Kadyr BAIKENOV,
President �Investconsulting�
The author of the article was the Minister of Energy and Fuel Resources in 1992 to 1994. The theme touched by him seems extremely important. Strategical projects on the development of our oil and gas industry, to guarantee power security have not been realised since that period. The government dealt only with tactical, �urgent� projects. This was explained with the absence of resources, changing conditions in the world�s markets and with any other thing. However, this policy makes strategic projects more urgent.
What was possible to do and what is necessary to realise, these are what about K.K. Baikenov�s article is.
The total process of the world�s development confirms that the globalisation process started long ago, and that today Kazakhstan has not been involved entirely in this process due to �a merit� of Soviet Union, which at first set up �an iron curtain�, later limited penetration of foreign money to the country. At present time, after the collapse of the USSR and establishment of independent states, each young state independently determines its way of development and penetration into the world�s economy. Of course, the influence (both positive and negative) of external forces will undoubtedly have a place in determination of our future.
The world practice has many examples when countries lose independence of their state managerial system due the growing globalisation. In such countries, �obedient� state managerial organisations are usually established, and the national economy and national consciousness get more vague.
Will our young state withstand, at least partially, the influence of the globalisation process, and, hence, the influence of the external forces on Kazakhstan�s independence in the economic and political development? Do we have a sufficient economic potential, which can be developed in order be part of the external forces influencing the world�s processes? If we reply directly, we reply �YES�. If we answer the question �HOW?�- this article is an effort to give subjective answers through consideration of the past and present events in the economic life of our state, after it was declared independent.
Projects, Programs and Problems
From the beginning of 1990s, during the Soviet period, the Government, where I worked, had been working with an idea to establish the power independence of Kazakhstan. The Ministry of Energy and Fuel resources, which I headed in 1992, was involved in the preparation of the economic program to realize separate projects for the fuel-power needs of the country. This program was supposed to guarantee the competitive power independence of this branch of the economy. The guarantee of economic independence, as history shows, is a basis for preservation of political independence.
In my opinion, it was a wise decision of the President, when forming the managerial structure of the independent state, to establish the Ministry of Energy and Fuel Resources in 1992. This Ministry guaranteed a combined development of the fuel-power complex of the country, according to the state policy. Oil, coal and uranium mining enterprises, power and oil processing plants and pipeline companies are overseen to this Ministry and on the basis of investors� keen interest in exploitation of hydrocarbon deposits, are allowed to attract investments to other branches of FPC (Fuel-Power Complex), in particular to the power branch.
The program to guarantee power independence for Kazakhstan in the proposed structure included projects for construction of a power electric station of 970 MWt capacity with gas-turbine devices, fuel for which was supposed to be gas from Zhanazhol and Urikhtau deposits in western Kazakhstan; construction of gas pipeline Chelkar-Leninsk-Kzylorda-Shymkent, of Southern-Kazakhstan Heat Electric Power, oil pipeline Atyrau-Kenkiyak-Kumkol, several highly-volt power transmission lines. The technical-economic feasibility was worked out for these projects, which confirmed their economic efficacy. There were a lot of discussions concerning the two latter projects. Finally, foreign experts whose opinions were respected over Kazakhstan research findings, worn out and economic inappropriateness was given to these projects. The Government agreed with this. In the result, several years later we again have to return to these projects. This is evident by the fact that the Government supported the Kazakhstan-Kumkol-Western China oil pipeline project. The Chinese National Oil Company was able to realize this project. The issue regarding the necessity to construct the gas pipeline to southern regions of the country is again being discussed. First of all, projects are to be profitable. Only in this case the project will initiate investors� interest. Most investors consider the project, first of all, from the position of hazards, both financial and political. That is why, if a project is necessary to protect the state�s interests, the state has to undertake some risks, i.e., to grant a state guarantee to the investor.
Western Kazakhstan
The construction of the Aktyubinsk Power Station along with the construction of the power transmission lines would provide for the requirements for electricity in the entire western region of Kazakhstan. At the present time, the Western Kazakhstan region receives 90% of electricity from Russia. The total volume of imported electricity for last year was 62% of the requirement of the Western Kazakhstan region. The construction of the Southern-Kazakhstan Power Station would allow to cover the power deficit in the southern region of the country, which receives 29% of its requirements from Central Asian republics.
