The quasi-state sector showed a rather peculiar reaction to President’s order to normalize the petroleum industry, so that the country embarks upon a new industrial policy. Despite criticism, KazMunayGas (KMG), is still eagerly buying odd things.
We should focus on such scopes, as deep processing of metals, as well as oil and gas chemistry and coal chemistry, heavy machines-building, uranium conversion and dressing, manufacturing of motor-vehicle spares parts and fertilizers. In other words, we need to create the higher processing industries. We need to find the maximum use for our minerals and raw materials, human resources and commodities, i.e. we must elevate our internal country value. By means of the new industrial policy, we are to reach the new quality model of development –said President Tokayev during his address to the nation on the 1st of September 2023.
Nice and POSH
After that, His Excellency met with CEOs of QazaqGaz and KMG. With both of them, he discussed implementation of major investment projects and improvement of company performance. President ordered the CEO of KMG, Magzum Mirzagaliyev, to focus the industry on the deep refining of oil and gas.
Parallel to above, social networks began to discuss some curious pieces of information regarding tricks performed by the national companies – tricks not present in President’s address to the nation. Tricks that would never emerge in President’s addresses to the nation.
For example, our petroleum industry appears to be addicted to services rendered by the Russian web-design studio owned by Artemiy Lebedev. That studio going under the name of “Long. Expensive. F…king Cool” designed the Qazaqgaz logotype in 2022. It was bloody expensive, and it took the studio a hell of a time to eventually design it. The cost of that service is unknown – Artemiy Lebedev and Qazaqgaz keep that info secret. But taking into consideration, how Lebedev presented that service on his web-site, one should conclude that the Kazakh gas mammoth paid the company more than generously.
The contract was signed through a rather convoluted scheme – through the Public Association “Council of Veterans of Gas Industry”, by which the contract cost was USD 1.7 million. We think, that such a scheme is a means to justify budgets without tender process,writes the Protenger telegram channel.
The Quadro web studio recently conducted research on the design market in Russia and gathered information about the cost of services from the top 10 companies, including Lebedev’s brainchild. They found that developing a corporate identity by the studio of the sensational Russian designer costs from 400,000 to 1.3 million rubles. Most likely, the price for the Kazakh «gas giant» was not calculated at the minimum rate.
Recently, it became known that Lebedev is once again involved with our oil company. This time, his studio «Long. Expensive. F…..ng Cool » designed the office and identity for the national company «Kazakhstan Petrochemical Industries» (KPI). For a general understanding, this plant in the Atyrau region, which will now be styled starting from email signatures to the work attire of employees – to the merit of Lebedev’s designers, is 49% owned by «KazMunayGas» and 49% by the «Samruk-Kazyna» fund. So, 100% state shareholders know who authored the fashionable makeover for their propylene plant.
«Good show is worth more than money,» — this is how most Kazakhstanis perceive the behavior of the Kazakh oil and gas industry, while local designers (among whom, by the way, there are no less talented ones than in Russia) feel crushed and humiliated.
Hotel Exists and Asks for Money
The other day, Finance Minister Erulan Zhamaubayev told journalists about the fate of the luxurious Kempinski Bodrum hotel, owned by KMG which has been a non-core asset of the national company for several years and cannot be sold. The hotel’s status is that there is no buyer.
When asked by the minister whether the working class of Kazakhstan, such as miners or metallurgists, should be sent for vacations to this hotel, he replied:
It was a five-star hotel at the time of commissioning and start-up. However, over time, any building becomes outdated both morally and physically. Sometimes it is easier to build a new hotel than to renovate an old one. I personally have not visited this hotel, and most likely, it would require significant funds for renovation; otherwise, any investor would have purchased it. Even if we find such a solution to send our people, Kazakhstanis, how attractive will it be for them? This is a whole industry with competition. Instead, we would just let people go there with no profit…
He also added that an inventory of this asset is needed. Throughout its history, KazMunaiGas has had dozens of non-core entertainment and tourism-related facilities both within and outside the country. Some have already been sold, while others have not yet.
Do We Need It, At All?!
KMG has this permanent principle – “In order to sell something unnecessary, we first need to buy that something unnecessary”.
The General Director of Documentolog, Bayzhan Kanafin, recently found an interesting procurement lot from Samruk-Kazyna related to KazMunaiGas. It involves the procurement of design, development, implementation, and installation of an automated document management system for 332 million tenge. An expert noted that in 2019, KazMunaiGas already implemented a similar solution from the Russian «Directum» for 1.5 billion tenge and purchased Microsoft licenses for 6 billion tenge. The question arises as to what happened with the existing software that required the need for new procurement.
Why is an information system for a state-owned company not being purchased from the Register of Trusted Software of the MCRIAIP (Methodological Center for the Development of Information and Analytical Support for the Public Procurement System)? Why create a register for domestic suppliers if it is not being used by state-owned companies? KazMunaiGas (KMG) is a subsidiary of Samruk. All purchases are made on the «Samruk-Kazyna Contract» platform, and contracts are also concluded there electronically. So why procure a separate system? It is being procured for the purpose of contract coordination within KMG, a function that should ideally be performed by a standard electronic document management system. However, it appears that the standard system within KMG is not fulfilling this function,writes finance.kz., quoting the words of Mr. Baizhan.
And now it seems that there have been explanations from KMG regarding this deal: the new system is needed because the previously purchased Russian product does not have contract management functionality. As for not procuring from the registry, it’s because the system needs to be created, it’s not a ready-made system.
We join the questions raised by Bayzhan and would like to add from our side: in the President’s Address, it was mentioned that state and quasi-state procurement should be transferred to a unified platform—a completely new state procurement system will be created. Naturally, all of this could be a coincidence, but it seems that the rush to implement a new document management system is to avoid conducting procurement in the new system,Andrey Chebotarev, the author of the Telegram channel finance.kz, concluded.
Are not there a bit way too much events around KMG and QazaqGaz lately? It would be OK, if those were reports of some bright achievements, but those events are all about criticism and exposure of non-understandable actions. It will be a great intrigue to watch how those companies implement the orders from the President.