The Comprehensive Privatisation Plan 2021-2025 includes 675 public and quasi-public properties

At the regular Government session chaired by Prime Minister Alikhan Smailov the progress of the Comprehensive Privatization Plan for 2021-2025 was considered. Reports on the subject were made by Deputy Prime Ministe, Minister of Finance Yerulan Zhamaubayev, Minister of National Economy Alibek Kuantyrov, as well as Chairman of the Board of National Welfare Fund Samruk Kazyna Almassadam Satkaliyev.

According to Zhamaubayev, the Comprehensive Plan includes 675 items of state property and quasi-public sector, including 7 items of republican property, 250 items of municipal property, 262 items of national holdings and companies, and about 150 items of joint-stock companies.

To date, of the 675 facilities in the Comprehensive Plan:  

  • 253 objects worth 141.7 billion tenge have been transferred to the competitive environment;
  • 60 objects are sent for reorganization and liquidation;
  • 146 objects are at auction;
  • 216 objects are in pre-sale preparation.  

Execution of the Comprehensive Plan in terms of sales, reorganisation and liquidation is 46%. At the same time, the rate of display of the objects of the Comprehensive Plan was 68%. 

In order to ensure timely and proper execution of the Comprehensive Plan for each facility, road maps with deadlines for putting up for sale are posted on the web portal of the State Property Registry. The road maps are publicly available.

In addition, approaches to deadlines for objects have been outlined according to which up to 80% of objects of the Comprehensive Plan are expected to be put up for sale by the end of this year.

The Ministry of Finance is constantly monitoring the implementation of roadmap activities.   

This year 295 objects of the comprehensive plan are to be put up for sale.

As of 1 December this year:

  • 36 objects in the amount of 86.1 billion tenge have been transferred to the competitive environment;
  • 32 objects are sent for reorganization and liquidation; 
  • 146 objects are on tender.

In order to ensure that 80% of the objects of the Comprehensive Plan are put up for sale, 81 more objects should be put up for sale by the end of 2022.

"In September and November this year, I held meetings on this issue and gave appropriate instructions to accelerate the necessary activities. Following the results the road maps for 13 newly included objects have been placed on the web-portal of the state property register and the road maps for 24 objects of communal property and SPK have been updated. Previously, the deadline for the placement of these objects was not defined," Zhamaubayev said. 

In addition, the process of placing the shares of NC KazMunayGas through an IPO on the Kazakh platforms of the JSC Kazakhstan Stock Exchange and the Stock Exchange "International Financial Center" Astana ".  

It should be noted that most of the regions and SPKs have offered 80% of the facilities of the Comprehensive Plan. 

At the same time, some regions and SPK have ensured implementation of 90-100% of objects - Karaganda region, Abay and Ulytau regions, SPK "Kokshe", SPK "Tobol", SPK "Baikonyr".  

At the same time, 7 regions and SPK have lagged behind the stipulated terms of billing. 

In his turn, Minister of National Economy Kuantyrov stated that in order to increase competition state-owned shareholding reduction through privatization of enterprises is continued. 

In pursuance of the instructions of the Head of State, the Ministry jointly with the Agency for Protection and Development of Competition carried out significant work on privatization. 

First, to further expand (complement) the list of privatization, criteria for selection of assets have been approved. These are ownership of a non-controlling interest, which does not give the right to make strategic decisions on important aspects; failure to achieve key performance indicators; belonging to small and micro enterprises; occurrence of the payback period of the project. 

"That is, if a facility meets the above criteria, it is subject to privatisation. Besides, within expansion of the Agency's mandate, two new privatization criteria have been included: presence of proposal of the antimonopoly body on transfer to competitive environment and occurrence of term of presence on the commodity market recommended by the antimonopoly body," Kuantyrov said.   

To date, the Comprehensive Plan has been updated to include more than 170 facilities. The right of entrepreneurs to choose an object for privatization has been enshrined. If there is a private initiative, the object may be sold. At the same time, in order to observe the interests of the state in privatisation, there are provisions for preserving: 

  • in strategic organizations, such as KazMunaiGas, Kazakhstan Temir Zholy, QazaqGaz, etc., to retain controlling stakes; 
  • staff is to be retained until the sale and purchase agreement is concluded. 