Returning to the theme regarding development of power projects by attracting foreign investments, I would like to emphasise that the Ministry of Energy and Fuel Resources worked out a (program) scheme of financing the construction of the Aktyubinsk power station based on attraction of credits from Western banks. Investors, such companies as Siemens (Germany), and BMB (Turkey) were ready to undertake responsibilities for the credits. In their own turn, these companies asked us to grant them the right to exploit Alibekmola deposit and two other small deposits in the Aktyubinsk region as a guarantee on the credits.
The technical contract had been signed, and the contract on financing the project was being completed. Unfortunately, this project was not realised. In 1994 the Ministry of Energy and Fuel Resources was reformed. The Oil and Gas Ministry and the Ministry of Energy and Coal Industry were created to take its place. From the state point of view, in my opinion, that was not necessary. The division of the fuel-power complex of the country resulted in a loss of the Program on guaranteeing the power independence. The Oil and Gas Ministry rejected to grant the above-mentioned deposits to the investors of the power stations. As a result, the project was not realised. The Government of A. Kazhegeldin did not support this project and at last buried it, having not considered the proposed financing system. I would like to emphasise that till present time the deposit Alibekmola is not exploited by anyone. What did the state gain from this policy? Nothing!
Short-sighted decisions on strategically significant projects lead to losses of time and the state�s continuous dependence on basic branches of the economy, which results in a political dependence along with all respective consequences.
Southern Regions
The dependence of our country on supplies of natural gas from our neighbours Uzbekistan and Turkmenistan is of the same importance from the political point of view. The issues regarding supplies of this product were considered repeatedly at the Governmental level. Despite the signed documents, �On friendship forever��, we continue to suffer from the deficit of Uzbek gas, especially during the winter season. This caused the difficult social situation in the southern regions of Kazakhstan due to problems of providing the population of towns and regions with heat. Of course, non-payments by gas consumers play a negative role in gas supplies, especially during winter season. During this season, Uzbekistan does not have enough gas to export to Kazakhstan and Kyrgyzstan in agreed volumes. Taking into consideration that Uzbekistan is fulfilling an active work on gasification of villages and settlements, we should not hope for regular gas supplies even in case of 100% payments. Turkmen gas goes through the pipeline system belonging to Uzbekistan. That is why in case there are any problems regarding payment for supplied gas or any other problems, our neighbour may also restrain Turkmen gas.
As we have a big volume of natural gas mined in the west of Kazakhstan and gas deposits near the Aral Sea, we have to take measures to provide southern regions of our country with our own gas. That is why it is extremely necessary for Kazakhstan to connect the southern and western regions of the country with a gas pipeline. The Program included this project also. As I mentioned before, the technical-economic feasibility was worked out, but, finally, all these documents were shelved. Naturally, the construction of the gas pipeline is expensive, but if we put into production the pipeline step by step, we could attract needed money required for the construction at the expense of companies that will mine the gas, owing to credits which may be received under the state guarantee, though at present the latter is �unfashionable�. But, according to the saying, we should choose �the lesser of two evils�. That is why we should make a decision, namely whether we will continue to be economically dependent or should we spend money to become independent.
During the last six years our state received significant amounts from foreign companies in the form of bonuses for the right to exploit oil deposits, from sales of Kazakhstan�s share in oil projects, from the sale of shareholding of separate state enterprises, and from sale of state property. To realise projects of strategic significance for Kazakhstan, not a single tenge was found, as money was used to cover the budget deficit, not to aid in development.
Power independence of Kazakhstan: is both an economic and political requirement.
It is known that investment money (IM) is formed of the following sources: IM = External investments and loans + population�s money + investments in the form of credits of local banks.
What do we have today? At the present time the volume of external investments has abruptly declined in comparison with previous years. The population is keeping money in stockings, and solvency of Kazakhstan banks is very low, so they cannot finance big projects. As a result, if one or all components of the IM formula fail to work, we should not expect any stirring within the economy, rather we will be at a stage of slow development for a long time, or, most likely, will face stagnation, de-industrialisation and degradation.
