Press releases

Kazakhstan's power transformers are being sent to Tajikistan

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- What are the financial results of 2019? How many transformers were produced in 2019 and in the first eight months of this year?

- Asia Trafo started its operations closer to the second half of 2019. According to the results of operations for six months of 2019, the total annual income of the partnership amounted to KZT 5.5 bln. In 2019, the plant manufactured 29 units of equipment and sold 23 of them last year. Six reactors are located here and are waiting for the customer's facility to be ready for installation and connection of equipment. In the first eight months of 2020, contracts were signed for 32 transformers. Nine of them were manufactured and shipped, and the rest are also in the process.

- How many transformers have already been sold this year?

- This year, contracts were signed for the supply of 32 transformers. Of these, nine transformers were manufactured and shipped to the customer. Also this year, we signed the first export contract for the supply of a power transformer to the National Grid Operator of Tajikistan, Barki Tojik Open Joint Stock Holding Company. They confide their electric networks to us, so this is the first export swallow for us. The contract is signed, payment is made, and we have started production of the transformer.

- What difficulties did the company face in implementing the project? How were they overcome?

- As part of the project to build a plant for production of 110-220 kV transformers, which is a technically and technologically complex facility that has no analogues in Central Asia, the difficulties were very diverse, as in any new project. It should be acknowledged that even the most thoughtful projects can surprise with ambiguous challenges in the course of their implementation. The most important thing here is the well-coordinated work of the team and responsible approach of each participant. The team of specialists from Alageum Electric together with Development Bank of Kazakhstan demonstrated their professionalism and responsibility during the project implementation.

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More problems than during the construction of the plant arose after the project was implemented. One of the problems is not quite fair competition. Alageum Electric Group of Companies has been engaged in the restoration of electrical engineering and transformer construction in Kazakhstan for more than 20 years. Kentau Transformer Plant, a part of Alageum Electric, has been producing transformers for more than 60 years. During this period, we have seen all sorts of things. And if in voltage classes of 6-10 kV we systematically fought with pseudo-enterprises that arranged amateurish repair of used transformers and sold them as new ones, receiving manufacturer's certificates or certificates of ST-KZ with a share of KAZ content above 50%. But when this happens for products of much higher class, which we now produce, it can not but cause outrage. Manufacture and production of transformers with a voltage class of 110 kV and higher is a very responsible job. There is a huge amount of work and resources behind this. Thanks to the help and support of DBK and DBK-Leasing, we have built a state-of-the-art plant. We nurture, train our managers, and train yesterday's students in engineering specialties to work and create healthy competition in the market. 250 people are provided with jobs at our enterprise, and when we reach the planned capacity, we will be able to provide jobs for more than 300 people. In other words, we are doing a tremendous work, but someone is going the other way - the easy way. False producers buy cheap products abroad, issue fictitious certificates with a high share of Kazakh content, participate in competitions for delivery to Kazakhstan's infrastructure facilities and win.

Another point is the support of domestic producers. For example, when we export our products abroad, we see how other countries protect their markets from exporters like us by creating preferential conditions for their own companies. When selected through procurement competitions, they provide up to 20% of the benefits to suppliers located in their country. Unfortunately, we don't have that.

Also, the situation around renewable energy sources (RES) probably needs to be covered. Design institutes put foreign products in RES projects largely, which are also manufactured in our country. This is the first.

Second. It may be necessary to review the requirements or recommendations for investors who undertake to build substations based on renewable energy sources. Often, the investor's companies with foreign capital participate in competitions with the provision of minimum tariffs. It would seem that this should affect the payback period of the project, but more often the obligation to save the cost of the project falls on the equipment suppliers. Given the lack of any benefits for us, as a domestic producer participating in the renewable energy project, we are forced to compete with imported products, which, by the way, has the support of the importing country. Put simply, a foreign investor participating in a Kazakhstan renewable energy project buys products in their own country. So the producer from Kazakhstan are at a loose end, because its price is not competitive in comparison with them. At the same time, the investor is not burdened by the need to use Kazakh products. We believe that in such priority areas implemented in the country, it is necessary to establish a requirement for investors to use locally produced products.

