Late last month, Parliament passed a bill to present Nazarbayev with the honorific Halyk Kaharmany, Kazakh for “People’s Hero”, when the country marks its 20th independence anniversary on December 16.

Kazakh Prime Minister Karim Masimov proposed the idea.

Speaking to parliament after the legislation’s acceptance on November 29, Masimov said: “I am now signing this document, which is probably the most important document I have ever signed in my life,” local media reported at the time.

But Nazarbayev told journalists Saturday he will not ink the document into law, according to the Kazinform news agency.

The president was speaking at a press conference at the new TV and radio complex, called Kazmediacenter, in the capital city Astana.

Nazarbayev, who has ruled the country since 1990, told the media he did not take exception to another proposal to name December 1 as First President’s Day, Kazinform reported.

He said that many countries recognize such a holiday.

Цель проекта: создание собственного вагоносборочного производства на базе ТОО «Таман» в г. Экибастуз, позволяющего удовлетворить потребности отечественных транспортных предприятий в обновлении парка грузовых вагонов.

Участники проекта:

ТОО «Казахстанская  вагоностроительная компания», созданная с участием АО «Қазтеміртранс», ТОО «Камкор Менеджмент», ТОО «Новые технологии в машиностроении и огнеупорах» (аффилированная компания АО «Востокмашзавод»).

Период реализации: 2009-2011 годы.

Месторасположение: г. Экибастуз, Павлодарская область.

Производственная мощность: 2500 единиц в год.

Ожидаемый эффект:

• Развитие транспортного машиностроения;
• диверсификация производства;
• развитие сопутствующих производств;
• Создание новых рабочих мест: 600 в период строительства, 200 – после ввода объекта в эксплуатацию.

Стадия реализации проекта:

В настоящее время по проекту завершены строительно-монтажные работы по 2-му пусковому комплексу, ведется работа по завершению процедур ввода в эксплуатацию и подписанию актов государственной комиссии. Строительно-монтажные работы по 3-му пусковому комплексу ведутся согласно графику, что обеспечит выход предприятия на проектную мощность до 3 000 вагонов в год. Планируемые сроки ввода в эксплуатацию – ноябрь 2011 г.

Проект строительства завода по производству пассажирских вагонов технологии Patentes Talgo SL в г.Астана

Цель проекта: Развитие отечественного транспортного железнодорожного машиностроения, удовлетворение потребности казахстанских транспортных предприятий в обновлении парка пассажирских вагонов.

Участники проекта: В рамках проекта создано совместное предприятие (СП) ТОО «Тулпар Тальго», участниками которого выступают АО «НК «КТЖ» в лице 100% дочернего предприятия АО «Ремлокомотив» и Patentes Talgo SL.

Период реализации: 2010 – 2011 гг

Месторасположение: Специальная экономическая зона «Астана – новый город».
Производственная мощность: 150 вагонов в год

Ожидаемый эффект: Постепенное снижение уровня изношенности пассажирского парка вагонов в Казахстане, серьезное повышение качества вагонов, полностью адаптированных для эксплуатации в Казахстане, создание 342 постоянных рабочих мест с высоким уровнем производительности труда.

Текущее состояние В настоящее время по проекту ведется строительство основного корпуса, закуп основного технологического оборудования. Освоение финансирования по строительно-монтажным рабам составило – 1,97 млрд. тг. С начала июня работы продолжены в трехсменном режиме.

Строительство Мойнакской гидроэлектростанции

Данный проект предполагает строительство гидроэлектростанции на реке Чарын (Алматинская область) установленной мощностью 300 МВт.

Цель проекта:

• создание маневренного источника электроэнергии для организации поставок электрической мощности и энергии в дефицитную энергосистему южных регионов РК;
• покрытие пиковых нагрузок южных регионов (работа в создаваемом балансирующем рынке электроэнергии).

Участники:

• АО «Мойнакская ГЭС» (51% – АО «КазКуат» со 100%-ным участием государства; 49% – частная компания АО «Бирлик»);
• Китайская международная корпорация водного хозяйства и энергетики (China International Water & Electric Corporation) привлечена в качестве подрядчика для проектирования, строительства «под ключ» и ввода в эксплуатацию основных объектов Мойнакской ГЭС.
• В целях организации финансирования проекта привлечены кредиты АО «Банк развития Казахстана», Государственного Банка Развития Казахстана (ГБРК).

Период реализации проекта: 2006-2011 годы.

Месторасположение объектов проекта: Алматинская область, Райымбекский район, Жылысайский сельский округ.

Производственная мощность: 300 МВт

Проект предполагает два этапа реализации:

1. Строительство головного гидроузла Мойнакской ГЭС – Бестюбинского водохранилища, а также инфраструктурных объектов (организация внешнего электроснабжения, строительство временных сооружений и поселка службы эксплуатации, обеспечение внешнего водоснабжения и канализации, реконструкция подъездной дороги к плотине Бестюбинского водохранилища и к уравнительному резервуару).

2. Строительство основных сооружений ГЭС (деривационный туннель протяженностью 9 км, здание ГЭС со станционной площадкой и служебно-бытовым корпусом).

Ожидаемый эффект от реализации проекта:

• Производство около 1 млрд. кВтч. электроэнергии в год;
• Обеспечение надежного электроснабжения южных регионов РК;
• Создание новых рабочих мест: на стадии строительства – 665, в период эксплуатации – 127.

Текущая стадия проработки проекта:

На сегодняшний день по проекту полностью завершен проход деривационной системы общей протяженностью 11,6 км и осуществляется строительство головного гидроузла Бестюбинского водохранилища, поставка и монтаж основного оборудования станции.

Строительство железной дороги Жетыген-Коргос

Цель проекта: Строительство однопутной железной дороги Жетыген – Коргос протяженностью 298,4 км с 4 промежуточными станциями, 10 обходными путями и терминалами перегрузки на станции Коргос.

Инициатор проекта: АО «НК «Қазақстан темiр жолы».

Период реализации: 2009-2012 годы.

Место реализации: Алматинская область.

Параметры проекта: Пропускная способность линии – до 30 миллионов тонн груза ежегодно.

Ожидаемый эффект

• Сокращение на 550 км расстояния от Китая до южных регионов Казахстана и стран Центральной Азии.
• Сокращение расстояния от Актау до Цзинхэ на 700 км.
• Сокращение на 1300 км маршрутов между Персидским заливом и Дальним Востоком, в комплексе с реализованным в Иране проектом строительства новой железнодорожной линии Бафк – Мешхед.
• Создание новых рабочих мест: на стадии строительства – 5500, в период эксплуатации – 2093.

