The government will dilute the share of private shareholders in energy companies that lack funds for modernization. This was stated today during a briefing in the government by Deputy Prime Minister Kanat Bozumbaev, who presented the progress of the national project for the modernization of the energy and utilities sectors, according to a correspondent from the business information center Kapital.kz.
“I want to emphasize that this is a very complex, large-scale project. There have been no analogs in Kazakhstan during the years of independence. It is quite an ambitious project, but we are consciously moving forward with its implementation because we simply cannot delay any longer; a recurrence of problems like those in Ekibastuz in other regions is unacceptable. Continuing to patch up weaknesses and fill gaps with budget funds in a sluggish manner makes no sense,” he clarified.
According to him, modernization will be carried out not only with state participation but also with funds from private investors and shareholders.
“Even if private investors are unable or claim that they cannot provide co-financing or increase their share capital, we will have to dilute their shares temporarily, allowing the state or quasi-state sector to enter. We will continue to finance this, and then we will sell it back to the private sector in the market to more successful managers,” the Deputy Prime Minister emphasized.
He added that outdated infrastructure is a hindrance to attracting investments for the construction of new factories, plants, and other investment projects.
“The national project for the modernization of energy and utility infrastructure consists of two main blocks: the first is generation. Generation implies that over the next 5 years, approximately 7,300 megawatts of electrical capacity will be built in the country, and part of the existing capacities will be updated and modernized. We are currently targeting 6.4 trillion tenge and expect this amount to be allocated. No subsidizing of interest rates for generation is planned here,” Kanat Bozumbaev clarified.
The second part of the project is the modernization of utility networks, which include electrical, thermal networks, as well as water supply networks: drinking water in large and small cities, wastewater networks, and sewage treatment facilities.
“We anticipate that the total amount of investments will be around 6.8 trillion tenge. I will say right away that this is an indicative figure; the numbers may change either way after the companies develop their investment plans. When the EPC contractors are determined and the project documentation is ready, and after the state expertise is conducted, the figures may vary slightly, but we expect that this will be plus or minus 10% in either direction,” he added.
The government intends to provide the longest possible loans for these purposes - up to 20 years.
“The interest rate that we are targeting will not exceed 10%. If we attract funds from the market at 15 or 17%, we will subsidize 5 or 7% for the needs of utility networks. You may ask me what amounts this will entail. For now, we estimate that over 5 years it will be around 1.4 trillion tenge. But it all depends on inflation in our country; as you know from last year, inflation is a factor, and it also depends on the refinancing rate that the National Bank will set,” Kanat Bozumbaev clarified.
If inflation decreases, the loan rates from financial institutions will also decrease accordingly.
“Here we will be flexible, and we will strive for natural monopoly entities to attract the cheapest loans. We are actively working on this with the financial sector,” he added.
One of the directions of the project is the installation of metering devices.
“We are currently planning to target - to fully cover 100% with metering devices over 5 years, to implement digitalization across all sectors so that ultimately, utility services can be accessed on a phone app, allowing users to see what charges have been made and why, similar to how you pay for mobile services. This is a significant task, but we expect to accomplish it in the coming years,” concluded the Deputy Prime Minister.