It is not too late to return to the task of provision of power independence. The absence of such a program leads to the fact that national companies are settling only their own department problems and do not take part in solving tasks which require joint actions. That is why, at the present time, it is possible to engage the total mechanism of creation and practical realisation of projects connected with the power independence, only with the help of a directions of the leader of the state. For example, the problem of provision the southern regions of the country with our own gas does not touch any of the national companies. Recently �Kazakhgas� company, which at the present time deals only with issues regarding repayment of former mutual debts between partners, did this. It is the Ministry of Energy, Industry and Trade, that is to realise the strategy of the development of the power independence or safety. But, unfortunately, for the time being there is no similar strategy. It is noteworthy that at the present time, there are no specialists in the Ministry�s apparatus, who know these problems well.
I believe that today it is extremely necessary to work out a program on the power independence of Kazakhstan and to conduct all economic calculations, to propose ways of financing of the projects. Undoubtedly, one of the difficult tasks, namely organising of financing of the projects, is to be solved jointly by both the government and the national companies. Moreover, we have an experience of such a large-scale project as the construction of the new capital. If state organisations and companies have the will and desire to solve the task on guarantee of the power independence, we may hope for a success.
KASE: in general, balanced and liquid market for dollar with high demand and supply
/IRBIS, Oct.07, 99/ � The next trades in US dollar, Deutsche mark and Euro were held at Kazakhstan stock exchange (KASE). 26 banks participated in the trades.
Today the trades were opened in the US dollar at 141.80 tenge per unit. At the beginning phase of the trade the dollar went down to 141.60 (minimum mark of the day) in four minutes � opening price was too high. And the volumes of the deals were minimal. The reasons for such a fast decrease of the exchange rate is not understandable. More likely, not all dealers have joined the trades yet.
Fall of the dollar price brought about a surge of demand, which was fully used by the sellers. Beginning the seventh minute of the session the exchange rate of an American currency soared and reached the level of 141.90 tenge per unit.
Rest of the trades went on with an active work of the dealers and in an almost balanced market. Dollar was traded within 141.80 - 141.91 price range, and its price grew a few times with subsequent downward corrections afterwards.
The trades were closed at � 141.82/83 tenge per dollar.
283 deals were made in US dollars. Weighted average dollar exchange rate made 141.81 (-0.09). Volume of the session - $11.635 mln (-$5.825 mln). Exchange rate fluctuation during the trade was0.22%.
Volume of an American currency supply remains high. Four banks were selling dollars in significant amounts. Worth to mention the cautious behavior the banks showed towards their currencies on sale: deal after deal the seller persistently raise the market by making small transactions and taking the most out of demand. Such tactics ensured a prevailing growth of the price of an American currency throughout the session and don�t seem to be fulfillment of clients orders for mandatory sale. Some other features of dealers� behaviors also display that a big chunk of the dollars sold today belongs to the banks themselves. At the same time, it is obvious that exporters� earnings had a noticeable impact on the stability of tenge.
Despite decreasing trade volume for last three days, demand for the dollar from the banks of the second tier and their clients does not shrink. Today it was completely balanced by supply, but will remain massive (practically all participants could not help buying) and stable.
In general, absolutely free market was observed on the trade floor, and the trade results reflect objective proportions of demand and supply. By the results of the trade it seems as if the market is not quite stable. Its major operators are �stuffed� with an American currency and would be glad to buy some more, but no way to do so. Therefore, a speculative component is rising.
Some influence is being made by major operators� sale of dollars to maintain their short term liquidity. More likely, effects of this factor will be temporary.
One hour after closing of the trades on over-the-counter market of Kazakhstan dollar was quoted at 141.90/142.10 tenge per unit, two hours later � 141.95/142.00.
No deals were made in Deutsche mark. At closing of the session Deutsche mark was quoted at 77.45/87 tenge per unit of the currency.
No deals were made in euro. At closing of the session euro was quoted at 152.00/36 tenge per unit.
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