Civilized market starts from financial discipline
Abay Marat uly
— To you opinion, what is the current situation with Kazakhstan’s electric-power industry, and what are its prospects for development?
— It is well known, that power industry is the basic industry that is vital for activity of the real sector of the economy and population. Reliable and efficient functionality of the industry, stable provision of electricity and heat are the basis for economic development.
Currently the power industry fully meets the requirements of Kazakhstan’s economy and population. However, taking into account the dynamic growth of power consumption, the forecast of the power balance shows difficulties in 2009.
With annual growth of GDP at the rate of 9-10%, average annual growth of power consumption is 5-6%. It will be impossible to provide for the growing consumption without acquiring new equipment and modernizing the existing equipment. In order to prevent the problems the government adopted the “Plan of actions on development of power industry of RK for 2007-2015”, which stipulates purchase of new equipment and modernization of existing stations.
For example, JSC “Samruk” plans to construct two large power stations, such as Moynakskaya hydro-power with capacity of 300 MWatt, Balkhashskaya power-heat station with capacity of 3000 MWatt and others; they are among the priority projects of modernizing the economy.
— JSC “KEGOC” turns 10 years old this year. How would you assess its contribution into the development of the industry?
— JSC “KEGOC”, being the flagship of Kazakhstan’s power industry, during all of these 10 years played an important role in ensuring reliable and continuous supply of electricity to the population and other industries of our country.
It is impossible to imagine the current power industry of Kazakhstan without JSC “KEGOC”, which is the “blood-vascular system” of the country’s economy. Realization of the break through projects during these 10 years implies reliability and stability of the company.
The company is completing the project of modernization of national power net, with total investments equal to 258 million USD. The project included modernization of stations with 220, 500 kWatt by installing the latest equipment with SCADA and ASKUE systems and complete replacement of telecommunications. This large scale modernization makes our national power net significant for all of the CIS.
Realization of another project of building the second transmission line from the North to the South of Kazakhstan with the capacity of 500kWatt will allow to increase the transmission of power from Yekibastuz hydro-power stations to the Southern parts of the country.
The successful completion of such break through projects demonstrates the company’s potential and attitude towards future development.
— Is there anything specific that you remember from you experience of working for KEGOC? How useful was the experience to you as a manager? What problems were the most difficult to resolve at the initial stages of the reform?
— The initial years after establishment of JSC “KEGOC” were the years of economic survival. I remember that Mukhtar Oblyazov, the first President of the company, after the meeting with the personnel said that the technical personnel didn’t have many problems, while the economy of the company was ruined. The main reason was the non-payment of electricity consumers.
I’d like to mention determination of Nursultan Abishevich Nazarbaev, the President of our country; without any hesitation he approved cutting out the electricity to non-payers. It allowed creating financial discipline and get rid of non-payments.
Many people were displeased at that time, especially akims. However, without such actions we wouldn’t have a civilized market and current culture of relations. Our neighbours – power engineers of Kyrgyzstan and Uzbekistan – still cannot cut out the power from non-payers without the permissions from above. Recently Kurmanbek Bakiev, the President of Kyrgyzstan, in his speech in fromnt of the Parliament said that “uncontrolled distribution of electricity created huge opportunities for corruption. Only completing the privatization can prevent corruption.”
— Based on you experience of reformation, how do you assess the current condition of Kazakhstan’s power industry and our prospects compared to other countries of the CIS?
— Taking about the issue of creating common power market in the CIS, Yuriy Udaltsev, member of the board of management of RAO UES, said: “On one side we have Byelorussia, which hasn’t started any reforms, on the other side we have Kazakhstan, which has already liberalized the industry; Russian is somewhere in between.”
It is well known, that Kazakhstan is the leading country in the CIS by reforming the power industry. It is mostly due to the merits of personnel of “KEGOC”, who developed the concepts of introducing the market principles to the power industry of Kazakhstan, projects of the legislation “About power industry” and some other legislative acts.
While the realization of new projects and introduction of market principles in the industry, the company’s personnel has improved its professionalism. Maybe they don’t notice it in their daily routine. I think that Salimzhuarov in 2007 is professionally much higher than he was in 1997. The spirit of a united team has developed in the company along with the growth of professionalism.
Analysing these 10 years of history of JSC “KEGOC”, I think that the company was very lucky with its managers. All of the managers are the new generation leaders, starting from Mukhtar Ablyazov, the first President of the company, up to the current head of the company Kanat Bozumbaev. They clearly identified the objectives and tasks for the company, used the potential of the personnel and gave the workers an opportunity to show their best qualities.
Mukhtar Ablyazov, the President of joint-stock company KEGOC per 1997-98
“Ten years ago the situation was critical; the salary hadn’t been paid for 11 months. I couldn’t understand how people work without receiving their salaries. When I just started my work in the company, there was no communication – the phones didn’t work, people always were on strike in front of the building – they were asking for their money. It took half a year to solve the problems.”
from the memories:
“Once one of the ministers called me and said: We are now in a bathhouse in Astana, and the electricity cut out. Could you turn on the lights for only 5 minutes, we’re not asking it for a long time, so that we can put our closes on. We understand that you are carrying out your reforms… This event had a strong influence on me: during that time there was a discussion whether to centralize or decentralize the management of the company. I understood that I cannot reply to each of such events: somebody will ask to turn on the lights in a bathhouse, others in their apartments… I had to arrange decentralization, split the responsibility with the regional offices, and introduce principles of free market: everybody makes own job within own responsibilities. It took me one month to prepare the reform program – maybe I wouldn’t be able to do it within a month now, but back then the situation was critical.”