Samruk-Kazyna's Profit Rests on Foreign-Controlled Companies

Yesterday I dropped by to see Zharas Akhmetov, and we got to talking about JSC Samruk-Kazyna.

Open Samruk's financial statements and everything looks rosy. There is a profit, apparently, and all is well. But one thing bothers me.

Start analyzing the numbers and you realize that Samruk stays afloat only thanks to companies over which Samruk has no influence, that is, companies where a controlling stake belongs to foreign firms.

Samruk's statements for 2016 are not yet publicly available. But take the statements of KazMunayGas (KMG), for example. Profit before tax is KZT 163 billion. A great result, it would seem. But subtract profit from associates (where KMG's influence is minimal) of KZT 270 billion, and you get a loss of KZT 107 billion. In other words, KMG's own operations produced a minus KZT 107 billion, while the associates, where foreigners are present, produced KZT 270 billion, with a plus sign.

Or take Kazatomprom. Its operating profit for nine months was KZT 68 billion, while its share of profit of associates and joint ventures was KZT 60 billion. This means that Kazatomprom's associates generate profit of at least KZT 140 billion, whereas Kazatomprom as a whole generates KZT 68 billion. Quite interesting for the world's leading uranium producer.

Or take Samruk-Tau-Ken. Its operating loss is KZT 0.8 billion, while profit from its associate is KZT 37 billion.

I assume Zharas will speak about this in more detail. But I have a question for those in charge of Samruk-Kazyna's transformation program. To expose the inefficiency of the national companies, the best way is to move into Samruk's own portfolio the companies over which the national holdings have minimal influence. Let the profit from genuine portfolio companies be reported at the parent company level. Then all the inefficiency of national management will be plain to see, and there will be no need to spend billions of tenge on transformation. :)