Implementation of the development strategy of Samruk-Energy JSC
The strategic indicators of our Company demonstrate an improving trend. The main growth factors are an increase in the volume of electricity and capacity sales on the domestic market, obtaining individual capacity tariffs, reducing specific fuel and water consumption for process needs, optimizing fuel and energy costs and energy saving, as well as reducing the debt load.
Strategic performance indicators12
12 Strategic KPIs approved according to the Development Strategy of Samruk-Energy JSC for 2022-2031.
13 Labor productivity is recalculated using the new methodology beginning in 2022.
In general, the Company's Strategic Indicators tend to improve in the period from 2021 to 2023. The main growth factors are an increase in electricity and capacity sales on the domestic market, an increase in tariffs of SDCs, obtaining individual capacity tariffs, reduction of specific fuel and water consumption for technological needs, optimisation of fuel and energy saving costs, as well as reduction of the debt load. At the same time, it is planned to increase the debt load in 2024-2031 due to the implementation of investment projects.
In accordance with the key strategic goals and 19 main development initiatives and tasks, in the reporting period, the Company implemented measures and realized projects aimed at achieving the main strategic goals. All initiatives and tasks were developed in accordance with the initiatives of the National Welfare Fund Samruk-Kazyna.
Reduced net carbon footprint
Environmental responsibility
Action
Installation at GRES-1, GRES-2, and APP plants of an automated system for monitoring emissions into the environment.
Comments on implementation
1. GRES-1: ASM is installed at power unit No. 2.
2. GRES-2: ASM was put into operation in test mode.
3. APP: equipment is being installed and adjusted.
Action
Application of low-emission vortex pulverized coal burners.
Comments on implementation
Positive conclusion on the developed design and construction project was received.
R&D
Action
Technologies of carbon capture and storage (CCS), production of carbon chemistry products (R&D).
Comments on implementation
A contract was concluded with Nazarbayev University JSC. Analytical review of existing and prospective technologies of capture, storage and use of CO2 separated from flue gases of TPPs was developed, design documentation for manufacturing of experimental laboratory unit for research of steam oxygen-free coal gasification was developed.
Green finance
Action
Utilization of green finance tools.
Comments on implementation
The Company issued green bonds. A report on the use/distribution of proceeds and impact of the financed green projects was prepared and published on the AIX website and the Company's corporate website.
Resource conservation
Action
“Construction of clarified water return pumping station” of GRES-2.
Comments on implementation
DED developed.
Decarbonization
Action
Sale of carbon units (offsets) from RES facilities.
Comments on implementation
Design documentation and monitoring plan approved by the authorized environmental authority. Offset units received and credited to the account. A contract for the sale of carbon units was concluded.
Increased productivity
Human Capital Development
Action
Creating attractive conditions for employees.
Comments on implementation
Carrying out diagnostics of corporate culture was inexpedient in accordance with the requirements of the Corporate Standard on Human Resource Management of the Samruk-Kazyna NWF Group JSC.
Action
Retaining internal talents and attracting highly professional staff.
Comments on implementation
The list of key positions and talent pool was approved by the Management Board of Samruk-Energy JSC. The list is compiled and approved annually.
Action
Ensuring social guarantees and social stability in the Company.
Comments on implementation
Salary indexation is carried out annually for the Group of companies of Samruk-Energy JSC.
Social responsibility
Action
Personnel training aimed at ensuring that employees understand ethical norms and principles, as well as zero tolerance for corruption and bribery.
Comments on implementation
74 training trainings/information mailings have been conducted. On a quarterly basis, the Board of Directors is provided with information on implemented measures in this area as part of the reports of the Compliance Service.
Increase in domestic and foreign electricity sales
Action
RES sales in 2023.
Comments on implementation
Actual sales of RES for 2023 amounted to 554.38 million kWh.
Action
Ensuring electricity supply to consumers of the Group of Companies Fund's.
