Current and capital expenditures of “Samruk-Energy” JSC were reduced by 18,5 bn.tenge in 2020. Activities on cutting costs are taken for purposes of implementing the instructions of Akhmetzhan Yesimov, the Chairman of “Samruk-Kazyna” SWF” JSC Executive Board, which were given at the meeting of operations headquarter of “Samruk-Kazyna” JSC.

We would like to remind that the companies that are part of “Samruk-Kazyna” JSC were assigned a wide range of tasks and certain instructions including reducing costs that do not directly affect their operations, revision of organizational structures of companies in terms of reduction of executive and vacant positions, etc.

The analysis of expenses planned in 2020 has resulted in “Samruk-Energy” JSC reduction of operating costs associated with consulting, audit and legal services, maintenance and updating of software, expenses for creating reserves and costs for vehicles and others.

Along with operating expenses, the company revised its capital expenditures, optimization of which is 15,8 bn.tenge, or 13% of total investment costs.

The largest power holding company in the country undertook all measures required to support its employees in a challenging epidemiological situation.

There were no job cuts at power plants and enterprises of the company, no delays in wages payment during the quarantine, also compensation payments and benefits established by labor legislation and collective bargaining agreements were made.

In general, “Samruk-Energy” JSC operations in power and coal industries were carried out as usual.

According to the results of the year, electricity output is forecasted the level of 30,5 bn. kWh, with an increase against the 2019 actual by 0,3 bn. kWh. (2019 actual was 30,2 bn. kWh).

 

Reference:

“Samruk-Energy” JSC is the largest power holding company in Kazakhstan, 100% owned by “Samruk-Kazyna” SWF JSC. It was established in 2007. Core business: electricity and heat production; transmission, distribution and sale of electricity, power coal mining. The holding company comprises energy and coal enterprises, including “Ekibastuz SDPP-1” LLP, “Ekibastuz SDPP-2 Plant” JSC, “Bogatyr Komir” LLP, “Almaty Power Plants” JSC, “Moynak HPP” JSC, “Shardarinsk HPP” JSC, etc.

region. However, according to the latest data from environmental experts, CHP-2 emissions make up 30% of the total emissions (according to the statistics provided in the paper "Setting targets for environmental quality for Almaty city"). The private housing that emit smoke, which uses coal, rubber and other inefficient fuel for heating homes and banya (Russian steam bath) greatly contributes to air pollution. As well as vehicles and other sources, the share of which is estimated at 70%.

  Which of them will follow the power engineers towards the improvement of environmental friendliness?

 

For reference:

Almaty CHP-2 is the largest thermal power plant in Kazakhstan for the combined generation of electricity and heat with an installed electric capacity of 510 MW, heat - 1411 Gcal / h. CHPP-2 belongs to "Almaty Power Plants" JSC).

 “Samruk-Energy” JSC- the largest power holding company in Kazakhstan, 100% owned by “Samruk-Kazyna” SWF JSC. It was established in 2007. Core business: electricity and heat production; transmission, distribution and sale of electricity, power coal mining. The holding company comprises energy and coal enterprises, including “Ekibastuz SDPP-1” LLP, “Ekibastuz SDPP-2 Plant” JSC, “Bogatyr Komir” LLP, “Almaty Power Plants” JSC, “Moynak Hydropower Plant named after U.D. Kantayev” JSC, “Shardarinsk HPP” JSC, etc.

______________________________________________

Government Relations and Communications Office

of “Samruk-Energy” JSC.

Tel: (7172) 55-30-62; This email address is being protected from spambots. You need JavaScript enabled to view it.

An automated medical checkup system (AMCS) is being implemented at “Ekibastuz SDPP-1” LLP and “APP” JSC as part of “Samruk-Energy” JSC Transformation Program. An employee receives a medical certificate and access to production facility in a minute.

Hardware and software complex for testing has an anatomical chair for a comfortable medical checkup of an employee. The “smart” chair is equipped with a pupilometer, an innovative development for determining drug intoxication of workers, alcohol detector, and an industrial blood pressure monitor. Thus, after the examination, in just one minute, an employee receives a complete description of the body condition.

