Projects supported by DBK under SPIID 2

In the second five-year plan of the SPIID, Development Bank of Kazakhstan was the driver of industrialization, and will remain so in the third.

In 2019, the State Program of Industrial and Innovative Development of the Republic of Kazakhstan for 2015-2019 was completed. At the beginning of the second SPIID-2 five-year plan, there were about 500 projects, including about 40 projects on a national scale. According to government data for December 2019, "over 500" new projects were implemented and about 80,000 new jobs were created.

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It is worth noting that commercial banks were not ready to provide money for a long time at a low interest rate during the period of the crisis (in 2015-2016, the country's GDP growth was at the level of 1.0-1.2%). Therefore, the largest player in the sector - the Development Bank of Kazakhstan (DBK, the subsidiary of Baiterek Holding) - was charged with accumulating the necessary amount of funds for the construction of new large enterprises and expanding the capacity of existing ones. In addition, the national development institution has an extensive basket of financial instruments in its arsenal from providing medium-and long-term loans even to "greenfield" projects to crediting exports of finished products.

DBK, having high international ratings (currently "Baa3 (positive)" - Moody's International Rating Agency, "BBB - (stable)" - Fitch, "BB+ (stable)" - S&P), in addition to government funding sources, successfully attracts money from both the domestic and foreign markets. Thus, compared to KZT 75 bln. allocated from the National Fund - funds in the amount of KZT 150 bln. were raised from the market, and compared to KZT 178 bln. from the national budget - funds raised in the amount of KZT 178 bln. were raised from the market. As a result, the Bank attracted a total of KZT 581 bln. for SPIID-2 projects financing. Due to this, the Bank approved the financing of 24 projects under the program for a total of KZT 480.5 bln. (including KZT 253 bln. from state sources), while the available amount for financing is KZT 100.5 bln.

Infrastructure projects that contribute to the implementation of the transit potential and creation of conditions for the transition to a "green" economy were implemented with the funds of the National Fund. Major transport and logistics projects: reconstruction of passenger terminal of Astana International Airport (out of KZT 90.4 bln., DBK allocated KZT 3.9 bln. under the SPIID-2 and KZT 29.6 bln. from other sources), expansion of Aktau International Seaport in the North direction (out of USD 86 mln., DBK financed KZT 10.9 bln. under the SPIID-2 and KZT 52.8 bln. from other sources). DBK supported the construction of Turgusun-1 mini-hydroelectric power station (DBK allocated KZT 5 bln. under the SPIID-2 out of KZT 13.4 bln. of total project cost).

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The Republican budget funds were directed to projects that will strengthen the export and industrial potential of the economy of Kazakhstan, and also allowed to solve long-standing problems with providing the domestic market. Two projects from this pool are clearly export-oriented – the construction of the first stage of the plant for production of 110 and 220 kV voltage class power transformers in Shymkent - Asia Trafo (out of KZT 19 bln., DBK allocated KZT 8.6 bln. – 45%) and the construction of the plant for production of branded ferrosilicium (YDD Corporation) with a capacity of 96 thou. tons in Karaganda region (DBK finances KZT 24.1 bln. of the total project cost of KZT 36.6 bln.).

The domestic demand for chilled poultry meat should be met by the megaproject of the Makinsk poultry farm: the total cost of the project to build a poultry farm for growing broilers with a capacity of 60 thou. tons per year on the live weight basis is KZT 52.4 bln., of which DBK funds are about KZT 30.5 bln. (58%). The largest project in Kazakhstan's petrochemistry, which also solved the problem of shortages in the local fuel market, was also implemented with the participation of DBK in the second five-year plan of industrialization. The funds of DBK amouted to USD 932 mln. (49%) for reconstruction and modernization of the Shymkent refinery with total cost of USD 1.9 bln.

