Letter from
the Chairman of
the Management Board
»

Dear colleagues,
shareholders, partners,
investors and stakeholders,

I am pleased to report that 2022 has been a significant year for KEGOC as we celebrated our 25th anniversary. Over the past 25 years, we have established a strong foundation for stable operations and successful project implementation to upgrade the national power grid and construct new power lines and substations. Through our joint efforts, KEGOC has become an efficient, state-of-the-art energy company that meets advanced standards to achieve its sustainable development goals.

At KEGOC, we understand the importance of our impact on the economy, environment, and society. We strive for long-term value growth and ensure our sustainable development by supporting the UN SDGs and ESG principles. In December 2021, the Board of Directors approved KEGOC’s updated Development Strategy for 2022-2031, which aims at long-term sustainable development, takes into account global trends related to the energy transition and integration of renewables, the need to address issues of electricity and capacity shortages in the medium term in Kazakhstan. It is also important that this strategic document also takes into account the need to introduce modern innovative and digital technologies, R&D, adherence to the principles of ESG, covers processes related to the decarbonization of the economy and ensuring economic growth in the country.

During 2022, KEGOC continued the implementation of grid infrastructure development projects of social importance to the country. We completed ‘Turkestan External Power Supply Reinforcement Project. Construction of electric grid facilities’, and 220 kV Ortalyk substation was commissioned. As of 31 December 2022, KEGOC had 82 electric 35-1150 kV substations with installed transformer capacity of 38,992.9 MVA.

Rehabilitation of 220-500 kV overhead transmission lines (OHTL) in Aktyubinskiye, Zapadnye, and Sarbaiskiye MES branches continued, and the projects under implementation include ‘West Kazakhstan Electricity Transmission Reinforcement Project. Construction of electric grid facilities’, which is scheduled for completion in 2023.

All KEGOC’s projects are implemented using its own and borrowed funds without public budget financing. As an additional source of financing, KEGOC issued green bonds for the first time in 2022, reinforcing the interest of foreign investors. We anticipate that the fact that investors from all over the world consider ESG to be crucial when making investment decisions will spur a growth in the number of local real economy issuers with a focus on creating ESG projects in Kazakhstan.

The timely performance of the Company’s obligations to financial institutions strengthens the interest of international investors. For instance, KEGOC fully redeemed a USD 46.3 million loan from the International Bank for Reconstruction and Development during the reporting year, 13 years ahead of time.

KEGOC’s cooperation on the management and stability of parallel operation with the power systems of neighbouring states has been successful. Energy security, renewable energy cooperation, and industrial cooperation between the countries were discussed at the 60th meeting of the Electric Power Council of the Commonwealth of Independent States, held in Astana in July 2022.

High qualification and experience of employees is the key to further successful development of our Company, solving complex technical and technological problems. That is why the main focus of 2022 was the policy aimed at improving the social well-being of employees. The total yearly income of operational employees increased by 28%–48%, engineering and technical workers and specialists by 15%–36%, and middle managers by 10%–15% due to increases in salaries, wage rates, and quarterly bonuses throughout the reporting period.

In 2022, the preferential housing lending programme was launched, the purpose of which is to retain and attract highly qualified personnel by providing a bank loan at a preferential interest rate.

I hope the implemented and planned activities will give an additional impetus to the motivation of employees, improve their well-being, as well as to maintain a high level of corporate culture and social stability in the Company.

In 2022, the Company’s net profit amounted to KZT 26.7 billion. The volume of electricity transmission services increased by 7.2% compared to 2021 and amounted to 58.6 billion kWh. The volume of services for technical dispatching amounted to 104.3 billion kWh and for balancing the generation and consumption of electricity 203.1 billion kWh.

I want to call your attention to the fact that Kazakhstan’s unified power system (UPS) had a marked increase in energy usage at the end of 2022. A historical high consumption of 16,459 MW in the history of Kazakhstan’s energy system was recorded on 7 December of that year, despite the fact that the nation’s power plants were only generating 15,203 MW at the time. With such heavy loads, Kazakhstan’s KEGOC-controlled national electricity system ran dependably and normally.

The Company’s shares in 2022, despite the geopolitical tension and its impact on the global stock market, have maintained their stability on the Kazakhstan Stock Exchange.