Kanat Bozumbayev, KEGOC: “National Power Grid of Kazakhstan will be technologically renovated in full”

— Could you outline a general condition of power sector of Kazakhstan economy for today?
— Of course, it should be considered on a background of common economic development of our country. Over a period of years in Kazakhstan, as everybody knows, high rates of growth of economy are observed, that, certainly, is accompanied by steady growth of a power consumption, volumes of energy production (increase since 2000, approximately 5-6% annually). Such situation, as we consider, will be kept and in foreseeable future. If in 2005 an energy consumption in Kazakhstan has amounted to 68.13 million kWh, then in 2006 this figure was already 71.7 million kWh. By 2010, according to the expert estimations, the power consumption will exceed 95 million kWh, and by 2015 it will reach a level about 117 kWh. And now about what we have with relation to the capacities. For 1, January of current year, an installed capacity of all Kazakhstan power stations has made 18 773 MW, while available, that is, I shall explain, that is actually can be involved in energy production — 14 617 MW. As you can see, capacity breaking makes 4 156 MW, it is caused by an unsatisfactory technical condition and significant making of a park resource of generating equipment. If we will maximally use an existing available capacities of power stations, already in couple of years, all reserves will be produced and if nothing to undertake already now, we will have an electric power deficit. First insignificant, but with perspective growth.

— What are a position and a role of KEGOC Company in decision of those tasks facing what face to branch as a whole?
— A role and a position of the Company are determined by the Law “On Electric Power Industry” and the series of normative acts. According to that KEGOC is the System Operator of the Unified Power System of the Republic of Kazakhstan, and the main objective is to provide stable operation of UPS Kazakhstan and reliable control of the National Power Grid (NPG). KEGOC realizes a series of investment projects to increase security of energy supply in the regions. Here first of all it is necessary to call the project of Modernization of NPG, which is realized since 2000 and it costs 43.8 million KZT. It is only first project for modernization. Since 2008 we plan to begin a second project to further modernization of NPG. Realization of this project considerably will raise reliability and quality of energy supply of the consumers, and also operation of the substations, dispatching and control systems of NPG. It will allow to cut the operation costs and to expand the volumes of services rendered by the company. The program of Feasibility Study “NPG Modernization Project. 2nd stage”, which is developed now, provides replacement of the high-voltage equipment at 30 not modernized substations of KEGOK. Necessary investments for this program, by estimates, will amount to 53.7 million KZT.
Also we actively implement the project of construction of the second high-voltage transmission line (HTL) 500 kilovolt “North – South”, with total length 1115 km., at the cost of the project 43.7 million KZT. Project finish is 2009. Realization of the project will enable to provide reliable power supply of the southern areas of Kazakhstan and will increase transit potential of NPG due to increase of throughput capacity of the line from 630 MW up to 1350 MW. It will allow to transfer in the winter period to the south an economy power of Ekibastuz power center, and in summer, in case of an electric power surplus in Kirghizstan and Tadjikistan, conversely, to transfer it to Russia.
Among other projects it is necessary to note a construction of interregional transmission line HTL-500 kilovolt “Northern Kazakhstan — Aktyubinsk region” with length of 500 km. Cost of the project is 18.6 million KZT. Realization of the project and putting this HTL into operation the project will allow to cover a deficit of electric energy and capacity in Aktyubinsk region by transfer from Ekibastuz power center with including the region to the structure of Kazakhstan’s Unified Power System. As a result it will allow to provide independence of the power-suppliers in this region from the deliveries of electric energy from Russia. In other words, they will have a choice to buy it either from Russians who exclusively dictate the prices in this region for today, or from the Kazakhstan energy producers.
For realization of this project for the first time the mechanism of state-private partnership (SPP) have been used on basis of concession agreement between JSC “Batys-Tranzit” and the Ministry of Energy and Mineral Resources of Kazakhstan. It will be observed that “KEGOC” is a shareholder of JSC “Batys-Tranzit”, a share of the company is 20%. We developed the feasibility study of the project, it was our idea. But seeing that credit loading on KEGOC’s budget is anyway great, we just entered into the authorized capital of the company by this feasibility study. Other shareholder was determined by the Ministry on the basis of competition.
Besides in West Kazakhstan we consider the opportunities to realize several objects till 2015. This is a construction of 220 kilovolt line Atyrau-Kulsary-Tengiz with extension of several substations to provide the reliability of energy supply of the consumers in oil-and-gas sector, first of all at the Tengiz field. We plan to construct two 220 kilovolt lines for electrification of railway Makat — Kandagash, that, probably, we will do together with the railwaymen. We examine an opportunity of construction a line 500 KV Atyrau-Kenkiyak-Ulke to connect North Kazakhstan, Aktyubinsk power center and West Kazakhstan. It will increase stability of system work and opportunities to export the electric power to Russia and other countries.
 
— What are the financing sources of the projects listed by you?
— They are different. In “NPG Modernization Project. 2nd stage” we bank on support of the republican budget, as soon as it is an important infrastructure project for the state. As to construction of abovementioned lines there will be involved the loan proceeds or the means attracted by way of state-private partnership (SPP).

