When RECs will flow back

Herman Nurbaev offers unprecedented thing - to unite all gorvodokanaly in a single company? Otherwise, I'm sure well-known Kazakh lawyer and manager, very soon in our country there acute water crisis. And in general, in his opinion, inadequate infrastructure is a major obstacle in the way of Kazakhstan one of the 50 most developed countries of the world.

- Herman Karimovich, and you are not afraid of being with the idea of combining gorvodokanalov accused in an effort to monopolize the industry? Why should I create a monster? - I'm not afraid. First, I am not saying that they should give it to me in control, even though our company (LLC "Legal Company" German "), as the author of the idea, is ready to take on the burden of solving this very difficult and, therefore, extremely interesting problem . Secondly, I would like to clarify that to meet the challenges of reconstruction and replacement of network turnover gorvodokanalov too small. example, any REC he has at least 3-4 billion tenge a year, the water utility - 200-300 million. gorvodokanalu yourself just why can not raise the necessary funds for the reconstruction without excessive uplift rate. Accordingly unification into a single republican system will allow for the modernization program of sewerage and water supply networks without a large increase in tariffs. - In this regard, please tell us about your project "Kazakhstan's water and sewer system" that you presented in London. - In our project, we paid much attention to the problem of development gorvodokanalov republic. In the framework of just and called for their integration and transformation into one company. This company can be used as a tool to attract foreign and domestic investment in the sector. Today Gorvodokanal - is primarily a collection, water supply, its treatment and transportation. We have to do, similar to the power industry, that is to separate the source of transportation. Source itself is profitable, it must be left in the community property, especially since water facilities of particular strategic importance, may not be in private hands, and transportation can be identified, integrate and transfer to private investors. Here's the numbers: by gorvodokanalam 12 cities of Kazakhstan, except in Almaty and Astana, replace the more than five thousand kilometers of pipes! In monetary terms this is more than a billion dollars. They can draw from abroad and return the combined company for 15-20 years. It might even be one of the great ways to use the pension funds. Since the guarantee repayment of investments are made by a natural monopoly tariffs. The same, incidentally, should be done in the field of engineering. Our customers have already made in Karaganda in practice department of transportation of heat from its production. - Where do you see the pitfalls, so to speak, the reefs for future investment projects in the communal area of Kazakhstan? - The main problem is this: most of the companies do not raise rates for investment projects, and are just trying to fill holes in their budgets. But it is a labor of Sisyphus, as laid down in the tariff only normative losses and the actual much more. Accordingly, each year the subjects face the fact that they are forced to buy excessive losses and incur losses. Excessive losses due to the strong depreciation of fixed assets, poor accounting system, misconfigured networks, etc. And how not to grow loss if, for example, instead of normative 10.12 consumers to sit all 20 networks, and even more. Currently, we are developing an investment project to LLP "Karaganda Zharyk" which provides for the implementation of measures to repair, upgrade networks and substations, the introduction of "metering" at all levels, which should lead to a reduction of excessive losses, increases system reliability. The project will start next year and is for five years. Of course, we can not immediately implement all measures necessary for the regional electricity company, for the sum of Karaganda for over $ 300 million. So first of all we need to prioritize and execute part of the activities in order to avoid large growth rates. The investment program also intended to result in lower rates. Of course, also plays a big role increased consumption of electricity in the region, as a large increase in the consumption allows the necessary measures without any tariff increases. - Herman Karimovich, you are well known as an effective manager. Yet how the lawyer suddenly took up community services, power supply? Because it requires specialized knowledge. - From the point of view of the theory for the effective management of this is not important. Another thing is that the management company must be good people in the industry. And it was like this: I created the company in 1996. But it turned out that in addition to its direct obligations, such as the protection and representation in court as administrative and criminal cases, work was carried out in parallel and in civil cases. Therefore, one of the areas was the legal service companies. Over time, the company was transformed from law to law. After all, the law firm - a company that is not engaged in commercial activity. And in the field of taxation had some disadvantages. Because as a lawyer I have to focus primarily on the provision of legal assistance to people and does not aim to make money. Now the law firm could deliver a clear goal - to extract revenue. One of our features is that we have never worked in the rough - we did everything legally. Exclusive activity of LLC "Legal Company" German "are natural monopolies. This is an area, which today is, to say the least, not in the best condition - It turns out that there is no quick profit, and much hassle? - Gains in general as such, no, but we believe this industry is very promising. We went to this area, because at the time few people majored in it because of its low yield. No one at that time was not interested