Disciplinary liability of officials for delayed sale of facilities has been envisaged. 

Second, transparency of privatisation and the activities of the State Commission is ensured by: 

  • publication of the SC's advisory decisions (in the State Property Registry, CGS web portals); 
  • publishing detailed information on each stage of the privatisation process in terms of assets (in the register of state property, on the website of the STC); 
  • preliminary discussion with the public (including involvement of the media) of the sale of strategically important objects and objects of social significance. 

In the case of direct targeted sales, relevant justifications are posted. In addition, the website of the National Chamber of Entrepreneurs is integrated with the Registry of State Property, which also provides detailed information on each facility and the privatisation process. 

Third, in order to prevent the emergence of private monopolists instead of state-owned ones, the approach to privatising communal CEMs has been revised. To avoid public resonance caused by deterioration of accessibility and quality of services, more than 200 socially important objects, which are local natural monopolies and are important for life support of the population (water, electricity, heat supply) have been excluded. Thus, these facilities remain (remain) in state ownership. Meanwhile, in the future, if investors are interested in buying them and agree to terms that take into account the state's interests, privatisation could be considered. Thus, a new subsection "Natural Monopoly Entities" will be formed in the register of state property. In this section private investors will be given access to the subsection and the opportunity to submit an application for the purchase of a facility with the necessary materials, including the investment program. 

Fourth, the maximum replenishment of the National Fund will be ensured through the sale of assets of national holdings and national companies. In August this year, the Rules determining the order of revenues to the National Fund from the transfer of assets of national holdings to the competitive environment were revised. It is also not allowed to repay the obligations of legal entities to the National Fund at the expense of the proceeds from the privatization of assets. 

Fifth, amendments to the Law "On State Property" were drafted to: 

  • to enshrine the concepts of "affiliated persons or related persons" as well as a ban on participation of a potential buyer and an affiliated person in one bidding lot; 
  • to set a minimum price for the object of privatisation equal to its book value or appraised value, whichever is higher; 
  • to sell large assets with a value above 1 billion tenge, taking into account the conclusion of the Agency. These amendments will be worked out in the framework of reforming the quasi-privatisation sector. 

Samruk-Kazyna Chairman of the Board Almassadam Satkaliyev said that at the moment the Fund and its portfolio companies have completed actions on 119 objects, of which: JSC NC KazMunayGas brought to the IPO (in the perimeter of 96 companies), 17 assets sold. Among them are Leasing Group, Tin one Mining, Electrode SK, KAZ Ferrite, which were part of Samruk-Kazyna Invest, and Kazakhstan Solar Silison, Astana Solar, 3 facilities liquidated and 2 facilities reorganised.

"I would like to dwell separately on the results of KazMunayGas IPO. Yesterday the final decisions of the Board of Directors and the Government on alienation of KMG's shares were adopted. Applications were accepted from November 9 to December 2. Priority was given to satisfaction of applications of citizens of Kazakhstan. The total number of applications received from our citizens amounted to 128.7 thousand. The total amount was 74.6 billion tenge," Satkaliyev informed.  

The fund plans to bring to IPO/SPO a number of the following portfolio companies in:

  • 2023-2024 - Air Astana, KEGOK, the green asset portfolio of Samruk-Energo.
  • 2024-2025 - KazakhGaz.
  • 2025 - Kazakhstan Temir Zholy.

In addition to the facilities specified in the Comprehensive Privatisation Plan, withdrawal of non-strategic facilities, so-called divestments, is also carried out.

Thus, for 2021-2022, 11 assets have been liquidated. Among them are assets of the Rompetrol Group. Two facilities were transferred to state ownership in accordance with the law. These are the Kazakhstan Electricity and Capacity Market Operator (KOREM) and the Settlement and Financial Centre for Renewable Energy Sources Support (RFC for RES). Two facilities have been sold, 1 facility has been reorganised. 

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