| Project Detail |
Samruk-Energy is the largest electricity generation company in Kazakhstan with approximately 7,000 megawatts (MW) of installed capacity. Samruk-Energy is one of the seven SOEs owned by Samruk Kazyna and planned for IPOs. In preparation for the IPO, Samruk-Energy is implementing a comprehensive corporate transformation program, which includes sales of nine of its assets, improvements to corporate governance, an introduction of enterprise resource planning system, etc. Following the governments development goals, in 2015 Samruk-Energy adopted the Long-term Development Strategy 2015 2025. Among other things, by 2025 Samruk-Energy plans to increase the power generation capacity from renewable sources up to 10% of total installed capacity (850 MW), which presently is less than 1%. In this context, Samruk-Energy has requested ADB to provide a technical assistance to support its corporate transformation and balance sheet restructuring planning. In addition to the corporate transformation to improve operation efficiency, Samruk-Energy faces liquidity requirements of EUR500 million by mid December 2017. The European Bank for Reconstruction and Development (EBRD) signed a loan agreement with Samruk-Energy in May 2017 for a EUR100 million loan to support its restructuring. While Samruk-Energy indicates that it would be able to raise the remaining amount from other financing sources, these will largely be from local banks, which will have limited tenors and continue to create challenges in managing Samruk-Energys cash flow.
The TA will have three major outputs: (i) a report on Samruk-Energys corporate transformation program, including the assessment of the activities and their impact on the energy sector and the whole economy of Kazakhstan and recommendations; (ii) detailed historical and pro-forma financial analysis of Samruk-Energy with a financial model to support the analysis and planning of balance sheet restructuring; and (iii) an environmental and social safeguard audit of Samruk-Energys current environmental and social management system (ESMS) with recommendations to fill any gaps to meet international standards. There will be a small workshop with Samruk-Energys relevant staff to share the findings by the consultants.
Project Rationale and Linkage to Country/Regional Strategy Kazakhstan, as a major oil exporter, has been facing economic challenges caused by the steep decline in the world oil prices and tenge depreciation after shifting to a floating regime in 2015. In its efforts to manage this economic downturn, the Government of Kazakhstan issued a decree in December 2015 to implement a new privatization program to improve the efficiency of state assets and to reduce budget expenditures. As part of the privatization plan, Samruk Kazyna, the sovereign wealth fund of Kazakhstan, plans to conduct initial public offerings (IPOs) of at least seven state-owned enterprises (SOEs) that it owns by 2020. These are also among the largest SOEs in the country.
Impact
Electricity supply from renewable energy sources in Kazakhstan increased to 3% by 2020.
Transfer of state-owned assets to a competitive environment by 2020. |