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Complete list of DBK projects that received loans under the SPIID-2:

  • Creation of a complex for the production of railway wheels, Prommashkomplekt LLP;
  • Construction of a rail and beam plant in Aktobe with a design capacity of 430 thousand tons of rolled steel per year, Aktobe Rail and Section Works LLP;
  • Modernization of the plant for the production of mineral fertilizers with an increase in the design capacity for the production of finished products, KazAzot JSC
  • Construction of a ferrosilicium production plant in Karaganda with a production capacity of 96,000 tons per year, YDD Corporation LLP;
  • Plant for production of power transformers of voltage class 110 and 220 kV in Shymkent, Asia Trafo LLP;
  • Construction of the first and second stage of the poultry farm for growing broilers with a capacity of 60 thou. tons per year on the live weight basis, Makinsk Poultry Farm LLP;
  • Development of Petroleum Engineering Plant, AtyrauNefteMash LLP;
  • Construction of a transport and logistics center in Shymkent, Continental Logistics Shymkent LLP;
  • Construction of Turgusun hydroelectric power station in the East Kazakhstan region, Turgusun-1 LLP;
  • Reconstruction of the passenger terminal of Astana International Airport, Astana International Airport JSC;
  • Construction of the Sodium Cyanide Plant with a capacity of 15,000 tons in Karatau, Talas Investment Company LLP;
  • Gasification of five localities in Kyzylorda region, KazTransGaz Aimak JSC;
  • Expansion of Aktau International Sea Port in the North direction, Aktau International Commercial Sea Port JSC;
  • Construction of Zhylga Photovoltaic Power Station, EcoProTech-Astana LLP;
  • Implementation of LTE/GSM/UMTS networks on the territory of Kazakhstan, Mobile Telecom-Service LLP and Kazakhtelecom JSC;
  • Production of motor fuels of K5 ecological class, Condensate JSC;
  • Construction of the mining and processing plant for processing polymetallic ores in Zhairem village in Karaganda region with a capacity of 5 mln. tons per year, Zhairem Mining and Processing Plant JSC;
  • Modernization and reconstruction of Shymkent Oil Refinery, PetroKazakhstan Oil Products LLP;
  • Construction of the Deep Oil Refining Complex, Atyrau Oil Refinery LLP;
  • Construction of the plant for production of methyl-tret-butyl-ether in Shymkent, Shymkent Chemical Company LLP.

"Implementation of the SPIID 2 allowed us to diversify the Bank's loan portfolio and develop non-resource sectors of our country's economy. Taking into account the significant impact of changes in the currency exchange rate, the money under the Program was specifically directed to support enterprises exposed to currency risk, which led to strengthening of their good standing. And what is good standing for the company? It is the ability to manufacture products, sell them in Kazakhstan and send them to foreign markets, pay salaries to their employees, deduct taxes to the state Treasury, timely fulfill their credit obligations, etc., - said the Managing Director of DBK Bakhytzhan Omarov.

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4.47 thousand new jobs were created at enterprises that received loans from DBK under the SPIID-2. According to the preliminary results of 2019, these companies sold products to the amount of KZT 516 bln., exported them to the amount of KZT 387 bln., and their tax deductions to the budget amounted to KZT 57 bln.", the Managing Director of DBK summarized.  

In the third five-year plan of industrialization until 2025, DBK will retain the function of the Industrialization Operator and Agent of state programs for development of non-resource industries. In performing this function, the financial institution intends to focus its attention on compliance with the environmental requirements of the Legislation of the Republic of Kazakhstan and application of the world's best practices in environmental management.

Common goals set in the SPIID-3 such as the expansion of production volumes and the range of processed goods, increase of production capacity through implementation of strategic projects, technological development and digitalization can not be met without the participation of the Development Bank of Kazakhstan in conditions of modern financial market of Kazakhstan.

The main stake in new State Program of Industrial and Innovative Development (SPIID) for 2020-2025 is placed on export-oriented manufacturers in the manufacturing sector. DBK support mechanisms include: provision of direct concessional lending, pre-export and export financing, as well as leasing financing of projects and subjects of industrial and innovative activities through the subsidiary DBK-Leasing.

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