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- It turns out that in the framework of renewable energy projects, if an investor buys equipment in their own or a third country – not in Kazakhstan, then the government supports the export of its products there. Most likely, there are some benefits when exporting…

- Of course. At the same time, in order to participate in a renewable energy project with foreign investment, we have much more difficult conditions. We have to compete with their low prices. However, we do not have any support to participate in such projects. We have a couple of such moments where we took part, and at the moment there is an investigation why the investor does not plan or even consider our domestic products and there is no support from the state in this regard. In our opinion, this should be corrected.

- How much of the output is planned to be exported, and how much will be used to meet the domestic needs of the country?

- The transformers produced at AsiaTrafo are a high-tech, complex product that requires a high degree of professionalism. Alageum Electric company constantly proves in practice that our product is in no way inferior to similar products of other plants, not only in Central Asia, but also in the world, because the technology and production are of world standard. In August, we signed our first export contract for the supply of products to foreign networks. Currently, we are negotiating the operation of our products in the electric networks of Russia, Kyrgyzstan and Uzbekistan. Now almost all products are used to meet the domestic needs of the country.

- What difficulties does the company face when exporting products, and how do you manage to overcome them? Is it sold within the Alageum Electric Group of Companies, or each of its subsidiaries do it independently?

- We have created a very wide dealer network in Russia, we also have representative offices in Tajikistan, and a subsidiary company in Kyrgyzstan. We have partners in every country, and we have built a sales system through them. For example, the dealer network in Russia was built up for about eight years. In addition to the issue of competitive prices for products, which is formed, among other things, due to the costs associated with logistics, we are faced with the issue of trust in products. AsiaTrafo is undoubtedly a new plant, modern, energy-efficient, with the most advanced technologies for power transformers production. But this is not enough to convince a foreign client. We need a reference list of successfully implemented and operated machines at the facilities. This is what we are currently doing, delivering products to the domestic market, and forming a list of already working transformers.

- Who buys your company's products?

- The voltage class from 110 kV is, of course, a consumer of production scales: factories, industrial enterprises. 220 kV is an electric grid company that specializes in the transit and sale of electricity on a regional and national scale. Our analog is KEGOC. The same electric grid companies are also available abroad. Our main consumers are companies engaged in the transit and sale of electricity.

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- When does the company plan to reach its design capacity and how much is it?

- The plant is waiting for the installation of an additional drying oven, and in fact, we can assume that the production capacity of the plant corresponds to the design. Put simply, we are able to produce the stated 12,000 MVA per year when we have orders. For 6 months of 2019, we have produced 1,400 MVA products.

- What is the internal demand for transformers produced by the company? What will be the need for transformers in Kazakhstan, taking into account the need to replace old transformers and build new facilities that will require transformers manufactured by the company?

- Service life of power transformers according to GOST is no more than 30 years. The current situation at substations and transformers put into operation on them is deplorable. Most of the products have been in use for more than 35 years. And this affects the energy efficiency of networks; large losses affect the quality of energy provided. The insulation properties of materials are lost, which will undoubtedly lead to an accident one day. In the age of the atom, energy, and affordable broadband Internet, the prospect of being left without electricity can pose significant risks for any company. With market relations in a highly competitive environment for any serious enterprise that is powered by these electrical networks, this leads to much more serious financial costs and missed opportunities than replacing transformers. According to our calculations, in the next three to five years, more than 9.5 GVA of transformer equipment will need to be replaced in total. For example, we took only the KEGOC power grid, which uses transformers. It will be enough work for us if we are entrusted with it.

- Your cooperation with Development Bank of Kazakhstan has been going on for several years. Tell us why you choose DBK to finance your projects.

- The Project of Asia Trafo was funded within the framework of the State Program for Industrial and Innovative Development and Business Road Map 2020. We started construction of a unique plant for the Republic in 2017. The total cost of the project was about KZT 19.1 bln., of which KZT 8.6 bln. was provided by Development Bank of Kazakhstan (a subsidiary of Baiterek Holding) in the form of a loan for a period of 12 years. DBK-Leasing, which is part of the Bank's structure, in turn provided financing in the amount of KZT 5.9 bln. Thanks to the support of these financial institutions, a modern plant was built, as well as high-tech equipment in the field of transformer construction was purchased. And we tend to believe that during the cooperation with DBK and DBK-Leasing, Alageum Electric Group of Companies has established itself as a reliable client, an entrepreneur with a long-term perspective.

АО «Банк Развития Казахстана»
проспект Мәңгілік Ел, здание 55 А, н.п. 15 Z05T3E2 Астана
+7 (7172) 79 26 79