Текущая стадия проработки проекта:

В настоящее время по проекту ведутся работы на строительстве мостов.Устройство опор и монтаж пролетных строений выполнено на 12 мостах, по 3 мостам организовано рабочее движение. Завершена сборка рельсошпальной решетки – 281,7 км, укладка верхнего строения пути – 47,3 км, станционного пути – 31 км.

Строительство железнодорожной линии Узень – госграница с Туркменистаном

Цель проекта: Строительство новой прикаспийской железнодорожной линии Узень – Гызылгая – Берекет – Этрек – Горган с последующим выходом на сеть российских железных дорог.

Инициатор проекта: АО «НК «Қазақстан темiр жолы».

Период реализации: 2009-2011 годы.

Место реализации: Мангистауская область.

Параметры проекта: общая протяженность магистрали – 670 км., эксплуатационная длина на территории Республики Казахстан – 138,5 км, пропускная способность линии – до 13 млн. тонн груза ежегодно.

Эффект от реализации проекта:

• Развитие транспортного потенциала;
• Создание новых рабочих мест: в период строительства – 4 060; на стадии эксплуатации – 812.

Текущая стадия проработки проекта:

По проекту завершены работы по отсыпке земполотна (146 км), устройству искусственных сооружений, продольному и внешнему электроснабжению, подвесу ВОЛС (326 км) и строительству объектов внешнего электроснабжения, уложено 146 км верхнего строения пути. Ведется строительство служебно-технических зданий и жилых домов на разъезде Бастау, ст. Узень и других раздельных пунктах, постов ЭЦ, монтаж оборудования СЦБ и связи.

Oт имени правительства РК я рад приветствовать вас на этом немаловажном форуме!

Как многие из вас знают, этот год является особенным для нашей страны. В декабре Казахстан будет отмечать 20-летие своей независимости.

В этой связи примечателен тот факт, что в этом году форум “KAZENERGY” сфокусирует внимание на огромном прогрессе, достигнутом нашей энергетической отраслью за последние два десятилетия.

Индустрия всегда играла ключевую роль в стремительном развитии Казахстана. Иностранные энергетические компании были одними из первых инвесторов и остаются крупнейшими инвесторами Казахстана.

Поэтому мы придаем особое значение вкладу наших иностранных партнеров, многие из которых присутствуют сегодня здесь.

Мы гордимся нашими достижениями, но нам предстоит еще много работы. На нашей последней встрече, состоявшейся год назад, я сказал, что неопределенность в энергетическом секторе увеличила расстояние между риском и возможностью. 
Сегодня это расстояние не стало меньше.

В начале года цены на энергоносители значительно выросли в ответ на увеличение спроса, трудности в инфраструктуре и перебои в поставках, связанные с политическими конфликтами в Северной Африке. Позже, рынок энергоносителей был потрясен резким ухудшением глобальной экономической ситуацией.

В последние месяцы, мировая экономика вновь переживает сложный период. Замедление экономического роста, ухудшение финансовой ситуации в США и эскалация долгового кризиса в Европе разрушили доверие и возродили риск рецессии. Страх охватил финансовые рынки, и инвесторы подвергают сомнению способность правительств получить необходимую поддержку решительных политических действий.

Вдобавок, препятствия возникли и на пути развивающихся экономик, которые до настоящего момента способствовали восстановлению мировой экономики. Увеличиваются долговые обязательства, обрушились фондовые рынки, приток капитала замедлился. Проще говоря, путь к устойчивому восстановлению мировой экономики будет длинней и ухабистее, чем ожидалось. В краткосрочной перспективе, эта макроэкономическая неопределенность создаст помехи для снижения цен и увеличения спроса на энергоресурсы.

Конечно, энергетическая промышленность не в первый раз переживает период неопределенности. Но для индустрии, использующей большие инвестиционные капиталы, это особенно болезненно. В этой связи, Правительство Казахстана осознает необходимость проявлять активность в привлечении и удержании инвестиций. Мы нацелены на улучшение бизнес-климата, чтобы помочь энергетической промышленность развиваться и брать на себя риски, а так же создавать общие ценности и добиваться успеха в процессе развития.

Мы инвестируем огромные средства в развитие человеческого капитала, инфраструктуры и технологий. Также мы продолжаем реформировать нашу нормативную базу, чтобы устранить административные барьеры и сократить бюрократические проволочки.

Все эти меры помогут нам достичь наших амбициозных целей посредствам создания среды, где Правительство и промышленность могут уверенно и ответственно строить планы на будущее.

Однако, выходя за рамки текущей экономической неопределенности, становиться ясно, что мировой спрос на энергоресурсы будет расти. Население и экономический рост будут проверять способность энергетической промышленности предоставлять новые и доступные запасы энергии. Это момент когда изменение климата представляет все большую угрозу. Без сомнений, вызовы энергетической безопасности и экологической устойчивости поменяют энергетический ландшафт. Эти вызовы потребуют глобальной сплоченности, чтобы их преодолеть. Казахстан стремится найти общие решения этих проблем. Две недели назад вместе с ООН мы провели 7ю конференцию «Окружающая Среда для Европы» в Астане.

В подтверждение Декларации по зеленому развитию я еще раз подтвердил готовность Казахстана к продвижению экологически устойчивого роста и развития. Сегодня мы продвигаем технологию по улучшению энерго-эффективности нашей экономики и овладению возобновляемыми источниками энергии.

В августе Правительство одобрило Закон «О энергосбережении и энерго-эффективности», который нацелен на уменьшение энергоёмкости промышленности на 10% к 2015 году и на 25% к концу десятилетия.

Мы также инвестируем внедрение передовых технологий и оборудования, для того чтобы модернизировать функционирующие объекты электро-энергетики, которые в настоящее время производят более 70% выбросов парниковых газов.

В этом контексте, мы предпринимаем наши первые шаги в развитии атомной энергии. В июне этого года Правительство РК одобрило программу по развитию атомной энергетики, которая предусматривает строительство первого Казахстанского ядерного предприятия. Трагические события произошедшие на Фукусиме в Японии в этом году послужили для нас хорошим поводом задуматься. Но я уверен, атомная энергетика в Казахстане имеет большое будущее.

Мы должны учиться на примере событий на Фукусиме. Но эти уроки должны внести вклад в более безопасное и зеленое будущее с атомной энергетикой.

Выходя за границы нашей страны, Казахстан осознает увеличивающуюся взаимозависимость между производителями энергоресурсов, поставщиками и потребителями.