According to the opinion of Azamat Mazhyn, the head of Digitization Office of “Samruk-Energy” JSC, the coronavirus pandemic has become one of the decisive factors for the implementation of this direction at the enterprises of the energy holding company.

“Almost non-contact medical checkup, in addition to reducing the time for a full checkup of each employee, eliminates the human factor and the system of random check of employees. Further conduct of analytics of employees’ condition for the throughout employment relations and reduce the number of sick leaves”, - Azamat Mazhyn told during the check of the new equipment at the power plants.

Data analytics will allow keeping records in the information system and systematizing cases of detecting workers’ health problems, as well as preventing complications and further development of diseases.

The automated medical examination is being implemented in a pilot mode. The technology is tested at CHP-2 of “APP” JSC and at “Ekibastuz SDPP-1” LLP.

Almaty CHP-2, the main source of heat and electricity in the southern metropolis, will be completely transferred to gas. This was told at “Samruk-Energy” JSC, which is currently engaged in activities on mitigating negative environmental impact.

In fact, an important step towards the environmental improvement of Almaty city is taken, since there are many facilities in the city, the activities of which negatively affect the quality of atmospheric air (motor transport, public transport and private residences with harmful emissions, other coal-fired heat and power generating enterprises). Furthermore, the city will have to address issues related to landscaping, development taking into account the wind conditions, fuel quality, etc.).

Many options for retrofit of CHP-2 have been considered. The design institute "KazNIPIenergoprom", which has a 60-year history of power facilities construction and is engaged in a whole range of pre-design and design works in the area of heat power engineering, performed the works as requested by “Almaty Power Plants” JSC.

It is no question that the transfer of CHP-2 to firing natural gas is the most effective way to reduce emissions of harmful substances into the atmosphere and improve air quality in the area of influence of the plant. This way the annual amount of emissions of pollutants into the atmosphere will be reduced by more than 80%.

Currently, “Samruk-Energy” JSC continues to attract acceptable sources and methods of financing the project involving a mandatory minimization of tariff burden and meeting the requirements for its full payback. Thus, the company respect all interests of the city residents, who are the main consumers of heat and electricity.

For reference:

Almaty CHP-2 is the largest thermal power plant in Kazakhstan for the combined generation of electricity and heat with an installed electric capacity of 510 MW, heat - 1411 Gcal / h. CHPP-2 belongs to "Almaty Power Plants" JSC).

 “Samruk-Energy” JSC- the largest power holding company in Kazakhstan, 100% owned by “Samruk-Kazyna” SWF JSC. It was established in 2007. Core business: electricity and heat production; transmission, distribution and sale of electricity, power coal mining. The holding company comprises energy and coal enterprises, including “Ekibastuz SDPP-1” LLP, “Ekibastuz SDPP-2 Plant” JSC, “Bogatyr Komir” LLP, “Almaty Power Plants” JSC, “Moynak Hydropower Plant named after U.D. Kantayev” JSC, “Shardarinsk HPP” JSC, etc.

______________________________________________

Government Relations and Communications Office

of “Samruk-Energy” JSC.

Tel: (7172) 55-30-62; This email address is being protected from spambots. You need JavaScript enabled to view it.

"Ekibastuz SDPP-2 Plant" JSC, equal shareholders of which are "Samruk-Kazyna" JSC and "Samruk-Energy" JSC, refinanced all foreign currencies liabilities worth circa 100 bn. tenge. Thus, the plant has completely reduced currency risks and eliminated potential foreign exchange losses.

This activity was held for supporting the government's policy to reduce the dollarization rate of the country's economy, foreign exchange obligations and external debt of Kazakhstan. “Halyk Bank of Kazakhstan” JSC, the largest bank in Kazakhstan, was the source of refinancing.

The implementation of the deal allowed Ekibastuz SDPP-2 to completely eliminate currency risks, fix the interest rate, free up pledged movable and immovable property in full, which enabled to reduce associated costs of over 1 bn. tenge.

Furthermore, the deal allowed improving the funding terms and simplifying the financing structure through a fixed long-term loan in national currency.

