A major part of the offer to international investors that Kazakhstan is taking on the road is its privatisation programme. Big numbers are being bandied about.
“We aim to reduce the government’s share in the economy to 15%. Therefore, until 2020 we aim to sell more than 700 companies, including [some of the] largest, with various profiles in infrastructure, oil refinery, energy and other key sectors. For investors, it should be like a red rag for the bull: the City bull,” deputy prime minister Askar Zhumagaliyev told a London audience at the Kazakhstan Global Investment Forum on October 2.
Cynics say they have heard this before, but Kazakh officials insist the government is staying the course. Asked if this ambitious programme would be carried out as promised, Arystan Kabykenov, vice-minister for investments and development of Kazakhstan, speaking on a panel at the forum, said there is “no room for error” in making it happen or in losing time, and the government is committed to the programme.
Nurlan Rakhmetov, managing director of privatisation and restructuring at national welfare fund Samruk-Kazyna, reiterated the point, telling fDi magazine: “Privatisation is a key policy of our government and actually started from 2014 and we have had one programme, 2014-16. Right now we have the programme of privatisation from 2016-20.”
Samruk-Kazyna owns many of the most highly prized assets that are on the selling block.
“The [privatisation] proposition is part of the economic policy of our government and from this point of view, privatisation totally coincides with the strategy of Samruk-Kazyna, because our strategy is, of course, to increase the efficiency of our company through simplifying the structure of the fund – and we want to withdraw from non-strategic business, so we propose these companies for investors,” says Mr Rakhmetov. “Out of 191 assets, we have already withdrawn 128 assets [from the] structure of our company but the rest are very interesting and it creates a lot of opportunity for foreign investments.”
These remaining assets being offered up include:
KazMunayGas (KMG): The government will retain the largest stake in KMG, the national oil company, given its strategic importance for the country, but a 25% stake is being considered for initial public offering, with a target date of late 2019 or early 2020. “A lot will depend on the macro economic environment, like oil price for instance. More likely that it will be a dual listing in London and Kazakhstan,” says Mr Rakhmetov. KMG has an exposure to promising Caspian offshore blocks. KMG itself is selling a 51% stake in KazMorTransFlot, the national maritime operator that it fully owns, and 100% of shares in the Kazakh-British Technical University.
Samruk Energy: National power generating company Samruk Energy is slated for a portion of its shares to go public in 2019. Samruk Energy is the largest energy company in Kazakhstan and the leader in electricity production with a 28% market share, but it also enjoys leading positions in renewable energy and coal production. Its asset, Bogatyr Komir, provides about 34% of the total national coal production.
Tau-Ken Samruk (TKS): The national mining company is seeking strategic partners for projects from its portfolio, and for the joint development of new ones. TKS has sizeable assets in gold, copper, tungsten (including the largest deposit in the world), iron ore, zinc, lead and silicon metal. “Our company is actively carrying out large-scale work to attract investors. A number of memorandums have already been signed with large Chinese, Turkish and Kazakh investors,” says Kanat Kudaibergen, chairman of the TKS management board.