Comments on implementation
At the end of 2023, electricity supply to consumers of the Group of companies Fund's in the amount of 3,276 million kWh was ensured (data for the first half of 2023).
Since July 1, 2023, the transition to the mechanism of purchase and sale of electricity through the Unified Purchaser of Electricity has been carried out, therefore, the implementation of the measure is irrelevant.
Action
Ensuring electricity supply to energy-intensive industries (DPCs, Industrial Zones, etc.).
Comments on implementation
According to the results of 2023, electricity supply for power supply of energy-intensive production facilities (Aktogay MPP and Bozshchakol MPP) in the amount of 853,5 million kWh (data for 1 half of 2023).
Since July 1, 2023, the transition to the mechanism of purchase and sale of electricity through the Unified Purchaser of Electricity has been implemented, therefore, the implementation of the measure is irrelevant.
Increase coal sales in domestic and foreign markets
Action
Ensuring export of unprocessed coal to the Russian Federation.
Comments on implementation
At the end of 2023, export of unprocessed coal amounted to 9,772 thousand tons.
Provision of 4,000 kcal/kg beneficiated coal
Action
Sales of enriched coal 4,000 kcal/kg
Comments on implementation
Work is underway to implement at Severny open pit mine a pilot plant for dry coal preparation of coal of the 3rd seam.
Improving operational efficiency of existing facilities
Action
Implementation of the program of energy saving and energy efficiency improvement in the period up to 2025.
Comments on implementation
In 2023, 61 different activities were performed, measures to improve energy efficiency were implemented in the group of companies of Samruk-Energy JSC.
Action
Reduction of technological losses in Alatau Zharyk Company's networks.
Comments on implementation
Actual losses in the reporting period amounted to 10.90%, which is lower than the baseline loss level of 2020 (12.6%).
Action
Implementation of the ASCEM system.
Comments on implementation
The ASCEM system was installed at 13 facilities.
Action
Implementation of SCADA operational dispatch system.
Comments on implementation
The works were not carried out due to changes in the project (the scope and locations of equipment installation under the project changed).
Action
Optimization of equipment repair cycle.
Comments on implementation
The Committee of Nuclear and Energy Supervision and Control of the Ministry of Energy of the Republic of Kazakhstan did not approve the transition from a 4-year to a 5-year equipment overhaul cycle due to increased risks of technological shutdowns and high level of equipment wear at power plants.
Equipment modernization
Action
Modernization of brush contact apparatuses with a permanent electronic monitoring system at Unit No. 2 (GRES-2)
Comments on implementation
Construction and installation and commissioning works have been completed.
Innovative development
Action
Implementation at Severny open pit mine of a pilot plant for dry coal preparation of third seam coal with calorific value of 4,000 kcal/kg, Stage I
Comments on implementation
Commercial offers from potential equipment suppliers are being updated to take into account new available technologies, after receipt it is planned to analyze the payback of the project.
Digitalization
Action
Automation and visualization of operational reports and daily reports.
Comments on implementation
Technical specification has been developed.
Action
Installation of automated control system at power unit No.2 of EGRES-2.
Comments on implementation
The works have been postponed to 2026-2027, taking into account the binding of the works to the overhaul of unit No.2.
Business Process Improvement
Action
Electronic archive (part of the measure “Reengineering of the Company's processes to maximize the effect of production, economic, financial and economic activities”).
Comments on implementation
The system was installed on the servers of Samruk-Energy JSC, work on scanning and digitization of documents is in progress.
HSE best practices
Action
Automation of the process of registering hazardous actions/conditions/incidents to minimize accidents.
Comments on implementation
The report on the results of post-monitoring of the implemented Safe Production Project was approved by the Management Board of Samruk-Energy JSC.
Action
Cooperation with advanced companies, conclusion of memorandums.
Comments on implementation
An agreement on cooperation in the field of occupational health and safety was reached with “Morshynsky Mineral Water Plant ‘OSKAR’ PJSC (Ukraine) with the signing of the relevant Memorandum, however, due to military actions on the territory of Ukraine, the signing of the Memorandum and further implementation of activities under the Memorandum was not possible.