For reference:

 “Sovereign Wealth Fund “ Samruk-Kazyna” JSC - an investment holding company, the mission of which is to improve the national welfare of the Republic of Kazakhstan and ensure long-term sustainability for future generations. It was established in 2008. The sole shareholder is the Government of the Republic of Kazakhstan. “Samruk-Kazyna” JSC group of companies includes enterprises of oil and gas, transport and logistics, chemical and nuclear, mining and metals, and energy sectors.

“Samruk-Energy” JSC is the largest power holding company in Kazakhstan, 100% owned by “Samruk-Kazyna” SWF JSC. It was established in 2007. Core business: electricity and heat production; transmission, distribution and sale of electricity, power coal mining. The holding company comprises energy and coal enterprises, including “Ekibastuz SDPP-1” LLP, “Ekibastuz SDPP-2 Plant” JSC, “Bogatyr Komir” LLP, “Almaty Power Plants” JSC, “Moynak Hydropower Plant named after U.D. Kantayev” JSC, “Shardarinsk HPP” JSC, etc.

"Ekibastuz SDPP-2 Plant" JSC is a Kazakhstani energy enterprise with an installed capacity of 1000 MW, which produces electricity using Ekibastuz high-ash coal with two power units of 500 MW each. Located in Ekibastuz city. Equal shareholders are “Samruk-Kazyna” Sovereign Wealth Fund” JSC and “Samruk-Energy” JSC.

____________________________________________

Government Relations and

Communications Office of “Samruk-Energy” JSC.

Tel: (7172) 55-30-62; This email address is being protected from spambots. You need JavaScript enabled to view it.

 

The implementation of two new renewable energy sources (RES) projects has commenced in Kazakhstan. This refers to the construction of wind power plants (WPPs) by companies of power holding company “Samruk-Energy” JSC in Almaty and Akmola regions. The project "Construction of a 60 MW wind power plant in Shelek corridor including the possible increase in capacity up to 300 MW" is implemented in the Enbekshikazakh district of Almaty region. The plant will consist of 24 wind-driven installations (WI) with a total capacity of 60 MW, a substation and power lines. Construction and installation works have begun at the facility’s production site. “Energia Semirechya” LLP, a company within the structure of “Samruk-Energy” JSC, manages the project. During the construction of the wind plant, it is planned to create 300 jobs, as well as 14 permanent jobs after the commissioning of the plant. The wind power plant is expected to generate 225,750 thous. kWh of electricity every year. According to the company's experts, the wind turbines can be used in conditions of a cold continental climate (–30 ... + 43 C), seismic activity of 10 points, and wind class II. Wind turbines have technical and environmental characteristics that meet international standards IEC 61400-series "Wind turbine generator systems". The second wind power plant is located in the vicinity of Ereymentau city, Akmola region. In accordance with the local wind potential, it is planned to install at the station site 11 WI with a unit capacity of 4.8 MW and a total installed capacity of 50 MW produced by German company ENO Energy GmbH. “Ereymentau Wind Power” LLP, “Samruk-Energy” holding’ company specializing in the production of electricity using renewable energy sources, is implementing the project. The project will allow employing 100 people with the involvement of local residents during the construction period. 16 people will service the plant in the course of its operation. Electricity, which will be produced at the new wind farm in Almaty and Akmola regions, will be supplied to the National Power Grid of Kazakhstan. According to experts, Kazakhstan has a huge potential for the use of renewable sources and, as noted, the transition to "green" energy, the introduction of "green" technologies is a growing direction of the global economy. For instance, according to “Samruk-Energy” experts, the main sources of electricity in Almaty region are Almaty CHPs, Kapshagai and Almaty Cascades of HPPs, Issyk HPP, Moynak HPP, and Karatal HPP. The region's need for electricity is covered by its own energy sources only by 50% because of the shortage of own generating facilities. The launch of another renewable energy facility in a region with a high potential of wind energy resources will partially fill this gap in electricity with minimal impact on the environment. It should be reminded that “Samruk-Energy” JSC RE facilities such as solar power plants (SPP), wind power plants, biogas plants (BGP), small hydropower plants produced 342,5 mln.kWh in 2019 or 14,3% of the total electricity generated from renewables in the Republic of Kazakhstan, and the company's share in the production of "clean" electricity (solar power plants, wind farms, small and large hydropower plants) in 2019 increased by 1,2% compared to 2018, which amounted to 2,924,2 mln. kWh. “Samruk-Energy” JSC- the largest power holding company in Kazakhstan, 100% owned by “Samruk-Kazyna” SWF JSC. It was established in 2007. Core business: electricity and heat production; transmission, distribution and sale of electricity, power coal mining. The holding company comprises energy and coal enterprises, including “Ekibastuz SDPP-1” LLP, “Ekibastuz SDPP-2 Plant” JSC, “Bogatyr Komir” LLP, “Almaty Power Plants” JSC, “Moynak Hydropower Plant named after U.D. Kantayev” JSC, “Shardarinsk HPP” JSC, etc. ______________________________________________ Government Relations and Communications Office of “Samruk-Energy” JSC. Tel: (7172) 55-30-62; This email address is being protected from spambots. You need JavaScript enabled to view it.

