in the Aktobe region The electricity market

ANALYSIS OF THE ELECTRIC POWER MARKET OF AKTOBE REGION

Over a period from 2011 to 2015, Aktobe region increased the electric power consumption by 23%. (Table 3).

In general, over the last 3 years (2013–2015) a steadily progressive growth rate of electric power consumption was observed in the region (diagram 1). Thus, in 2015, increase in electric power consumption in the region amounted to 12% (4,741,675 thous. kW), while in 2014 (4,236,314 thous.

kW) against the level of 2013 (3,934,620 thous. kW) an increase was equal to 7%. In turn, in 2013 and 2012, an increase was equal to 1% and 3% only, respectively.

Over the last five years (2011–2015), the energy deficiency situation in Aktobe region remained relatively stable, although there were minor fluctuations (Table 4, diagram 2). Thus, in 2015, the energy deficiency of the region increased by 2% as compared to the previous year and amounted to 36% (1,693,357 thous. kW) of the total energy consumption in the region.

In 2014, the energy deficiency also increased by 2% (from 32% in 2013 to 34% in 2014) and amounted to

1,457,517 thous. kW, while in 2012 the shortage of electric power was equal to 39% (1,532,458 thous. kW).

Over a period from 2011 to 2015, there was a significant increase in a share of local content of electric power transmitted through OHL 500 kV of Batys Transit JSC for coverage of the energy deficiency in Aktobe region (Table 5, diagram 3). Thus, in 2015, a share of the Russian electric power reduced to 4%, while in 2011 and 2012 it was equal to 30% and 20%, respectively.

During the reporting period, a share of electric power supply to Aktobe region through OHL 500 kV of Batys Transit JSC increased from 21% in 2011 to 34% in 2015 (Table 6, diagram 4). Other major suppliers in the region are the following: Zhanazhol GTPP with a share of 23%, GTU AFAP – 20% and Aktobe CHPP – 14%

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INFORMATION ON THE ELECTRIC POWER TRANSMISSION SERVICE AND TARIFFS

Performance of contracts for power transmission services

In 2015, the Company entered into service contracts for electric power transmission through the interregional 500kV network «North Kazakhstan - Aktobe region» with the following parties:

1. Aktobeenergosnab LLP – in the amount of 279,388 thous. kW*h, the contract No. number 1/190-

dated 16.02.2009, a supplementary agreement No. 9 dated 29.10.2014;

2. Kazchrome TNC JSC – in the total volume of 2,555,505 thous. kW*h, including: 2,235,655 thous. kW*h – the Branch «Aktobe Ferrous Alloys Plant», the contract No. 14-11/4/5/2870 dated 31.12.2014;

319,550 thous. kW*h – the Branch «Don Mining and Processing Plant» (subsoil use), the contract No. 14-11/4/5/2871 dated 31.12.2014.

3. KEGOC JSC – to cover the process losses and own needs of Aktobe branch of KEGOC JSC in the amount of 102,325 thous. kW*h, the contract No. 28--1190 dated 22.12.2014.

4. INTER RAO Central Asia LLP – in the amount of 6,330 thous. kW*h, the contract No. 3/5 dated 17.01

2013, a supplementary agreement No. 3 dated 31.12.2014;

5. Uralenergo-Pool LLP – in the amount of 6,100 thous. kW*h, the contract No. 11 dated 27.01.2015.

6. Energy Trade Co. LLP – in the amount of 30,215 thous. kW*h, the contract No.1/T dated 26.02.2015.

In 2015, the contractual volume of electric power transmission under the above-stated contracts amounted to 2,979,563 thousand kW.h.

In 2015, the actual power transmission volume amounted to 1,620,790 thous. KW.h; the deviation was equal to 1,358,773 thous. kW.h or 46%.

The analysis of electric power production and consumption market of Aktobe region for 2015 showed that decrease in the volume of electric power transmission through OHL-5740 Zhitikara – Ulke was caused by the following factors:

•• increase in electric power generation by energy-producing organizations of Aktobe region;

•• overestimation of contractual volumes of electric power transmission through electric grids of

Batys Transit JSC by individual consumers;

•• prolonged elimination of consequences of the accident at the first furnace of the melting shop

No. 4 of the branch of Aktobe Ferrous Alloys Plant of Kazchrome TNC JSC.

The technological power consumption for electricity transmission through the networks of JSC «Batys Transit»

Technological power consumption at the 500 kV power transmission line of Batys Transit JSC takes place during the power transmission process as well as in the course of power consumption by line itself for own needs of substations.

In 2015, the actual volume of process energy consumption and coverage of substations’ needs mounted to 81,790 thous. kW.h or 5.05% of the volume of electric power transmitted.

Tariff

In the course of formation, approval and implementation of a tariff and tariff estimates Batys Transit JSC being a natural monopoly entity is governed by the Law of the Republic of Kazakhstan «On Natural Monopolies and Regulated Markets» No. 272-I dated July 9, 1998 and other normative legal acts of the Republic of Kazakhstan. According to the Order No. 102- dated 22.06.2011 of the Aktobe Regional Department of the Agency for Regulation of Natural Monopolies, since August 2011 a tariff for electric power transmission services through OHL 500 kV has been approved for the Company at the rate of 3.45 tenge/kW excluding VAT. This rate was also applicable during the period from January to October 2015.

On September 21, 2015, according to the Order No. 181- of the Aktobe Regional Department of the Agency for Regulation of Natural Monopolies and Protection of Competition of the Ministry of National Economy of the Republic of Kazakhstan, the following limit tariffs were approved for Batys Transit JSC for the electric power transmission and distribution services for the period from November 1, 2015 till October 31, 2020:

•• from November 1, 2015 till October 31, 2016 – at the rate of 3.44 tenge/1 kW.h (excluding a value added tax);

•• from November 1, 2016 till October 31, 2017 – at the rate of 3.44 tenge/1 kW.h (excluding a value added tax);

•• from November 1, 2017 till October 31, 2018 – at the rate of 3.43 tenge/1 kW.h (excluding a value added tax);

•• from November 1, 2018 till October 31, 2019 – at the rate of 3.29 tenge/1 kW.h (excluding a value added tax);

•• from November 1, 2019 till October 31, 2020 – at the rate of 2.71 tenge/1 kW.h (excluding a value added tax);