— The problem of capital consumption is very important for all economy, and power industry is no exception. What is its condition in the electric power industry and particularly in KEGOC, at your opinion?
— Generally, a situation of this as a whole in the field is difficult. On average the volume of deterioration is about 60-70%. Our situation in KEGOC is a shade better, as we realize the project of the networks modernization stage by stage already the seventh year. So, in frameworks of “NPG Modernization o Project. 1st stage” we have replaced the switching equipment at 42 electric substations in total 4 173 units to the sum of 374 million dollars. This is unexampled replacement. Means for its performance KEGOC borrowed from the World Bank and the European Bank of Reconstruction and Development, and the suppliers of new equipment determined at competition, were the famous world companies. Now we are developing the feasibility study for “NPG Modernization Project. 2nd stage” — it will cover about 60 substations and will last from 2008 to 2017. By preliminary estimate, in the framework of the project, about 4 thousand units of equipment will be replaced to the amount of $ 430 million. As a result we will completely replace the equipment at the existing substations. National Power Grid of Kazakhstan will be completely technologically renovated and will work on the modern foreign equipment.

— In 1990th a problem of plunders of nonferrous metal products in the electric power industry was very actually. What is a situation for today?
— Yes, up to the beginning of 2000th there were mass plunders of the wires and the angel pieces of transmission lines. The wires were delivered to the nonferrous metal receiving points, and the angle pieces were used in household for overlaying of window frames. We had to weld them. We worked very well with the law enforcement bodies, and spent explanatory work with local population, highlighted the occasions with the caught thieves. As a result of these measures, and certainly, that people began to live better, this problem has notably lost its sharpness. But, in any case, for today we need to protect the power facilities. Special security divisions protect the substations and the transmission lines.

— One more acute problem of Kazakhstan economy is the staff. How does your Company decide the problem of providing with the professional staff?
— We pay great attention to vocational training and improvement of professional skills of the staff. There is a special requirement of the Rules on personal development in the power organizations, according to that the short-term re-training of employees by day-shift education on the refresher courses in the specialized educational institutions, both Kazakhstan, and foreign should be carried out. We strictly follow these rules. The personnel working on the lines, has to re-train no less than once per three years. For administrative personnel we make a rule practicable to re-train no less than once par five years. It should be carried out in the special educational institutions of Kazakhstan, Russia and Ukraine.
As regards an education, about 300 employees get higher education in in-service training manner and about 60 employees receive secondary-level professional education annually. The employees having professional experience, study by correspondence, we pay additional educational holidays during all period of training. We actively invite the graduates of Kazakhstan Universities, especially the Eurasian University named after Gumilev, Agricultural University in Astana and Almaty Institute of Energetics and Communications. We select the students already after the third course and in one year after a practical training we invite them to work in KEGOC. And we purposefully prepare for the certain quantity of students in Almaty Institute of Energetics and Communications, paying their education with further placing in a job. Pavlodar State University named after Toraigyrov and Industrial Institute in Rudnensk prepare a good staff, and their graduates work in the Company.
As a whole the Company is completed both experts, and the personnel though, certainly, it is impossible to tell, that we have no problem with this. Average monthly wages of KEGOC’s employees in 2006 was 66 500 KZT, that increased for 12-13% as compared with 2005. Nevertheless, there is a high level of employee turnover. The main cause of this problem, is comparatively low level of wages and a growing demand for qualified personnel on a labour market. Last year turnover of staff has made almost 11%, that distinctly higher than in 2005. High turnover of staff is in our regional branches adjoining to Russia — in Pavlodar and Kustanai oblasts where Russians actively and successfully “entice” our employees, because the wages in the Russian power industry are great higher. In West Kazakhstan we should compete with the oilmen, it is very difficult too. Occasionally they can attract our best power engineering specialists as the electricians, but with high salaries. Building boom in our country increases a demand for qualified specialists.

— What can you do to decide this problem?
— Taking into account that the salary in KEGOC JSC is lower than in other fields, we decided to increase it for 20-40% in a whole. For the chiefs and administrative personnel the salary was increased less, for the specialists and the workers it was increased more, and for separate low-paid categories even on 50%. Now the situation was a little stabilized, though there is a question with Anti-monopoly committee — how to include it in tariffs? But, I think, we will arrive at an optimal solution, which suitable for all participants of market.
 
— Today a necessity of changing the power tariffs is already obvious, however how and how much should they raise?
— Existing tariffs uniquely do not promote return of invested means. Look, how the prices and the tariffs have grown into several times for last 5 years, and electricity became cheaper meanwhile. As a matter of fact, an energy industry subsidizes all others. Today the marketed electric power basically is produced on the power stations constructed in Soviet time. They are already amortized, that’s why the companies make a profit in any case. But it is until the time comes, while anything will be seriously disabled. To construct and recoup a new station it is necessary, that the selling tariffs on the stations should be not less than 3-3.5 cents (present time – 1.7-2.1 cents). Objectively over the years there will be a deficiency of the electric power, and the time will come when the tariffs rise sharply.
We are not the followers of a shock therapy, therefore we have to increase its level systematically, up to the values which give confidence to the investors, that they can return their invested means. In other words, profit level and efficiency of an electric energy industry should be competitive with other branches existing in Kazakhstan, otherwise no one will invest money in the electric power industry. I think it is not necessary to explain the consequences of that. Today a time issues the new challenges for the powermen, that’s why we have to work with an advancing, “to see” a situation through some years.

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