Renewal of Transformation projects portfolio represents a continuous process of improvement. The content is updated every year proceeding from the company’s needs.

An online meeting of the Extended Modernization Council (EMC) was held at “Samruk-Energy” JSC. The Directorate for Asset Management of “Energy” Sector, representatives of the Digitization Office of “Samruk-Kazyna” JSC Fund, Borankulova Lyazat, the Managing Director for Strategic Development, as well as Shashkenova Maral, Director of the Strategic Development Department, chief executive officers of subsidiaries and affiliates of the energy holding company, managing directors of the Head Office and supervisors of potential projects and activities participated in the meeting.

Bakitzhan Zhulamanov, the Chairman of the Executive Board of “Samruk-Energy” JSC, opened the meeting of the Modernization Council: “Much attention was directed to addressing production issues, using techniques for collecting ideas and proposals based on “bottom-up” that helped us to identify the growing needs of subsidiaries and affiliates of the group. As a result now we have a short list of initiatives”.

The preparatory work for updating the portfolio over six months comprised communications with all subsidiaries and affiliates, expanding channels for collecting ideas and propositions, studying the feasibility and economic efficiency of more than 60 potential projects and activities.

15 projects that survived an elimination process were submitted to the Modernization Council members. Discussions and voting resulted in consideration of the possibility of allocating a budget and other resources for further implementation of 10 business proposals of the updated Project Portfolio. The remaining five projects are planned to be implemented outside the Digital Transformation Program.

“Several projects contain advanced digital solutions and are aimed at enhancing production efficiency. The pandemic has also influenced the content of the Project Portfolio, which involved services automation, paperless circulation. The projects and activities that we offer for consideration are aimed at achieving strategic goals, increasing the company's value and reducing operating costs,” said Yedil Kopenov, Managing Director for Business Transformation at “Samruk-Energy” JSC during the meeting.

Yedil Kopenov encouraged chief executive officers of “Samruk-Energy” JSC subsidiaries to be actively involved in the implementation of projects, to consider allocating of resources for this and comply with project management methodology: “Please provide the options for the Portfolio management structure both at the HO and at SA level for consideration”

Chief executive officers of companies that are part of the energy holding company were assigned with controlling over the implementation of decisions of the Modernization Council and preparing budgets in accordance with developed financial and economic models. It is planned to obtain approval of the Project Portfolio from “Samruk-Energy” JSC Board of Directors in October.

The goal of Transformation Program project is 30% reduction of occupational injury rate figures.

The third wave of the project for the introduction of the new integrated safety management model of “Samruk-Energy” JSC Transformation Program includes “Almaty Power Plants” JSC (AlES), “Alatau Zharyk Company” JSC (AZhC) and a solar power plant of “Samruk Green Energy” LLP (SGE), which employs more than 6 thousand people. The new approaches aim to enhance safety culture and reduce occupational injury rate by preventing incidents.

The start of “the introduction of the new integrated safety management model” project’s implementation was announced at the kick-off online meeting with the participation of senior executives of the energy holding company and supervisors of “Samruk-Energy” JSC subsidiaries, who are responsible for workplace safety issues.

“I would like to highlight the significance of occupational health and safety issues. This project is under special control of Akhmetzhan Yesimov, the Chairman of the Executive Board of “Samruk-Kazyna” SWF JSC. The sponsor of the project at “Samruk-Energy” JSC is also the chief executive officer Chairman of the Executive Board Bakitzhan Zhulmanov”, - said Yedil Kopenov, the Project Co-sponsor, Managing Director for Business Transformation.  

