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Course for Innovations

In the framework of the Made in KZ 2012 project, we have addressed to top managers of the national companies, included in Sowereign Welth Fund Samruk-Kazyna, with the request to share with readers of Kazakhstan magazine their achievements and priorities in the field of implementation of industrial innovative projects and local content development.

1. What are the strategic tasks of your company in the area of industrial-innovative development?

2. What investment projects, targeted at the development of domestic productions and Kazakhstani companies, are implemented by your company today?

Lyazzat Kiinov, Chief Executive Officer of JSC National Company KazMunayGas

1. The oil and gas companies pay much attention to scientific, technical and Innovative development since this serves as the guarantee for their dynamism and competitiveness. Therefore, until 2016 JSC National Company KazMunayGas is planning to invest about $312 million in innovative projects and research and development.

In order to ensure the innovative development of the oil and gas industry we have developed an innovative technological program for the company with the purpose to create conditions for a wide use of resource-saving, environmentally safe industrial technologies. This will help increase the oil conversion ratio and product line, improve the quality of products to the international standards level, ensure the growth of reserves and oil production in the fields, increase production volumes and decrease costs. It is important to mention that today in cooperation with research and development departments nearly all foreign oil and gas corporations are working on modeling the fields and studying the zones of interest.

The preliminary estimates indicate that additional income of KazMunayGas, generated by innovations, will reach about $3 billion; at the same time, the growth of labor productivity in the company will reach $149 thousand. Thus, by 2020 given the labor productivity at 521 thousand US dollars one third will be ensured thanks to innovations.

In order to build an innovative infrastructure in 2011–2015 JSC National Company KazMunayGas is planning to allocate about 43 billion tenge that will be spent on construction of the KIOG Scientific Research Center facilities as well as the Institute of information technologies and Oil and Gas engineering under KBTU at the Park of Innovative Technologies FEZ territory.

2. JSC National Company KazMunayGas is actively working on projects of rebuilding and modernization of Kazakhstani oil refineries. The major phase of modernization of these plants will take place in 2012–2015. The implementation of these projects will let us raise the average complexity index to the world indicator of 10.2, lead the oil conversion ratio to 90 % and quality of engine oil to Euro-5. Today, the respective indicators are 4.67, 63 % and Euro-2. The implementation of this task, set by the President of RK, on modernization of oil refineries will allow ensuring a total supply to the internal market by domestic high-quality oil products by 2016.

Another project, implemented by KazMunayGas under AIID state program, is the construction of an asphalt cement producing plant in Aktau that will annually produce at least 400 thousand tons of high quality bitumen. The plant output is planned to be used for the construction and exploitation of the Western Europe – Western China international transport corridor. This highway will not only connect Europe and Asia but also will strategically strengthen Kazakhstan and give impulse for the development of regions in the republic.

KazMunayGas conducts targeted work and strives to make its contribution in the expansion of Kazakhstani content. According to preliminary estimates, last year the share of local content in the purchase of goods reached 38 % and for services this figure was 60 %. By 2015 we are planning to lead these indicators to 60 % and 90 % respectively. Today, the total amount of long term contract, signed and planned to be signed in the near future with Kazakhstani producers of goods, reaches about 78 billion tenge. These funds will let them run modernization of their plants and raise the competitiveness of products as well as create 1,635 new jobs by 2016.

Vladimir Shkolnik, Chief Executive Officer of JSC NAC Kazatomprom

1. The strategy of JSC NAC Kazatomprom assumes building a transnational diversified company, also including the foreign assets of the nuclear fuel cycle.

The major strategic task of the company is generation of maximum profit per kilogram of uranium, produced in Kazakhstan, at all the following phases of NFC through effective and optimal use of the domestic mineral resources base depending on current market structure.

One of the major directions of the strategic development is the diversification of business into adjoining highly technological areas with the development of scientific technical and innovative potential. Under its framework the company established new highly technological plants, based on rare and rare-earth metals. Moreover, the company implements a number of innovative projects for the development and installation of RER (solar and wind energy, technologies of heat pump units).

The major priorities of innovative and technical development of Kazatomprom are modernization, adoption of new technologies, organization of R&D (research and development) operations, energy and resource saving, raising Kazakhstani content, formation of a motivation mechanism and an innovative culture. We are launching the monitoring system for current and promising innovative projects as well as business processes, stimulating the implementation of innovative development measures, including the attraction of financing instruments and the launch of advanced management technologies of JSC SWF Samruk-Kazyna.