Будучи надежным энергетическим партнером соединяющим Восток и Запад, Казахстан играет важную роль в мировой энергетической безопасности. Мы продолжаем способствовать диверсификации маршрутов транспортировки энергоресурсов и конечных рынков.

Началась первая стадия расширения нефтепровода КТК. Она увеличит его пропускную способность на более чем 40 миллионов тонн. Между тем, строительство газопровода Бейнеу-Бозой-Шымкент также было начато. Этот газопровод протяжённостью 1500 км соединит месторождения газа в западном Казахстане с потребителями южных регионов страны. В конечном итоге, он будет соединён с газопроводом Китай-Центральная Азия.

Дамы и Господа,

Казахстан осознает значительную роль энергетического сектора в улучшении уровня жизни и усилении экономического развития. В настоящее время, промышленность столкнулась с беспрецедентными вызовами.Но я уверен, что работая в команде – правительство, бизнес, общество – мы будем способны противостоять энергетическим вызовам 21го века.

Спасибо за внимание.

Kazakhstan burst forth onto the global stage in 1991 as the second-largest member of the Commonwealth of Independent States (CIS). Since the start of the millennium, the country has averaged near 10% GDP growth until 2007, and has been the second-largest recipient of FDI throughout the CIS region. Following liquidity injections from the National Oil Fund, established in 2001 to ward off the dangers posed by commodity price swings, the government has successfully defended the real economy throughout the global financial crisis. Via its Business Road Map 2020 program, Kazakhstan is actively looking to create higher levels of value-added from its extensive natural resource base, and improve the spread of economic diversification across the country. The government has also actively sought to improve the business environment for foreign investors, and has seen its ranking in the World Bank’s Doing Business survey surge from 74th in 2010 to 59th in 2011. GDP growth has responded in turn, up by 4% in 2010, while IMF estimates put it at 5.6-6.5% over the 2011-2012 period.

Kazakhstan is also looking to leverage its role as a key land transit state between Europe and China through highway upgrade projects, while seeking to expand its trading relations through the Customs Union it has with Russia and Belarus. The oil and gas sector has been a key mainstay of the economy, generating the wealth needed to provide the economy with new growth opportunities across the board. Additionally, the strengths Kazakhstan holds in the mineral resources and agriculture sectors allow it to punch well above its weight in not only regional but also international trading terms.

The Business Year presents the real opportunities and those creating them—diplomats, business people, civil servants, and key stakeholders—to introduce Kazakhstan and its many unexpected faces in the world of business.

Speaking at the opening of the International Forum for A Nuclear-Free World in Astana on Wednesday, President Nazarbayev said that in the absence of efficient control over nuclear arms races in South Asia and the Middle East, countries should take responsibility for preventing nuclear technology from landing in the hands of international terrorists.

The Astana forum is timed for the 20th anniversary of the closure of the Semipalatinsk nuclear test site in the east of Kazakhstan.

Resourse: Interfax

The move, which was widely expected after he won April’s presidential poll, will dilute the governing party’s monopoly.

Mr Nazarbayev’s Nur Otan party, which has 98 of the 107 parliamentary seats, is widely expected to win most seats.

But the elections could pave the way for a second-placed party to have a presence in parliament.

The country’s one-party lower house of parliament, the Mazhilis, asked the president last week to dissolve the chamber ahead of the vote.

Oil-producing state

The first part of the poll, the election from party lists, will be held on 15 January 2012.

The next day, other deputies will be chosen by the People’s Assembly of Kazakhstan, a consultative body loyal to Mr Nazarbayev.

Analysts and poll observers say there has not been a fair poll in the country in the last 20 years and warn that any party that manages to come second is likely to be widely sympathetic to the governing party and pose no challenge to Mr Nazarbayev’s leadership.

In April’s presidential vote, which was criticised by international observers, Mr Nazarbayev won 95.5% of votes. In the 2005 election, he won 91.2%.

His current term was to have ended in 2012, but he called the early poll after a proposal to cancel the next two elections was ruled unconstitutional.

Under a 2007 constitutional amendment, there is no limit on the number of terms the former Communist Party boss may serve in office.

Mr Nazarbayev has argued that economic prosperity should come before democracy.

Kazakhstan is Central Asia’s largest economy and oil producer and, having reformed its market, has achieved annual economic growth of around 8% over the last decade. It has attracted more than $120bn ($76bn) in foreign investment since independence.

Resourse: ВВС

Uzenmunaigas (UMG) produced 3,789 thousand tonnes (102kbopd), which is 685 thousand tonnes less than in the same period of 2010. Embamunaigas (EMG) produced 2,103 thousand tonnes (57kbopd), which is 21 thousand tonnes more than in the same period of last year. The total volume of the oil produced at the production facilities of UMG and EMG in the first nine months of 2011 is 5,891 thousand tonnes of oil (159kbopd), which is 664 thousand tonnes or 10% less than in the same period of last year. The results of the first nine months were negatively affected by the illegal industrial action at UMG during May-August 2011 and a number of emergency power cuts in the fields during January-April 2011 caused by severe weather conditions.

The Company’s share in the production volumes from KGM, CCEL and PKI for the nine months of 2011 amounted to 3,315 thousand tonnes of crude oil (91kbopd) which is 74 thousand tonnes or 2% less than in the same period last year in accordance with production plans of these companies.

The year-to-date underproduction compared to the consolidated plan exceeds 870 thousand tonnes, which has been caused by the illegal strike at UMG and a number of emergency power cuts in Uzen, Karazhnbasmunai and Kumkol oil fields. This was partly offset by higher than planned production at other Company’s assets. As announced previously, measures taken at UMG resulted in increase of daily production, from mid-August to late September 2011 daily production increased by 34%, from 10.3 to 13.8 thousand tonnes per day. Underproduction compared to the consolidated plan is currently expected to reach 1,150 thousand tonnes for the year, or 8.4% of the consolidated production volume of KMG EP (including the share in production of jointly controlled entities where production is expected to exceed the plan for the year). The Сompany had previously estimated the expected deviation from the plan at 800 thousand tonnes. The revised estimate is based upon the actual duration of the illegal strike, actual production results in September, and an updated production forecast for joint ventures, and also takes account of the implementation of measures to restore the daily production level. This estimate assumes an uninterrupted electricity supply and timely implementation of measures to restore production.