The project involves the introduction of new standards and practical tools that will enable power plant employees change attitudes towards compliance with safety rules, raise awareness and change outdated attitudes.

Practice has shown that risk prevention works allow avoiding accidents at work. Six accidents were reported across “Samruk-Energy” JSC group of companies over the first half of 2020, while seven sad events occurred at enterprises, one of which with fatal outcome during the same period of 2019. A transparent incidents reporting system has been introduced since 2019, as part of which potentially dangerous incidents that result in an injury are recorded and examined. The responsibility for concealing accidents has also been strengthened, and monetary incentives are provided for reporting potentially dangerous situations. 16 potentially dangerous incidents were reported and investigated during the first half of 2020. 23 incidents were reported over the same period of last year.

According to Tulegen Maxilov, the project manager, head of Health, Safety and Environmental Protection Department, occupational injury rates are planned to be reduced at enterprises by 30% during three years after the project’s implementation.

“It is essential that a high-quality analysis of possible risks is conducted at a production facility. The work should not involve a bureaucratic approach. The introduction of a transparent reporting system, a proactive approach to occupational safety issues are crucial tasks in the project implementation”, - Tulegen Maxilov told.

The first wave of the project for the introduction of the new integrated safety management model was completed in 2019 at the Head Office of “Samruk-Energy” JSC, “Ekibastuz SDPP-1” LLP, “Moynak HPP” JSC, “Shardarinsk HPP” JSC. The second stage of this project will be introduced at “First Wind Power Plant” LLP and “Ekibastuz SDPP-2 Plant” JSC by the end of 2020.

According to the data from System Operator, the Republic of Kazakhstan power plants produced 45 577,5 mln.kWh of electricity in January-May 2020, which is 3,3% more than the same period in 2019. There was an increase in production in all zones of the UES of Kazakhstan. This is mentioned in the Report with the analysis of the electricity and coal market of Kazakhstan for  January - May 2020 posted on “Samruk-Energy” JSC website.

Over the five months of 2020, generation of electricity by combined generating facilities amounted to 22,5 bn. kWh, which is almost comparable to the same period in 2019 (22,8 bn. kWh). At the same time, in comparison with January-May 2019, the share of combined generation increased slightly, and amounted to 49,6% of the total electricity production in the Republic of Kazakhstan.

The volume of electricity production by energy-producing organizations of “Samruk-Energy” JSC for January-May 2020 amounted to 12 225,7 mln. kWh or an increase of 7% compared to the same period in 2019.

According to the System Operator, in January-May 2020, there was a 2% increase in the electricity consumption pattern in the republic compared with January-May 2019. So, in the northern zone of the republic, consumption increased by 2%, in the western by 5% and in the southern by 1%.

According to the Statistics Committee of the Ministry of National Economy of the Republic of Kazakhstan, in January-May 2020, 44 951, 9 thous. of bituminous coal were mined, which is 2% higher than the same period in 2019 (43 874,7 thous. tons).

In January-May 2020, “Bogatyr Komir LLP, a coal mining company that is managed on a parity basis by “Samruk-Energy” JSC and the “RusAl” Russian UC, produced 19 428 thous.tons, which is 6% more than in the corresponding period 2019 (18 328 thousand tons).  19 498 thous.of tons were sold during this period, including:

- 15 151 thousand tons to the domestic market of the Republic of Kazakhstan, which is 8,8% more than for the corresponding period of 2019 (13 923 thous. tons);

- for export (RF) - 4 346 mln. tons, which is 1,8% more than for the corresponding period of 2019 (4 271 thous. tons).

Electricity production by RE facilities (SPP, WPP, Biogas plants, small hydropower plants) of the RK for January-May 2020 amounted to 1 170,2 mln. kWh. The growth was 81,8%. in comparison with the 5 months of 2019 (643,5 mln.. kWh).

Over the five months of this year, the production of electricity by BGP and small hydropower plants has decreased compared to the same period in 2019, while the production of electricity by wind farm and solar power plants has increased.