2. Kazatomprom systematically approaches the issues on development of innovative business directions; therefore, creating new businesses in the republic the company strives to cover the full cycle – from provision of raw materials to finished goods. This is true for projects on renewable energy as well as production and processing of rare and rare-earth metals. We are establishing new technological platforms for production of uranium and other production areas of NFC, for demineralization, water conditioning and production of chemicals, for production, transfer and storage of energy.

The approach, in practice which the company reached significant successes in certain industries and diversifies its operations in the adjoining sectors for minimization of market risks and increasing financial sustainability, is widely adopted among leading global transnational corporations.

Under the law on support of using the renewable energy sources we implement projects, related to the development and launch of RER both at our own enterprises and for satisfaction of republic’s needs. This is the establishment of the plant and servicing of wind power stations and heat pump units, as well as the creation of photoelectric modules based on Kazakhstan silicon.

The most important indicator of the purchasing operations in Kazatomprom is the share of Kazakhstani content in the procurement of goods, works and services. The company permanently runs scientific and marketing researches, targeted at increasing the share of local content in procurements by its enterprises.

Today the list of products, demanded by Kazatomprom, is dominated by chemical and pipe production, as well as machine building goods. With the purpose of increasing Kazakhstani content in December of 2011 we launched a new vitriol plant in the Zhanakorgan village of the Kyzylorda oblast. The produced sulphuric acid will cover the growing needs of uranium producing plants in the region. This project was implemented by SKZ-U LLC.

Kuanyshbek Yessekeyev, Chief Executive Officer of JSC Kazakhtelecom

1. Several major strategic tasks can be indicated in the field of innovative operations of JSC Kazakhtelecom. First of all, is building an effective organizational structure that meets key aspects in this area as well as introduction of a process model and innovative development strategy that are supposed to support the innovation process at all phases. An important role is played by the emergence of an innovative culture that is able to significantly influence this process, being its original "accelerator".

JSC Kazakhtelecom pays great attention to the creation of necessary human resource and infrastructure conditions in order to introduce the innovations inside the company. Under this task it is expected to develop scientific laboratories and incubators, designated to run research and development, as well as the expansion of excellence centers for human resources. With the purpose to monitor and timely correct innovative operations it is planned to introduce key performance indicators for innovation management systems.

Based on JSC Kazakhtelecom strategic development goals as well as tasks for innovative development, our company is running innovative projects, in the field of mobile and optical technologies and cloud computing. Thus, in accordance with the service development plans of the company the organization of broadband access to FTTH optical communication lines (GPON) is considered as a major direction. iDNet service, offered on the basis of this technology, meets all modern requirements for organization of high-quality and high speed access to Internet resources and other information services.

In 2011 the iDNet service was first offered in the cities of Almaty and Astana as well as all oblast centers of Kazakhstan. Until 2015 we are planning to install over 500 thousand ports and use this network to cover all the large cities of the republic. Another important direction is further development CDMA-450 (EV-DO) networks in order to ensure high-speed wireless access throughout the country. I would like to emphasize that both these projects are included in the state Program for accelerated industrial-innovative development.

2. JSC Kazakhtelecom runs systematic work on increasing the Kazakhstani content in the procurement of goods, works and services. Considering the fact that procurement of goods constitutes over 50 % of all the procurement volume (and at the same time we purchase mainly imported telecommunications equipment with "zero" Kazakhstani content), one of the ways to increase the local content is the support of domestic companies, willing to start the production of import-substituting equipment in Kazakhstan. For instance, today we already cooperate with ASHU LLC, Eltex Alatau LLC, AlphaNetwork LLC for establishment of GPON import-substituting telecommunication equipment, optical splitters and patch cords plants, based on PIT Alatau FEZ. 

Kanat Alpysbaev, Vice-president for economy and finance at JSC National Company Kazakhstan Temir Zholy

1. The contribution of our company in the accelerated industrial innovative development is hard to overestimate. Today, the portfolio of JSC NC Kazakhstan Temir Zholy includes 14 innovative projects, some of which are already in the final implementation phase.

The company faces a number of important tasks. By 2015 we must increase the output of railroad machine building by 3 times (compared to 2011) to 300 billion tenge as well as lead Kazakhstani content in the procurement volume to 95 %. Within this period we need to expand the list of items, produced domestically for the needs of railroad transport, to 5,200 items (in 2011 – 3,688), as well as create 13,000 new jobs (in 2011 – about 3,000).

2. The Talgo plant, producing passenger coaches, was launched in Astana in 2011. The projected capacity of the enterprise is 150 units per year. In 2012 the first train, consisting of new wagons, produced in Kazakhstan, will connect Almaty and Petropavlovsk.

Another big project of Kazakhstan Temir Zholy is the construction of the plant, producing electric locomotives in cooperation with Alstom Transport (France) company and CJSC Transmashholding (Russia). The capacities of JSC Lokomotiv Kurastyru Zauyty will be used at maximum in the production of parts and joints for future locomotives.