KMG EP is among the top three Kazakh oil and gas producers. The overall production in 2010 was 13.3mt (an average of 270kbopd) of crude oil, including the Company’s share in Kazgermunai, CCEL, PKI and NBK. The total volume of proved and probable reserves, as at the end of 2010 was 232mt (1.7bn bbl), including shares in the associates – about 2.2 bn barrels. The Company’s shares are listed on the Kazakhstan Stock Exchange and the GDRs are listed on The London Stock Exchange. The Company raised over US$2bn in its IPO in September 2006. The International rating agency Standard & Poor’s (S&P) confirmed KMG EP’s “BB+” corporate credit rating in July 2010 and “GAMMA-6” rating in September 2011.

• Net profit amounted to 165bn Tenge (US$1,126m) and earnings per share – 2,280 Tenge (US$2.6 per GDR), an increase of 5% and 6%, respectively, compared to the same period in 2010.
• The main factors that had a negative impact on KMG EP’s results were production and export decline due to the illegal strike that took place in May-August 2011, increased taxes as well as fines and penalties accrued in 2Q11.
• The average price of Brent in the first nine months of 2011 was 46% higher than in the same period last year, up from US$77 per barrel to US$112 per barrel.

Production Highlights
In the first nine months of 2011 KMG EP’s consolidated production was 9,207 thousand tonnes of crude oil (250 kbopd) including the Company’s stakes in LLP Kazgermunai JV (KGM), CCEL (CCEL, Karazhanbasmunai) and PetroKazakhstan Inc. (PKI). This was 739 thousand tonnes or 7% less than during the same period in 2010.

Uzenmunaigas (UMG) produced 3,789 thousand tonnes (102 kbopd), which is 685 thousand tonnes less than in the same period of 2010.

Embamunaigas (EMG) produced 2,103 thousand tonnes (57 kbopd), which is 21 thousand tonnes more than in the same period of last year, thereby the total volume of the oil produced at production facilities of UMG and EMG in the first nine months of 2011 is 5,891 thousand tonnes (159 kbopd), which is 664 thousand tonnes, or 10% less than in the same period of last year.  The results of the first nine months were negatively affected by a number of emergency power cuts in the fields, caused by severe weather conditions in March and April 2011, as well as the illegal labour action at UMG.

Impact of the illegal labour action on annual production of the Company will depend on how quickly the Company will restore production at UMG to planned level. The production process has now been normalised and production level has been increasing for the past two months. Assuming no significant disruptions to the production process, the expected underproduction compared to the plan for the full year of 2011 is currently estimated at 1,150 thousand tonnes, or 8.5% of the consolidated volume of KMG EP’s production (including the stakes in the jointly controlled entities where production targets are expected to be exceeded).

The Company’s export sales and domestic sales volumes from the Uzenmunaigas and Embamunaigas production facilities were 4,365 thousand tonnes (118 kbopd) and 1,409 thousand tonnes (38 kbopd), respectively. The loss of production due to illegal labour action has mainly impacted on the Company’s export volumes which declined by 37% in 3Q11 compared to 3Q10.

The Company’s share in the production volumes from KGM, CCEL, PKI and NBK amounted to 3,316 thousand tonnes of crude oil (91 kbopd), which is 75 thousand tonnes or 2% less than in the same period in 2010 in line with production plans of these companies.

The Company’s share in the sales volumes from KGM, CCEL and PKI was 3,718 thousand tonnes of crude oil (102 kbopd), including 3,047 thousand tonnes (84 kbopd) or 82% supplied to export markets. PKI sales volumes include sales of refined products produced from crude oil purchased under swap arrangements with third parties.

Net Profit for the Period
Profit after tax (net income) in the first nine months of 2011 was 165bn Tenge (US$1,126m). This represents a 5% growth compared to the same period of 2010, which is mainly explained by an increase in oil price, partly offset by production decline due to the illegal strike, increase in operating taxes, production costs and selling, general and administrative expenses (fines and penalties).

Crude Oil Sales
The Company’s crude oil sales in the first nine months of 2011 increased by 23% compared to the same period in 2010 and amounted to 536bn Tenge (US$3,669m). This was due to a 38% increase in the average realized price, from 67,170 Tenge per tonne (US$63.05 per barrel) to 92,888 Tenge per tonne (US$87.89 per barrel) partly offset by reduced export volume sales due to decreased production.

Taxes Other than on Income
Taxes, other than on income, in the first nine months of 2011 were 218bn Tenge (US$1,491m), which is 74% higher compared to the same period of 2010. The increase is due to the higher rent and mineral extraction taxes (MET) as a result of the oil price growth, as well as reintroduction of crude oil customs export duty (CED) on 16th August 2010 at US$20 per tone and its subsequent increase to US$40 per tonne from 1st January 2011. In addition, in 2Q11 the Company recognized 15bn Tenge (US$105m) of export customs duty (principal amount not including the fine for late payment in the amount of 2.3bn Tenge recognized in “Fines and penalties”) related to the unfavourable decision of the Supreme Court with respect to KMG EP’s claim that export customs duty should not be levied on oil exports in 2009 on which rent tax had already been paid.

Production Expenses
Production expenses in the first nine months of 2011 were 88bn Tenge (US$601m), which is 9% higher compared to the same period of 2010. A significant part of the production cost increase is due to an increase in payroll, repairs, maintenance and transportation services. Increase in payroll expenses reflects salary increase at the production units from 1st June 2010 and salary indexation from the 1st January 2011. Growth in repairs and maintenance expenses was due to higher repair costs per well partly offset by the decreased number of repaired wells due to the illegal strike. Expenses on materials declined due to lower consumption attributable to decreased number of repaired wells.

Selling, General and Administrative Expenses
Selling, general and administrative expenses in the first nine months of 2011 were 76bn Tenge (US$523m), which is 10% higher compared to the same period of 2010, mainly due to increase in fines and penalties, as well as increase in sponsorship.

The increase in fines and penalties was mainly due to recognition of the penalty as a result of 2004-2005 tax audit dispute, the fine for late payment of export customs duty of 2009 and environmental fine accrual.

