Strategic orientations, objectives and tasks

Within the frames of its mission and achievement of targeted results the Company will need to implement three strategic orientations:

• Provision of energy security of Kazakhstan;
• Enhancement of equity value;
• Social liability.

Provision of energy security of Kazakhstan 

Company’s activity focuses on provision of energy security which is one of the main priorities of further economic development of Kazakhstan. The main objective of this orientation is to provide reliable supplies of electric power and coal as well as to support consistency of UPG RoK (United Power Grid). 

THE COMPANY WILL ACHIEVE THIS OBJECTIVE BY PERFORMING THE FOLLOWING TASKS:

1. Granting of National operator status in the field of electric power to the Company;

National operator status will contribute to stable development of the offset by providing energy security, increasing reliability of domestic supplies and utilization efficiency of resource base of Kazakhstan.

2. Control over stations of federal importance;

The Company intends to set the maximum level of control over the stations of federal importance which will lead to strengthening of the role of the state on these objects and will contribute to maintaining the stability of UPG RoK. 

3. Optimization of generation structure;

Increase of power cycling shares in generation portfolio shall be provided in order to reduce dependence on expensive imported electric power supplies.

4. Provision with idle capacities;

The Company plans to secure reserves by increasing available capacities which will contribute to increase of energy security of the state. 

5. Central planning of purchase and sale of exported/imported electric power and development of export potential.

It will offer new opportunities in the field of export of electric energy to Byelorussia and delivery of electric power from Central Asian states into EEA states.

Enhancement of equity value 

Due to high yield in the foreseeable future of electric power market an enhancement of equity values is also one of the strategic orientations of Company’s development.

PRIMARY OBJECTIVES AND TASKS TO ENHANCE EQUITY VALUE:

1. Protection of shareholders’ interests and successful initial public offering (IPO):

For successful initial public offering the Company plans to participate in a range of actions to improve legislation in order to provide financial appeal of the Company for investors.

• Participation in creation of stable tariff design system;
• Changes in dividend policy;
• Improvement of corporate management.

The Company will participate in improvement of tariff legislation for energy producing, energy delivering and energy supplying organizations by eliminating existing shortages and centralization of offset regulation at republican level. There also will be active operation to include payment of dividends into an approved plan of cash flows of energy producing facilities. In part of corporate management there is an objective to achieve 85% of corporate governance score by 2022.

The Company recognizes the importance of innovative and technological development and performs methodical work on improvement of existing equipment base, complete large-scale automation of the whole company and application of progressive world technologies to provide energy efficiency of own production.

2. Provision of holding finance stability:

• Diversification into affiliates;
• Participation in creation of stable tariff design system.

The primary orientation of diversification will be development of char-forming pure coal production with the purpose of its export into the Baltic and the CIS (Russia, Ukraine). 

Besides the above mentioned actions on improvement of tariff legislation will provide profit enhancement and refundability of investments which in its turn will contribute to provision of holding financial stability.

3. Participation in commercially viable projects:

• Innovation-driven growth. 

High capital coefficient and research intensity of electric power field determines the particular importance of this task.

Social liability

As it is noticed in the Strategy of National Wealth Fund Samruk-Kazyna JSC, growth of long-term cost is impossible not including interests of all concerned parties including interests of the Company that is why improvement of social liability standards is the key strategic orientation. Works focused on implementation of initiatives of the Government of the Republic of Kazakhstan and National Wealth Fund Samruk-Kazyna JSC in the sphere of social liabilities are provided in this orientation. 

*  Approved by the  Government Resolution of the Republic of Kazakhstan d/d 14 September 2012  №1202.

Corporate social liability enlarges upon the Company’s borders and involves a wide range of concerned parties: government authorities, local community, business partners, suppliers, clients. Investments of the Company have, first of all, socially conscious nature and are focused on development of clean technologies, environment protection, increase of resource and energy efficiency. The Company committed itself to anti-bribery and corruption policy and excludes discrimination in labor.

Strategy of corporate social liability within the  company implements socially conscious measures concerning employees and issues related to investments into human capital assets, health, safety, employees’ labor motivation, development of housing program, sports events, insurance of life and health, assistance in establishment of labor organizations, personnel training.

FOCAL AREAS OF COMPANY’S SOCIAL LIABILITY ARE:

• implementation of government programs in social sphere;
• efficient investments into production development; 
• protection of labor and environment;
• development of personnel potential;
• satisfaction of personnel needs and improvement of their health;
• rendering beneficent help and sponsor support. 

Within the frames of implementation of these orientations the Company fulfills the tasks on development of monoproduction settlements, anti-corruption enforcement and actions against discrimination in the sphere of labor and employment, development of green technologies and implementation of environmental standards, reduction of losses and harmful effect, monitoring of employees’ labor conditions, training and personnel development, formation of personnel reserve, housing policy, payment and labor motivation policy as well as social support of retirees and disables persons, etc.

Tasks on reduction of industrial accidents provide fulfillment of actions on safety level increase by using up-to-date equipment, personnel training as well as bringing of production conditions in accordance with international standards in the sphere of safety and labor protection.

WITHIN THE FRAMES OF ENVIRON-MENT PROTECTION THE PRIORITY TASKS ARE: 

1. Implementation of green economy strategy and development of clean coal technologies and RES, increase of energy efficiency.

Energy efficiency is one of the fundamental aspects of environment protection. To eliminate energy poverty of remote consumers the Company plans to involve renewable energy sources (wind and sun power plants as well as small hydro-power plants) into the balance.

Measures taken with the purpose to use electric energy and fuel more efficient as well as measures on energy supply can give a possibility of stable economic growth almost without increasing energy consumption and, as a consequence, without increasing air emissions. Upon that increase of fuel consumption ratio and reduction of energy consumption for technical needs is assumed.

Actions such as establishment of Kazakhstan Smart Grid, construction of contemporary co-generation power plants as well as development of RES are aimed to increase of efficiency. In future the Company plans to examine the issues on utilization of secondary energy resources (for example, rejected heat of exhaust fumes, industrial waters and steam, energy of natural gas overpressure, etc.). 

Due to quantitative obligations of Kyoto Protocol up to 2020, Kazakhstan implements a quota system for greenhouse gases emissions.

Number of quotas for every energy producing organization will be determined by the National plan approved by the decree of the Government of the Republic of Kazakhstan. Within the nearest ten years the community plans to reduce CO2 emissions as well as to get additional quotas by constructing renewable energy sources.

2. Reduction of losses in electric and heat networks.

This task will be performed by upgrading of processing base as well as implementation of Smart Metering system and all-round automation of the Company.

3. Reduction of harmful effect.

In order to minimize pollution of environment equipment for filtering of release as well as up-to-date methods for disposal of bottom ash waste will be implemented.

4. Implementation of social and environmental standards system.

The Company deliberately implements environmental management system according to ISO 14001 standard at all facilities.