The Second Wave of Privatization

April 28, 2014

The second wave of privatization of state-owned organizations will be launched in Kazakhstan.

April 14, 2014 Umirzak Shukeyev, the Chairman of the Board of Sovereign Wealth Fund Samruk-Kazyna JSC, informed that the Fund is going to put up a third of its assets for privatization.

Organizations selected for privatization are related to those which operate non-core business and which are unrelated to organizations of strategic importance or national security. The preliminary list includes 32 organizations belonging to republican ownership, 586 facilities of communal (municipal) ownership and 191 organizations belonging to holdings.

Privatization, with it, will be intensified by implementation of the “People’s IPO” program.

The State is planning to offer different share packages of Samruk-Kazyna’s subsidiaries to the stock market in 2014-2016. Actually, it relates to companies belonged to these subsidiaries such as KazMunaiGas, Kazakhstan Temir Zholy, Kazatomprom, Samruk-Energo, Kazakhstan Engineering and others.

In addition, KEGOC’s shares will be placed in the stock market within the People’s IPO program in December 2014.

Moreover, In 2014 there will be an auction sale of shares of Aktobe TPP (100%), Zhambyl State-owned District Power Plant (50%), Temirshol Energo (51%), Semser Security (49%), Locomotive-2030 (51%), Temirzhol Zhondeu (75,6%) Mr Shukeyev said. In 2015, fourteen companies will be brought to auction, including KMG-service, Tengis Service, Kazmortransflot, Eurasia-Air, Kazakh Institute of Oil and Gas, Eastern-Kazakhstan Power Supply Company and others.

The Government is developing conceptual approaches to setting a unified legal form in relation to organizations remaining in the state’s ownership until the end of the first half of 2014.

It has to be noted that privatization of Samruk-Kazyna’s assets is an important source of budget replenishment and development of business. We analyzed “merits and flaws” of privatization and it has to be admitted that effectiveness of market depends on availability of private ownership. Privatization of state ownership, as we think, will lead to reduction of government expenses, intensification of market competition and demonopolization of economy.

Madina Sypatayeva