in working with such actors. From the first day we began to work for the future, without regard to the objective of obtaining a quick profit. Besides, at the moment our company serves other companies. Today it is more than 20 companies in which we fully supervise legal services. The first thing we started, made them public, that is completely legalized. Their income, turnover and generally work as a whole. For what? To under it could raise money. Only when the high level of publicity, the company will be of interest to investors. That is important for any investor - to know what it really does. And it is not just bookkeeping. This annual audit and preparation of financial statements according to international standards, and so on. - Then why did the owners continue to work with unprofitable RECs? - As I said, many RECs are now unprofitable and are not of any interest to entrepreneurs. Many receive only profit on the resale of electricity. It also affects the increase in the cost of electricity in the region. In this case, the REC itself is used only as an excellent tool pressure. In addition, RECs take money for attaching additional capacity, and it is illegal to approval of the plan for the region. Moreover, in the present legislation generally does not profitable for REC payment collection for additional power. We do not see the prospects of such a REC, REC should be profitable on its own, from its core business. - Plans for your undoubtedly ambitious, but if you have already tangible results? - Of course! In 2001, we took control of Mangistau REC. More precisely, we were initially as a consultant of the management company. By the time of our arrival the company brought only losses occurred an epidemic of non-payment. It's funny that the main defaulters were mainly oil: So, taking control of the local REC, the first thing we did - sent official letters to all customers with the notice, which was politely asked to pay for electricity. - And what was their reaction? - Large main consumers rejected the notification data. And we had to give up and simply offsets disconnect them from the mains. We understood that the oil industry outage can have serious consequences. But after a series of lawsuits we have made, that the tenth day of each month payments are regularly coming. This was the first step. The second step is for the first time in Kazakhstan developed and agreed with the authorized investment project. This pilot project is the total amount of 560 million tenge was designed for a three-year period. In the future, we have developed and agreed on two investment projects. Because of this, we fully retool their business. Built a new line was put into operation a transformer substation of 220 kV. - And how you have extracted the money? - We went to the stock market by placing its bonds on the Kazakhstan Stock Exchange. Through this could attract investors. Audited according to international standards and proven transparency. Our bonds bought Kazakh pension funds. But the main thing - we spent the money for other purposes and were able to bring them back exactly three years! At present JSC "MEDC" repaid first issue of bonds, coupons are paid in full. Makes us happy and understanding of the antitrust agency that is the only right way to the subjects of natural monopolies. - What are the advantages for the owner of an investment project, of course, and what good he has brought to consumers? - First, it was established uninterrupted flow of electricity, the second network were upgraded and the opportunity to increase the volume and combat losses. Today in Kazakhstan, they range from 15 to 30 percent. This is due to loss of power consumption. And the activities of the RECs is effective only when fully loaded networks. Today, as part of the Mangistau region, there is an increase in electricity consumption. By law, the greater the consumer market, the lower the rate. Here's a direct benefit of the consumer. - But today was a paradoxical situation - with the growth of consumption is on the rise in tariffs. Why? - Because the tariff for transportation of initially low. In Europe is the total price - ten cents per kilowatt. We have ten times less. So not to raise tariffs have to find other ways to raise funds. We have registered bond program by 10 billion tenge, carried three bond issues in the framework of this program, has attracted more than 1.5 billion tenge. Acting as legal advisors Mangistau REC, we believe that in the near future it will be possible to carry out IPO. That is to receive already sunk investments with no bonds and shares, which will carry out activities without increasing the tariff. - Do you use your experience in other enterprises in Kazakhstan? - Of course. For example, the Company "Legal Company" German "is the manager of the Karaganda REC (LLP" Karaganda Zharyk "). Where are already using their own experience, but from a regional perspective. But a global challenge for us today is to upgrade the existing lines of electricity, are completely worn out. Why wait to start a global disaster? It is necessary today to attract large-scale funds to the development of public services of the country. Of course, have to endure strict. Currently we are planning to attract investments through securitization, where a guarantee of repayment of investment will not perform property and future earnings. If you take the best international experience, the first of which to invest money - is the infrastructure (drainage, roads, water, electricity). And after the deal with the development of small and medium businesses. We are all RECs are in poor condition, and it soon will greatly affect the level of development of the economy and can be a barrier to implementation of the program of Kazakhstan joining the 50 most developed countries of the world. Mark spoke of the iceberg, Almaty     Link to the source: "Express K" Daily social Republican political newspaper, № 148 of "14 August 2007"