Integrated annual report | Samruk-Energy JSC

Message of the Chairman of the Managment Board of “Samruk-Energy” JSC

Bakitzhan Tolevzhanovich Zhulamanov
The Chairman of the Managment Board of “Samruk-Energy” JSC

Dear readers!

In 2017, in the face of growing competition in the domestic market, “Samruk-Energy” JSC significantly improved its production and financial results. Leading energy producing enterprises – “Ekibastuz SDPP-1” LLP and “Ekibastuz SDPP-2 Plant” JSC sold electricity at prices below the ceiling tariff set. An important point was the preservation and growth of electricity exports to the Russian Federation. In 2017, the supplies reached a record volume of 4.7 billion kWh.

The increase in production and sales, the achievement of KPI set ensured the growth of revenue by 21% to 220 billion tenge. The share of the energy holding company in the generation sector of Kazakhstan reached 28% with a total output of 28.6 billion kWh, which is 27% higher than in 2016. The growing volumes of electricity production has had a positive impact on coal production – it grew by 15%, exceeding 40 million tons.

As part of implementation of the Republic of Kazakhstan Government’s Decree No. 1141 dated December 30, 2015 “On Certain matters of Privatization for 2016-2020” (hereinafter – Privatization Program), deals relating to the sale of equity stake in “East Kazakhstan Regional Energy Company“ JSC, “Mangistau Electricity Distribution Network Company“ JSC and “Aktobe CHP” JSC were completed. At the same time, in 2018, in order to optimize the structure of the Company’s assets, it is planned to continue the sale of assets within the Privatization Program, as well as the sale of subsidiaries in accordance with the decisions of the Shareholder.

Transformation Program projects which involves the introduction of up-to-date automated systems, including an integrated planning system are actively implemented. Savings of 6.4 billion tenge were received as the result of three years’ work on the project “Release of residual inventory”. During the quarter, the pilot project of the new model of sales unit based on the Trade House provided a marginal benefit of KZT 110 million. Coordination of sales process and a unified trading policy increased the load of power plants, which had a positive effect on the growth of capacity factor from 37.6 to 48.1%.

Taking into account the trends on digitalization and modernization of the economy, as part of the tasks announced by the Head of State in the annual message to the people of Kazakhstan, the projects “Digital Power Plant”, “Digital Coal mine” and “Systems of Fuel Oil Free Heating of Boiler Units” are planned to be implemented. Furthermore, “Samruk-Energy” JSC will continue the work on assets retrofit that includes the introduction of automated production systems, using forecast analytics and elements of artificial intelligence. A well-deserved recognition of last year results was the awarding of “Samruk-Energy” JSC a 3rd place in TOP‑10 “Rating of innovative companies of Kazakhstan”.

In conditions of transformation, much attention is paid to the level of preparedness and competence of staff.  Expertise and performance results of a single employee contribute to the overall success of the Company.  The principles of meritocracy were introduced in 2017 according to the recommendations of the shareholder.  Following the results of the Job matching procedure, the assessment of knowledge and qualifications showed that 80% of employees correspond to the position held.

Programs for regulation of social and labor relations are improved. Joint work in this direction conducted in partnership with the local trade union. As a result of annual research, the social stability rating across the group of companies was improved and amounted to 73%.

The Company is proactively involved in the processes of industry-specific cooperation being a part of NCE “Atameken”, Kazakhstan Electric Energy Association, and KAZENERGY. The stand of “Samruk-Energy” JSC was presented along with the leading world and domestic companies during the international exhibition “ASTANA EXPO-2017” under the motto Future Energy. Tens of thousands of visitors to the corporate pavilion saw the exposition about the implemented projects and the development of alternative energy sources.

The work of the section “Future Energy – Prospects for the Development of Global Energy” was organized at a high level during the World Scientific and Engineering Congress. WSEC‑2017 has united scientists, heads of research laboratories of leading universities, start-up companies, and global experts. Valuable opinions and assessments on the subject of the block “Energy Trilemma Balance: Security, Accessibility and Sustainability” were received in the end of the event.

The Company’s long-term development strategy approved in 2015 is adjusted to meet the shareholder’s requirements, as a response to global challenges. The focus is on ensuring of energy transition in the presence of cheap coal generation, high environmental standards and increasing the share of renewable energy in the country’s energy mix through new projects.

In terms of the Company’s contribution, every third Kazakhstani kilowatt-hour of green energy was produced by “Samruk-Energy” JSC subsidiaries in 2017.

Mitigating the impact on the environment is one of our priorities. The implementation of a comprehensive environmental protection program for 2017 across “Samruk-Energy” JSC group of companies reduced by 5% the specific emissions of pollutants per unit of output. The work on improvement of energy efficiency is underway.

Today, we face new tasks and challenges: the completion of privatization processes, expansion into new markets, increasing profitability and efficiency of operations, and the implementation of investment program.

“Samruk-Energy” JSC will make every effort to ensure stable development of power industry and meet the needs of Kazakhstani economy in order to successfully achieve the strategic goals of the state identified by the country’s leadership.