In 2009 as a result of the audit of 2004-2005 tax statements, the tax authorities provided a tax assessment to the Company for 32bn Tenge, representing 16bn Tenge of the principal unpaid amount, 8bn Tenge of administration penalties (50% of the principal amount), and a further 8bn Tenge of late payment interest. The Company filed several appeals as a result of which the principal amount and late payment interest were reduced first to 10.7bn Tenge and 3.8bn Tenge and then to 8.6bn Tenge and 2.6bn Tenge, respectively, and fully paid by the Company in 2010 with the use of provisions accrued earlier. However, the Ministry of Finance filed another appeal for restating the principal amount and late payment interest back to 10.7bn Tenge and 3.8bn Tenge, respectively. This appeal was satisfied by the Supreme Court and KMG EP recognized in the second quarter of 2011 the difference of 3.3bn Tenge (US$23m) related to the satisfied appeal, as well as the administrative penalty (US$37m, 50% of the final principal amount of 10.7bn Tenge) of 5.4bn Tenge, which had not been provided for due to the Company’s belief that its appeals would be successful. The Company continues to dispute the above unfavourable decision related to the tax audit of 2004-2005.

The environmental fine of 2.8bn accrued in 1Q11 is related to gas flaring at Prorva group of fields when it was not feasible to obtain the required regulatory permissions in time. The Company intends to appeal the matter with the regional court. The gas flaring permissions for the remainder of 2011 were obtained in March 2011.

Growth in sponsorship was mainly due to construction of social infrastructure and financial aid to Uralsk to recover from the water flood in the region.

Cash Flows
Operating cash flow in the first nine months of 2011 was 110bn Tenge (US$752m) compared to 76bn Tenge (US$518m) in same period of 2010 mainly due to increase in oil price, income tax overpayment in the first half of 2010 not repeated in 2011, and decrease in working capital.

Capex
Purchases of property, plant and equipment and intangible assets (as per Cash Flow Statement) in the first nine months of 2011 were 67bn Tenge (US$462m), of which maintenance capex was 56bn Tenge (US$385m), capex on exploration and supplemental exploration was 11bn Tenge (US$77m).

This represent 30% increase compared to the same period of 2010, in accordance with Capex budget for 2011. The increase in planned capital expenditures is mainly due to an increase in planned production drilling from 213 wells in 2010 to 239 wells in 2011 and an increase in exploration programme.

The purchases of property, plant and equipment and intangible assets do not include additional investment in Ural Group Limited (UGL) in the form of loans amounting 1.2bn Tenge (US$8.3m).

Cash distribution to stockholders
On 5 May, 2011 KMG EP declared 57bn Tenge (US$389m) as dividends for the year 2010, of which 34bn Tenge (US$236m) was offset against an outstanding amount of the debt instrument (“the Bond”, see below in “cash and debt”) issued by National Company “KazMunaiGas” (NC KMG).
In the first nine months of 2011 the Company spent 10.3bn Tenge (US$71m) to buy back 538,925 preferred shares. Since the beginning of the preferred shares buy-back program to September 30, 2011, the Company spent 35bn Tenge (US$235m) to buy 1,885,138 preferred shares (46% of all preferred shares issued).

Cash and Debt
Cash and cash equivalents as at 30 September 2011 amounted to 143bn Tenge (US$965m) compared to 99bn Tenge (US$668m) as at 31 December 2010.

Other financial assets (current and non-current) at 30 September 2011 were 545bn Tenge (US$3.7bn) compared to 600bn Tenge (US$4.1bn) as at 31 December 2010. Other financial assets include the NC KMG bond, deposits, and other financial instruments.

On 16 July 2010, the Company purchased the bond issued by NC KMG in the amount of 221 billion Tenge (US$1.5bn) which carries an annual coupon of 7% and will mature in June 2013. As at 30 September 2011 the outstanding amount of the Bond was 187bn Tenge (US$1,262m). KMG EP recognized 10.8bn Tenge (US$74m) interest income from NC KMG Bond in the first nine months of 2011.

As at 30 September 2011, 82% of cash and financial assets (including the Bond) were denominated in foreign currency and 18% were denominated in Tenge. Interest accrued on deposits in banks in the first nine months of 2011 was 8.1bn Tenge (US$55.6m).

Borrowings were 87bn Tenge (US$586m) as at 30 September 2011 compared to 122bn Tenge (US$831m) as at 31 December 2010. Borrowings include 78.7bn Tenge (US$532m) of non-recourse debt of KMG PKI Finance B.V. related to the acquisition of the 33% interest in PKI. As per the terms of the deal, on 5 July 2011 the Company paid principal and accrued interest of the KMG PKI Finance notes in the amount of 34bn Tenge (US$234m) and 4.7bn Tenge (US$32m) respectively.

Net cash position at 30 September 2011 amounted to 601bn Tenge (US$4.1bn) compared to 576bn Tenge (US$3.9bn) as at 31 December 2010.

Income from Strategic Acquisitions
In the first nine months of 2011 KMG EP’s share of results of associates and joint ventures was 70bn Tenge (US$477m) compared to 46bn Tenge (US$310m) in the same period of 2010. The financial results of associates and joint ventures in the first nine months of 2011 were primarily driven by the higher oil price compared to the same period of 2010.

Kazgermunai
In the first nine months of 2011 KMG EP recognised a 30.1bn Tenge (US$206m) income from its share in KGM. This amount represents 50% of KGM’s net profit of 35.8bn Tenge (US$245m) and a 2.8bn Tenge (US$19m) deferred income tax benefit net of 6.4bn Tenge (US$44m) from the effect of purchase price premium amortization and a 2.0bn Tenge (US$14m) deferred income tax amortisation.

KGM’s net income increased by 34% in the reported period compared to the same period of 2010 due to higher oil price, optimization of the structure of crude oil supplies and purchases for the purposes of meeting domestic supply requirements partly offset by accrual of fines related to customs export duty (CED) on crude oil exported in December 2008 and reintroduction of CED on crude oil on 16th August 2010 and its subsequent increase to US$40 per tonne from 1st January 2011.

During the first nine months ended September 30, 2011 the Company received dividends from KGM in the amount of 36.6bn Tenge (US$250m).

PetroKazakhstan Inc.
In the first nine months of 2011 KMG EP recognised a 39.4bn Tenge (US$270m) income from its share in PKI. This amount represents 33% of PKI’s net profit of 48.0bn Tenge (US$ 329m) net of 8.6bn Tenge (US$59m) from the effect of purchase price premium amortization.

PKI’s net income increased by 76% in the reported period compared to the same period of 2010 mainly due to higher oil price and consolidating of 50% of the results of JSC “Turgai Petroleum” in the reported period (for more details refer to KMG EP’s press-release of 20 August 2010).

During the first nine months ended September 30 2011 the Company received dividends from PKI in the amount of 19.2bn Tenge (US$132m).