The generation of electricity by renewable energy facilities of “Samruk-Energy” JSC (solar power plants, wind farms, small hydropower plants) in January-May 2020 amounted to 143,5 mln. kWh or 12,3% of the total volume of electricity generated by renewable energy facilities, which is compared to the same period 2019 is up 9,1% (in January-May 2019, the generation of renewable energy by Samruk-Energy holding company entities amounted to 131,5 mln.kWh, and the share of RES of energy holding company is 20,4%). The main decrease in the share of electricity production by renewable energy facilities of “Samruk-Energy" JSC is the commissioning of new renewable energy facilities in the Republic of Kazakhstan.

More detailed information about the Report on the Electricity and Coal Market of Kazakhstan for the period January - May 2020 is available on “Samruk-Energy” JSC website at the link: https://www.samruk-energy.kz/ru/press-center / analytical-review

For reference:

“Samruk-Energy” JSC is the largest power holding company in Kazakhstan, 100% owned by “Samruk-Kazyna” SWF JSC. It was established in 2007. Core business: electricity and heat production; transmission, distribution and sale of electricity, power coal mining. The holding company comprises energy and coal enterprises, including “Ekibastuz SDPP-1” LLP, “Ekibastuz SDPP-2 Plant” JSC, “Bogatyr Komir” LLP, “Almaty Power Plants” JSC, “Moynak Hydropower Plant named after U.D. Kantayev” JSC, “Shardarinsk HPP” JSC, etc.

______________________________________________

Government Relations and Communications Office of “Samruk-Energy” JSC.

Tel: (7172) 55-30-62; This email address is being protected from spambots. You need JavaScript enabled to view it.

Fitch Ratings affirmed Samruk-Energy's long-term foreign and local currency credit rating of “BB”, and also raised Samruk-Energy's solvency on an independent basis from “B” to “B +” and the rating for unsecured loans from “BB-” to "BB". The outlook is “Stable”.

Raising of creditworthiness on a stand-alone basis is connected with a stronger financial profile owing to improved credit indicators and reduction of Company's currency risks. Increasing of priority unsecured ratings of the Company is because of less structural subordination for unsecured lenders.

Affirmation of ratings resulted from considerable reduction of the Company’s currency fluctuations after refinancing of US dollar loan at the Moynak HPP in local currency at the holding company level, as well as converting the loan in US dollars into local currency. At the end of 2019, foreign currency debt amounted to only 2%, compared to 60% in 2016. Thus, as the Agency notes, the Group increased its financial flexibility and ability to stand against currency shocks.

The affirmed rating includes the Agency’s opinion that the Group will receive individual capacity tariffs for new power units of Shardarinsk HPP, Moynak HPP and Almaty Power Plants until 2024-2028.

Along with a boost in the Company's income, the Agency noted a substantial debt reduction and, as a result, improved financial performance. Furthermore, an increase in the share of international financial institutions in the structure of the loan portfolio of the Company from 30% to 42% was marked out, which shows the high quality of the debt portfolio and significantly influences the assessment of the financial performance of the Group. At the same time, the Company plans to work closely with international lenders.

The company is 100% state owned. Samruk-Energy accounts for about 30% of electricity generation and about 40% of the country's total coal production in 2019. Evaluation of the socio-economic consequences of a potential default of Samruk-Energy as moderate reflects the Agency's view that most of operations of subsidiaries will continue if the parent company cannot meet its obligations.

In addition to that, the Agency notes that Samruk-Energy has sufficient liquidity and cash to meet its short-term obligations in full.

 

Reference:

“Samruk-Energy” JSC is the largest power holding company in Kazakhstan, 100% owned by “Samruk-Kazyna” SWF JSC. It was established in 2007. Core business: electricity and heat production; transmission, distribution and sale of electricity, power coal mining. The holding company comprises energy and coal enterprises, including “Ekibastuz SDPP-1” LLP, “Ekibastuz SDPP-2 Plant” JSC, “Bogatyr Komir” LLP, “Almaty Power Plants” JSC, “Moynak Hydropower Plant named after U.D. Kantayev” JSC, “Shardarinsk HPP” JSC, etc.

______________________________________________

Government Relations and Communications Office of “Samruk-Energy” JSC.

Tel: (7172) 55-30-62; This email address is being protected from spambots. You need JavaScript enabled to view it.