In 2011 JSC NC Kazakhstan Temir Zholy successfully finished the construction of the Korgas – Zhetygen and the Uzen – state border with Turkmenistan railroad lines. Currently, both roads and adjacent infrastructure objects are additionally equipped with the necessary technical and communication systems.

In addition, the company is actively involved in the development of the Dostyk station, bordering China, in order to lead its carrying capacity to 25 million tons of freight per year by 2015.

In 2013 we will finish building a trunk fiber-optic transmission line with a total length of 4,000 kilometers while by 2016 the company will establish the Khorgos – Eastern gates FEZ industrial and logistics hub as well as internal logistics terminals in the big cities of the republic.

Among other big industrial projects, implemented by JSC NC Kazakhstan Temir Zholy today, we may mention the launch of the plant producing car casting in Ust-Kamenogorsk, electric switch mechanisms and R-65 rails in Karaganda, modernization of railroad tracking substation equipment, as well as the construction of the new Arkalyk – Shubarkol and Zhezkazgan – Beyneu railroads.

Nazarbek Beysen, the Chief Executive Office of SK-Pharmaceuticals LLC

1. One of key tasks of SK-Pharmaceuticals LLC as a Single distributor is the facilitation to the development of domestic production through signing long term contracts and offering the priorities upon procurement process.

As you know Kazakhstan is running the state program on accelerated industrial innovative development under which a number of projects are being implemented, including those targeted at the support of the pharmaceutical industry. The major indicator is the increase of domestic drugs volume in the domestic market by 2014 from 30 % to 50 % in natural units.

This program stimulates the modernization of production areas, creates favorable investment conditions and ensures guaranteed volume of sales through a Single distributor. Our company offers Kazakhstani producers the preferences upon procurement of drugs and medical devices. If the tender on this or another medication is competed by several potential suppliers, the priority is given to the domestic producer, undoubtedly, not at the expense of the quality of offered products. Today, such measures already let us increase the content of Kazakhstani producers in the procurement of a Single distributor to 68 % in natural units.

2. As I already mentioned earlier under AIID program we ensure guaranteed sales volume through signing long term contracts. At the same time, domestic producers are obliged to introduce the standards of appropriate Good Manufacturing Practice (GMP). Only upon performance of this condition, a Single distributor starts the procurement of medicine on these contracts. Therefore, our company stimulates Kazakhstani producing plants to invest funds in modernization of products and the launch of new lines.

Today, 14 long term contracts have already been signed. At the moment four enterprises have performed the liabilities on establishment of the production lines, based on GMP standards, and started the supply of pharmaceutical products and medical accessories under long term agreements on 37 items for total amount of 2.1 billion tenge.

The institution of the Customs Union expands the investment opportunities of Kazakhstani companies because it opens the doors to the integrated markets of Russia, Belarus and Kazakhstan, the total size of which reaches $17 billion while the domestic market size equals to only $1.1 billion.

At the same time, under the framework of the Customs Union the legislative base in the field of production and turnover of drugs and medical devices will be standardized. There will be the single network of laboratories, controlling the quality of products, and an integrated system of inspecting the pharmaceutical market subjects (analogous to EU). The measures on controlling the quality and safety of the products will be regulated. At the same time, Kazakhstan saved its 5-year transition period on customs duties for pharmaceutical products.

The member countries of the Customs Union also agreed on mutual recognition of the registration certificates for domestic manufacturers, producing GMP standard output. This means that they will not need to register their products in all three countries of the Customs Union registration in one country will be enough.

All these measures enhance the export potential of the Kazakhstani companies.

Table of contents
Mission Is Possible   Editorial 
Course for Innovations  Blitz Poll 
On Thin Ice  Editorial 
· 2016 №1  №2  №3  №4  №5
· 2015 №1  №2  №3  №4  №5  №6
· 2014 №1  №2  №3  №4  №5  №6
· 2013 №1  №2  №3  №4  №5  №6
· 2012 №1  №2  №3  №4  №5  №6
· 2011 №1  №2  №3  №4  №5  №6
· 2010 №1  №2  №3  №4  №5/6
· 2009 №1  №2  №3  №4  №5  №6
· 2008 №1  №2  №3  №4  №5/6
· 2007 №1  №2  №3  №4
· 2006 №1  №2  №3  №4
· 2005 №1  №2  №3  №4
· 2004 №1  №2  №3  №4
· 2003 №1  №2  №3  №4
· 2002 №1  №2  №3  №4
· 2001 №1/2  №3/4  №5/6
· 2000 №1  №2  №3

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