Increase in net
asset value
Improving financial stability
Action
Compliance with the normative values of financial covenants of creditors, with fixation on a semi-annual and annual basis (except for debt raising and interest expenses arising, in case of force majeure (quarantine), in accordance with the order of the Fund and/or the Government of RK).
Comments on implementation
All financial covenants of the Company's creditors are observed.
Implementation of investment projects
Action
1. Expansion and reconstruction of Ekibastuz GRES-2 with installation of power unit No. 3.
Comments on implementation
Transition to an alternative option for replacement of the main process equipment is being considered.
Action
2. Expansion and reconstruction of Ekibastuz GRES-1 (restoration of unit No. 1).
Comments on implementation
A test start-up of the power unit was carried out with its inclusion into the grid.
Delivery of a turbo-feeding pump is expected.
Action
3. Gasification of Almaty CHPPs.
Comments on implementation
1. CHPP-1: a positive conclusion of RSE “Gosexpertiza” on the feasibility study of the project was obtained.
2. CHPP-2: EPC-contract concluded.
3. CHPP-3: an EPC contract was concluded, and an agreement was signed for the purchase of a service to maintain electric capacity availability during construction of newly commissioned generating units with maneuverable generation mode.
Action
4.Reconstruction of cable networks in Almaty city and Almaty region.
Comments on implementation
Construction and installation works are in progress.
Action
5. Transition of Bogatyr open pit mine to modern cyclic-flow technology (CFT) of mining.
Comments on implementation
Pre-commissioning and commissioning works have been performed and commissioning will be carried out in December 2023.
Action
6. Transfer of the Kensu River flow.
Comments on implementation
Implementation of the project by attracting an investor through public private partnership is being considered.
Action
7. Construction of the counter-regulating Kerbulak HPP on the Ili River.
Comments on implementation
Work is underway with the Ministry of Energy of the Republic of Kazakhstan in terms of amendments to the RLA to ensure a tariff that allows the project to be realized.
Action
8. Construction of a 50 MW WPP near Ereimentau.
Comments on implementation
Works on construction of access and on-site roads, construction of mounting sites for wind turbines (foundations of wind turbines), rearrangement of existing power lines and laying of 35 kV CLs, as well as construction of the 220/35 kV substation (buildings of control room, centralized control room and checkpoints) have been completed.
Action
9. Construction of hybrid WPP, HPP with capacity of 310 MW in Almaty region.
Comments on implementation
Joint work with Akimat of Yenbekshikazakh district and Akimat of Almaty region is underway to make decisions on land return.
Corporate governance
Action
Preparation of annual report in the field of sustainable development in accordance with GRI.
Comments on implementation
Integrated Annual Report for 2022 was approved by the decision of the Board of Directors dated 01.06.2023.
Action
Independent diagnostics of corporate governance by the Shareholder, and development of medium-term plans for improvement of corporate governance (within the terms established by the Shareholder).
Comments on implementation
The report on the Road Map of the ISDMS by the results of 2023 was approved by the Board of Directors on February 26, 2024. At the end of the reporting period, the fulfillment of the ISDMS Roadmap amounted to 94.4%.
Action
Regular assessment of the Board of Directors (self-assessment, independent assessment) in accordance with the internal document on assessment of the Board of Directors.
Comments on implementation
Self-assessment of the BOD by questionnaire method was conducted in the first quarter of 2023. The report was submitted and approved at the BOD meeting on 01.06.2023. Based on the results of the assessment, an action plan was developed.
Action
Improvement of the Company's image by means of awareness-raising activities (annually).
Comments on implementation
All measures to improve the image by implementing outreach activities are carried out.
Action
Obtaining ESG rating.
Comments on implementation
Based on the results of a comprehensive study of the Company's sustainability risk management performance by Morningstar Sustainalytics rating agency on December 12, 2023, the Company was assigned an ESG risk rating of 24.1, which corresponds to Medium Risk level according to the Sustainalytics Agency scale.