CCEL
As of 30 September 2011 the Company has recognised the amount of 22.7bn Tenge (US$153m) as a receivable from CCEL, a jointly controlled entity with CITIC Group. The Company has accrued 2.2bn Tenge (US$15.1m) of interest income for the first nine months of 2011 related to the US$26.87m annual priority return from CCEL.
***

The consolidated financial statements for the first nine months ended 30 September 2011 with Notes are available on the Company’s website (www.kmgep.kz).

It is a reminder that one of the main objectives of the Program of housing construction development for 2011–2014, approved by the Government March 31, 2011, is to create a full-fledged housing market, balanced by both in supply and demand, involvement investments into private sector, as well as promotion of public-private partnership. Special attention in the program is paid to developing of individual housing construction, engineering and communication infrastructure of housing development areas, as well as improving affordability of mortgage and the housing construction savings system for the population.

The program involves three main directions of state support in the construction industry: the use of the system of housing savings for selling the real estate, funding commercial banks to finance the construction, construction of engineering services. In general, from the national budget for these purposes will be allocated over 359 billion tenge ($ 2.46 billion). It is expected that the total volume of housing construction during the years of implementation of the program will be about 24.3 million m2.

Although the program has been started recently, some positive results have been already achieved. This is evidenced by the volume of investments into housing construction, which in January–June amounted 171.4 billion tenge ($ 1.17 billion), an increase over the same period of last year is 24.3%. The share of funds spent in housing construction accounted 9.2 % of the total investment into capital stock.

As the director of the consulting company Qncepto Oleg Alferov says, it is possible that annual investments in the sector for 2013–2014 can return to pre-crisis 490 billion tenge. And in this case, the forecasts of the developer of the program – The Agency of Construction, Housing and Utilities (ACHU) – can even be surpassed. Especially that NWF “Samruk-Kazyna” begins to target funding of banks for development projects. In his view, the plans to create an engineering infrastructure will play an important role and that give impetus to the construction of not only multiflats objects, but also of individual housing construction.

Already built

If we talk about amounts, in accordance with the program there are plans to build 6 million m2 of housing in Kazakhstan this year. According to ACHU information 2.7 million m2 have been put into operation in the first half of 2011, including 1.5 million m2 (or 56.7 % of the total) built at the population’s cost. The percentage of new housing to the annual plan was 44.3 %. It should be noted that in Astana, Almaty, West Kazakhstan, Mangistau, Kostanay and Pavlodar oblasts the volume of housing put into operation in the first half of 2011 did not reach last year’s level. But this figure has increased considerably in the South-Kazakhstan (1.8 times) and East Kazakhstan oblasts (1.6 times).

In total in January–June 2011 construction of 12,089 new buildings was completed, including 10,221 – of housing and 1,868 – of non-housing purposes. The volume of building and construction works (services) amounted to 711.4 billion tenge, or 1.7 % more than last year. During this period state enterprises and organizations put in commission 158.1 thousand m2 of housing, while private developers and the population have built 2.4 million m2. Thus, the share of state sector had only 5.9 % of the total housing construction. 21,228 apartments, including 10,116 individual dwellings, was put into operation totally in the country.

As noted by Mr. Alferov, at the moment the results shown by the industry are 1.2 % below last year’s volumes. However the investments in construction since the beginning of the year have grown, so there is an opportunity to execute the plan from the new state program. The more so it does not put too ambitious targets – the 400,000 m2 less than last year should be put into operation in 2011. In fact, the housing construction program aimed at retention of the pace of housing construction on the 2006 level. At the same time the annual growth target for the next four years is equivalent to only 50 thousand m2, which, experts believe, is a very conservative outlook.

Where will the government support go?

Analyzing the current situation in each of the three main directions of state support, it is worth noting that akimats in all regions of the country have already started the construction of housing through a system of housing savings. The new scheme is as follows. “The Housing Construction Savings Bank of Kazakhstan” creates a pool of its savers who want to buy flat or house at a certain price and comfort class, and city administration allocates land plots with the existing engineering infrastructure. In case of the construction and selling of housing through the local body The Housing Construction Bank send there applications for housing construction. Akimat on account of the loans from the national budget build it. After a house is put into operation an akimat concludes sales and purchase agreement with the depositors of the bank and The Housing Construction Bank transfers money of depositors to an akimat, which is due to repay its loan from the national budget.

In the first half of this year 7.993 billion tenge were directed from the national budget to local executive bodies for construction and housing selling through the system of housing savings, and akimats have already spent 4.968 billion tenge, or 62.2 %. In total in 2011–2013 48.8 billion tenge will be allocated from the budget for these purposes, including 28.8 billion tenge to implement pilot projects in 2011. In 2012 another 32 billion tenge will be allocated for the construction of housing under this scheme, which will provide next year commissioning 300,000 m2 of credit housing.

Involving the housing savings of people in financing the construction is quite understandable. Since the beginning of its work The Housing Construction Bank has already signed contracts with more than 188.3 thousand of its savers with total savings of more than 50.3 billion tenge. The largest share of contracts belongs to Almaty city (14.1 %), Astana (14.5 %), and also Aktobe (8.3 %) and East-Kazakhstan (7.9 %) regions. In January–June 2011 4,042 borrowers get housing, intermediate and advance housing credits of totaling $ 12.355 billion tenge.

The second direction of the program the government intends to fund the commercial banks to finance the construction of housing by private developers. To do this, specific deposits are to be set in banks for the construction period.

Conditions of participation for banks are the following: the funds should be directed for financing the construction of an economy class, with the ultimate selling price of housing, depending on the region and features of the project, should not exceed 170 thousand tenge per square meter, the terms of the loan for real estate developers – not more than five years, and the maximum rate on bank credit rate should be 12 % per annum.

In 2011, for this purpose 57 billion tenge has been already allocated, an additional 13 billion tenge will be allocated in 2012. As a result of this scheme, the government expects to commission 1.7 million m2 of commercial housing. Several second-tier banks – CenterCredit, BTA, Eurasian Bank – have already expressed their willingness to participate in projects and grant loans to developers under the terms of the government.

Stimulation the development of private housing also is not forgotten; especially in the pre-crisis period 58-60 % of the total input of housing was individual housing construction. In this case the government assumes the provision of housing development areas with engineering and communications infrastructure. In 2011 the earmarked transfers of 26.6 billion tenge were allocated from the national budget for these purposes, including 2.6 billion tenge for preliminary work concerning development of Koschi village (as satellite town of Astana) and 4 bn to prepare the infrastructure of four satellite towns of Almaty.

