 9% in recent years. It is very important that these numbers are increasing every year. This is facilitated by a lot of time-consuming work. We have a detailed Development Strategy that we are implementing. Today, Kazakhstan Municipal Systems is a stable holding company with a clear management mechanism and an effective financial policy.

— Nabi Yerkinovich, as you know, energy is primarily a knowledge–intensive, high-tech sector that requires constant investments. How profitable is this business?

— Indeed, this industry has a lot of production costs. The energy sector has a voluminous expenditure part. The main production costs are for fuel and materials. A special place in the expenditure part is occupied by the modernization of production, which we carry out at our facilities. I would like to note that over the past 5 years, investments in production modernization by Kazakhstan Municipal Systems have amounted to about 160 billion tenge.

— A colossal figure. I know that this year has been particularly successful for Kazakhstan Utilities. One of your assets, Karagandinskaya TPP–3, has commissioned a new power unit. What effect did it have?

— Yes, in Karaganda, a new power unit was launched at our CHP-3, which made it possible to generate a quarter more electricity and heat. Of course, this event gave a new impetus to the development of the economy of the entire Karaganda region. The increase in the station's capacity will allow new energy-intensive production facilities to be located in the nearby Saryarka SEZ, as well as accelerate the pace of housing construction. In addition, small and medium-sized businesses received additional energy support. Taking into account the additional commissioning, Karaganda CHPP-3 has reached a capacity of 670 megawatts.

— It is known that the modernization of production concerns not only the Karaganda CHPP-3. As you noted, Kazakhstan Municipal Systems has created and is gradually implementing its own Development Strategy for the Group of Companies. What does it include?

— Our priority is the comprehensive modernization of energy production, the use of innovative solutions, scientific, innovative approach and optimization of energy costs. Thus, Kagandy Zharyk LLP successfully completed the implementation of the investment program for 2011-2015 for a total amount of 44.5 billion tenge. As a result, electricity losses were reduced, and a number of substations and overhead cable lines were reconstructed. Ontustik Zharyk Transit LLP has implemented an automatic database and consumer system (ASBIP) in order to issue technical specifications for the fastest possible identification of connection points. New substations and power transmission lines are being commissioned to supply new residential districts of Shymkent and its suburbs. In total, over the past 5 years, the Ontustik Zharyk Transit company has allocated 17.5 billion tenge for the implementation of the investment program.

— This year, the International Rating Agency Fitch Ratings has confirmed the Stable outlook for Kazakhstan Municipal Systems LLP. In the current economic realities, this is a very good result. How difficult is it to maintain such an international status?

— Kazakhstan is embedded in the global economic architecture. Internal financial, production, and trade processes are inextricably linked to the global economy. The Fitch Ratings rating agency analyzes the activities and evaluates the achievements of the most famous corporations in the international space. This year, Fitch Ratings confirmed the Stable outlook for our Group of Companies, assigning KKS long–term issuer default ratings in foreign and national currency at BB- and a national long-term rating of BBB+(kaz). We associate this assessment by leading analysts with the successful economic strategy of our Group and consider it as a further incentive in our work.

— Thank you for your time, Nabi Yerkinovich! I would like to wish you the realization of all your plans and success in your difficult work!

— Thank you! Taking this opportunity, on my own behalf and on behalf of the 11,000-strong team of the Kazakhstan Municipal Systems Group of Companies, I would like to congratulate everyone who has connected their lives with energy on our upcoming professional holiday. I sincerely wish my energy colleagues good health, success in their work and all the best!