Risks and challenges related to the implementation of the development strategy
Strategic direction 1. Transition to a “green” economy
01
Name of risk or threat:
Climate risks
Risk prevention measures:
Control over compliance with environmental legislation, deadlines for submitting applications for emission permits and reporting to state regulatory authorities, mandatory environmental insurance, and compliance with technical regulations.
Monitoring of budget execution under the “environmental protection” item, compliance with the plan for modernization and repair of main and auxiliary equipment, use of greenhouse gas emission quota limits, and adjustments.
In accordance with the Environmental Code of the RK, if necessary, to obtain additional quotas for greenhouse gas emissions, including their acquisition at auction, as well as to form liquidation funds.
Strategic direction 2: Ensuring reliable competitive supplies of energy resources in the markets of operation
02
Name of risk or threat:
Information security risks
Risk prevention measures:
Preparation of spare information capacities (servers, computers).
Regulations for obtaining or limiting access rights.
Name of risk or threat:
Risk of industrial accidents that cause damage to the health and life of employees in the course of performing their duties
Risk prevention measures:
Timely provision of employees with personal protective equipment.
Control over training of employees in the field of occupational safety and health, verification of knowledge of technical operation rules, safety equipment, execution in Subsidiaries and Affiliates of measures developed within the framework of the Action Plan for management of occupational safety and environmental protection issues in the Group of companies of Samruk-Energy JSC. Monthly monitoring of their fulfillment.
Name of risk or threat:
Tariff setting risk
Risk prevention measures:
Qualitative preparation of the subject's tariff campaign for approval (coordination) of tariffs.
Timely adjustment of tariff estimates and investment programs in CRNM CP MNE to avoid introduction of compensatory (reduced) tariffs for Subsidiaries and Affiliates.
Tariff policy monitoring. Weekly report on tariff policy problems of Subsidiaries and Affiliates.
Working with government authorities of the Republic of Kazakhstan to obtain the necessary tariff for goods and services of the Company's Subsidiaries and Affiliates.
Name of risk or threat:
Risk of industrial accidents and disasters
Risk prevention measures:
Control over timely diagnostics of equipment in order to determine its technical condition.
Control over timely and complete fulfillment of necessary repairs of equipment in accordance with the established schedule.
Strategic direction 3. Increasing the value of equity capital
03
Name of risk or threat:
Risks of ongoing/prospective investment projects and investment programs of subsidiaries and affiliates
Risk prevention measures:
Work with state authorities of the Republic of Kazakhstan to obtain support for the Company's investment projects.
Report on fulfillment of the Development Plan of Samruk-Energy JSC and Samruk-Kazyna JSC Subsidiaries and Affiliates.
Monitoring of development of capital investments of Samruk-Energy JSC and investment projects being implemented.
Name of risk or threat:
Reputational damage risk
Risk prevention measures:
Control over compliance with the Rules of preparation and placement of information materials on the website. Regular monitoring of negative feedback, timely response to incidents covered in mass media and social networks.
Timely development and placement of the Annual Report on the website.
Name of risk or threat:
Risk of violation of external creditors' covenants and listing requirements
Risk prevention measures:
Formation of a report on debt and financial stability.
Monitoring compliance with covenants in accordance with the Financial Sustainability and Debt Management Policy (financial and non-financial).
Name of risk or threat:
Asset impairment risk
Risk prevention measures:
Reducing capital expenditure, analyzing the feasibility of planned capital repairs.
Performing impairment tests (in case of impairment indicators).
Centralized control over the formation and adjustment of the investment program of subsidiaries and affiliates.
Name of risk or threat:
Credit risk
Risk prevention measures:
Diversification of invested temporarily available funds into financial instruments in accordance with the requirements of the main parameters of the treasury portfolio. Examination of counterparty banks' risks related to the placement of IOUs
Compliance with limits on counterparty banks.