As of July 1, 2011 11.681 billion tenge were transferred from the national budget, 7.981 billion tenge from them or 68.3 % have been already assimilated. In total, during the first six months 185.8 km of utilities were built in Kazakhstan, including 86.5 km of power lines 2.5 km of heat supply, 33.1 km of water supply, sewerage 3.1 km, 50.4 km 10.2 km of gas pipelines and 10.2 km access roads.

Deficits and affordability

Running this new program seems to neutralize last year’s fears of ACHU Chairman Serik Nokin, who supposed this year the volume of housing construction in Kazakhstan can be significantly reduced. He also predicted that in this period real estate prices advance, triggered by an expected deficit of 1.5 million m2, is possible.

However, according to Qncepto company, at the moment there are no signs of deficiency in the housing market. There is every chance to retain the commissioning of housing on the current level, what will allow preventing the shortage of market supply.

Not bad proposal, but we shouldn’t forget about the affordability of housing for population, most of people can’t buy a house without mortgage. Thus, in I quarter of this year more than 90 % of transactions with residential real estate were made in cash and 10 % – with the help of credits. From now forth this proportion will vary proportionately to reduction of an interest rate of mortgage. And despite the fact that the population currently prefers to use the accumulated funds for buying property, banks seriously expect to increase their portfolio of mortgage credits by the end of this year, as they have been actively cutting interest rates for this type of lending.

According to Mr. Alferov, the terms of mortgage credits are becoming softer, although slightly. The volume of mortgages issued in the first half of the year exceeding last year’s figures by 65 %. Thus, the credit market for the purchase and housing construction rebounded to the level of early 2008. At this pace banks will be returning to the peak figures of mortgage lending is still very far away.

Plans for construction materials

It is clear that the demand for housing depends primarily on its price, which, in turn, depends on the prime cost of the building. Theoretically, this can be achieved by increasing the use of local materials in construction. For this purpose in September 2010 the government approved The program for the development of the construction industry and building materials in 2010–2014. Aims of the program look quite ambitious. In particular, till 2015 domestic demand should be satisfied by domestic construction materials by 80 %, including cement – 100 %, building ceramics – 88 %, construction fittings – 80 %, glass – 50 %, linoleum – 30 %. In addition, labor productivity in the industry should increase by 40 % and the gross value added – by 76 %.

Now Kazakhstan produces less than half of the materials used in construction. As noted by Oleg Alferov, for some types of building materials domestic producers were putting pressure on import for a long time. For example, he said that “we fix up ourselves with brick for two-thirds, plasterboard – three-quarters, concrete and concrete products – 100 %. On the other hand, more than 70 % of the roof and 90 % of timber are imported.” As a result, the share of domestic production in total volume of construction materials is yet lower than in previous years. And in the first half of 2011 it is 41.8 %.

The head of Qncepto thinks that the situation is difficult to be changed in one or two years. “The re-equipment of existing plants and building new ones are necessary. Dozens of them. Therefore, it is early to demand results from the program. However it is worth saying about forecasts of the industry. Targets for 2010 were overly optimistic. More properly, they were calculated incorrectly. It was assumed, for example, that the Kazakhstani share of construction materials on the market will be 63 %. In fact it is 44 %. Forecasts about the development of productivity to $63 thousand per person look even more doubtful. “In 2010 they had to rise more than twice. It is unclear how this was possible. Infact, growthhasnotexceeded 20 %,” – Mr. Alferov concludes.

Yulia Melnik
KAZAKHSTAN International Business Magazine №4, 2011

Incomes rise

We begin our review traditionally with the activities of all the telecommunication industry.According to the Statistics Agency, in the first half of 2011 the communication enterprises provided services in the amount of 259.63 billion tenge, which in comparable prices by 16.5 % higher than in January–June 2010.Revenues from long-distance telephone services amounted to 22 billion tenge (17.0 %), local telephone services – 19.48 billion tenge (0.8 %), and the Internet – 39.9 billion tenge (61.5 %), cellular – 139.57 bln tenge (13.2 %).

As one can see, revenue from mobile communications (53.9 %) and the Internet (15.3 %) continue to take the largest share in total, followed by long-distance (8.5 %) and local calls (7.5 %).

The fact that the Internet began to play a significant role in the overall structure is not news, as well as the fact that its share steadily increases. But another thing is interesting – the growth rate in the current year has accelerated considerably: in 2009 the Internet sector gained 26.5 %, in 2010 – 28.1 %, and for the first six months of 2011 growth was already 61.5 %.This of course reflected its share, which is also noticeably rose – up to 15.3 %.For comparison, in 2009 9.6% of revenue fell at the Internet, in 2010 – 11.3 %.This shows the potential of the market driver – the Internet shows the highest rates and growing almost four times faster than the entire telecom!

In the structure of the Internet revenues the growth trend remains generally due to providing services to the population and activity in rural areas – here the rate is even higher.For example, if the volume of internet services rendered to population last year rose by 44 %, the first half of 2011 growth was already 96.2 % (compared to the same period of 2010). As for revenues from Internet services rendered in rural areasin January–June, they rose by 58.2 % (as against 74 % in 2010). In this sector, although the pace dropped, it was still very high.As we can see, the Internet is actively going to the grass-work.

At the same time the regions have the greatest potential for growth, as there is a strong imbalance in the structure of income by regions. Moreover, this imbalance is growing.Thus, the lion’s share of all Internet revenues, which is 53.7 %, still falls at Almaty, although at year-end 2010 the share of the southern capital decreased to 45.8 % against 51.6 % in 2009. Then there are Astana (8 %), Karaganda (5.7 %), East-Kazakhstan (3.8 %) and Atyrau (3.7 %) regions.

If we talk about the regional distribution of daily site traffic of Kaznet sites (according to online counter CountZero), Almaty for last six months is about 32 % of all Kazakhstani users as against 48 % a year earlier. Astana has added a little – now it has 8.9 %. Karaganda showed a growth up to 8.3 %. Thus, a clear trend of internetization of regions of Kazakhstan is being traced. But the less obvious fact is that while the bulk of the core audience is in Almaty – they use the Internet more often.

Portrait of Kaznet citizen…

As for the number of Internet users in Kazakhstan, the estimates concerning this figures are traditionally very different, but more often the figure of 5–6 million is sounded. According to the Statistics Agency, there were 1.094 million subscribers of fixed internet in the first half of 2011 in our country(in this case one subscriber means one connection point), and cellular subscribers with access to the internet – 5.7 million The number of fixed telephone lines at the end of June 2011 amounted to 4.1 million.

