Kazakhstan’s Samruk Energy to auction electricity assets

01 December 2016, Week 47 Issue 838

Kazakh power generator Samruk Energy has announced a two-stage electronic tender for the sale of four regional subsidiaries, kicking off the largest privatisation programme in Kazakhstan’s history.

The state-owned company said in a statement on November 25 that 100% stakes in local power distributors East Kazakhstan Regional Energy, Aktobe TETS and TegisMunay had now been made available to investors. A 78.64% interest in Mangistau Electricity Distribution has also been included in the online tender process opened last week.

The assets are expected to yield a combined windfall of 40.5 billion tenge (US$119.4 million).

The two-stage tender involves an initial consideration stage to assess all proposals made by investors before the most attractive ones are shortlisted by a commission comprised of Samruk Energy and government officials.

“Under the terms of the tenders, potential buyers need to maintain the profile of the companies’ main activities [for a minimum of three years] as well as make obligatory investments,” Samruk Energy said in a statement.

Such investments include safety enhancements to ensure no accidents occur within the first 12 months of operations. The new owners are also required to maintain staff levels at no less than 80% of the current workforce.

Samruk Energy is the country’s leading utility, providing 6,800 MW of power from mainly gas-powered facilities. The utility accounts for 25% of the country’s total electricity generation capacity.

The company is wholly owned by Kazakhstan’s powerful sovereign wealth fund, Samruk Kazyna, which controls a number of strategically important enterprises in the energy, transport and communications sectors.

In May, Samruk Kazyna board member Berik Beisengaliyev revealed that Kazakh authorities were planning to take a portion of Samruk Energy’s shares public in 2019 as part of Kazakhstan's biggest privatisation wave to date. Over 170 smaller assets, including the four Samruk Energy subsidiaries, will be sold through electronic auctions from late-2016, he said. Minority stakes in 44 larger assets will also be offered to investors from 2017 until the end of 2018.

Beisengaliyev added that initial public offerings (IPO) for large companies such as national energy group KazMunaiGaz (KMG), uranium miner Kazatomprom and railway monopoly Kazakhstan Temir Zholy would be limited to 25% of total shares. The government, through Samryk Kazyna or a direct holding, will maintain a controlling interest. 

The sale of state assets is expected to continue up to the end of 2020 as Astana looks to shore up its energy-dependent budget following the recent oil price crash.

Joseph Murphy

Edited by

Joseph Murphy


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