But in February “Kazakhtelecom”, the main provider of Kazakhstan, informed about the results of 2010, according to the company, the number of users of broadband Internet access (as of January 1, 2011) was 1,756,838 and the number of ports – 765,817.

In turn, according to the annual survey of online audience made by ICT Marketing (specializing in research in the field of telecommunications and IT), at the end of last year, the number of Internet users in Kazakhstan was 4.3 million.To calculate it the ICT Marketing used the data of questionnaire survey of urban and rural population. In general, according to the company, from December 2009 to December 2010 the size of the Internet audience has increased by more than 30 %.Among urban residents aged 16 years and older 41 % use the Internet, and among rural – 19 %.At the same time 94 % of Kazakh users use the Internet several times a month or more. Mostly the Internet is used by young people.

If speaking about the cities of Kazakhstan with a population of 70,000 or more person, the picture is as follows.Among the urbanites aged 16–24 years the share of Internet users was 66 % and aged 25–44 years – 52 %.In the age category from 45 to 54 35 % use the Internet, 55 years and older – only 10 % of the population. Most kazakhstani go on-line from PC or laptop, while the proportion of those who enjoy mobile phone is relatively small. During the survey ICT Marketing found that only 12 % of adults (16 years and older) of the urbanities use the Internet service from a mobile phone with GPRS / WAP.The majority of “mobile Internet users” also use the Internet from a regular computer at home, at work or elsewhere (7 among 10 users).By the way, the Internet is still mainly used at home.If in November 2009 the proportion of home users was 61 % of all adult citizens, at the end of 2010 this figure had already reached 63 %.

The company PROFIT Online also presented its estimation of the number of Internet users.Thus, it suppose that at the end of 2010 there were about 6–6,5 million (monthly audience), and the core of Kazakhstan’s Internet audience (those who go online several times a week) – in 2,5–2,8 million users. PROFIT Online experts note that the nature of further dynamics will change: growth of monthly audience will slow down, but the core – to grow more actively, coming in numbers to the monthly audience.That is a quantum growth of the audience: users will go online more often and spend more time there.

… And his/her preferences

Today, most Kazakhs use the Internet to exchange e-mail, downloading music and video, as well as social networking.A recent survey of Institute of Political Solutions, conducted among residents of 16 cities of Kazakhstan, also confirmed the addiction to social networks.It was found that 64 % of Kazakhstani Internet users “resides” in the social networking sites, of which 62.4 % prefer “My World”, followed by “Odnoklassniki.ru” – 25.9 %, while “VKontakte” is on a the third place – 22.7 %.Rapidly gaining popularity Facebook has 12 % and fourth place.

However, despite the popularity of Russian social networks, the level of Kaznet site traffic is growing steadily too.So, today the number of projects with traffic ranking of more than a thousand people a day is about 160 sites, while in 2008 the quantity of such web-resources were only about fifty. The website traffic of the most popular sites – Kiwi.kz, Kolesa.kz and Nur.kz – is about 130,000 web visitors per day.For example, the Russian Mail.ru is every day used by about 1,3-1,4 million Kazakhstani citizen (for comparison, in December 2009, the average daily audience of Mail.ru from Kazakhstan was equal to 720 thousand people).

Thus, sites of Kaznet have something to strive for and they have great potential for growth. The good fact is that Kaznet not only grows with domains (on July 31, 2011 in the area KZ 60 686 domain names were registered), but also with really existing sites.Thus, in the catalog of CountZero rating there were about 11,5 thousand sites at the end of July 2011, while just in the beginning of the year this figure was only 10 thousand.

Fight for the interests

The increase of the Internet audience and site traffic in Kaznet were followed by the growth of budgets allocated by domestic companies for the Internet advertising.The audience of traditional media flows into the network, followed by advertising budgets.According to various estimates, the volume of Internet advertising market in Kazakhstan in 2010 amounted from $5 million to $10 million, however, exact numbers are not even as important, the main thing is a clear growth trend.In the next few years, Internet advertising market will grow by at least 30 % per year.The exact figures will depend on the economic situation: if the economy shows good growth, the doubling of the market is possible.

Against this background, increasing the number of different arguments and discussions around Kaznet becomes quite logic: the amount of money in that share is growing, there is something to fight for.Thus, last year the Internet community was watching the carve-up of online community forum “Tsentr tyazhesti” (”The center of gravity”).This year’s heated debate flared up around the need to protect copyright on the Internet, as this issue directly affects the commercial interests of the tens and even hundreds of sites, whose work is based on the provision of pirated video content.

The impetus for the discussions became a method of “three snaps” (two warnings followed by forced elimination of a piratical resource) – an initiative of the Internet Association of Kazakhstan (IAK) to protect copyright in Kaznet.As was known, the method of “three snaps” was proposed by IAC at the round table held in late April.Its essence was outlined by the association president Shaukat Sabirov: “We need to punish offenders by the “three clicks”: First – the notification to the author of illegal content, the second – a warning, and the third – criminal case. We believe that this is the most appropriate method for our market.”Although this approach does allow sites to feel more secure, it has caused a rapid perturbation of a number of major Kazakh sites, including Namba.kz, Nur.kz and Kiwi.kz.In their view, an active anti-piracy is detrimental for Kaznet.They even wrote an open letter to the Prime Minister of Kazakhstan with a request to enter a two-year moratorium on the fight against piracy.

Interesting, that the initiative of the Association was the only trigger for the widening of the conflict of interest that erupted in early June. Later the opponents of the “three snaps” finally admitted that the problem for them is not in “snap”, but in the fight against pirated content at all. And heir arguments were, at least, surprising: all the traffic and advertising budgets will go in RuNet, and Kaznet, if not die, then fall back to five years ago.However, if one look at things robustly, it is clear that the Internet is used not only to download movies.And if we’re talking about Kaznet and advertising budgets, in our country there are about 150 sites that can be attributed to advertising sites, that is, to sites of interest to advertisers.This means that online advertising in Kazakhstan does not end out of the boundaries of the three portals.

The seriousness of the situation was confirmed by the exit of “Kazakhtelecom” to “pirate” scene. During one of the roundtables Askar Eserkegenov, Chief Commercial Officer of the company, actually spoke in favor of piracy.The arguments he gave the following argument: while banning pirated content when the traffic goes from Kazakhstan (and “swing” will be a Russian site) may occur deterioration in the quality of Internet access and increase of its price.

However, perhaps this discussion is the most eloquent indication that an internet business in Kazakhstan is forming as an independent phenomenon, as well as the fact that internet projects in Kaznet are becoming more interesting for investment.

Alexander Vassilyev