ENGINE ROOM

Kazakhstan 2017 | ECONOMY | VIP INTERVIEW

TBY talks to Bela Ferenczi, CEO for Central Asia & Azerbaijan for General Electric, on improving the domestic locomotive network, national diversification efforts, and the role of PPPs.

Can you give us some background on GE's operations in Kazakhstan and how your international expertise is helping localize advanced technologies?

GE has been working in Kazakhstan since the middle of the last century—our first sale was in 1930 for the mining industry. Today, we are proud to be active in nearly every industry with our broad technology portfolio. For example, GE engines are powering hundreds of Kazakhstan Temir Zholy (KTZ) locomotives and dozens of airplanes operated by Air Astana and other airlines. In addition, thousands of units of GE equipment are supporting the oil and gas and healthcare industries in Kazakhstan. Our overall approach is long-term partnership with the government and the country's leading companies on key projects to modernize industrial infrastructure. Probably we could say that our biggest localization success so far has been our partnership with KTZ. In 2009, the first GE-powered locomotive made in Kazakhstan rolled off the assembly line and onto the rails. To date, we have helped produce and modernize over 700 locomotives. Today about 90% of freight locomotives in Kazakhstan are powered by GE engines, with much higher efficiency and lower emissions than the legacy fleet, and as a result, Kazakhstan has the youngest and the most fuel-efficient locomotive fleet in the CIS region. We continue to supply the engine kit, but everything else is locally produced. This project was destined to success thanks to the perfect alignment between GE's long-term commitment and the country's strategic priority to develop the non-resource sectors of the economy, as well as its vast geography and rail network, which is quite similar to other large countries like the US, China, or Russia. In fact, Kazakhstan is GE's second-largest rail market globally and our largest hub of locomotive production outside of the US.

What other partnerships and programs do you have beyond the rail industry?

In addition to working with KTZ, we are also localizing oil and gas equipment servicing by teaming up with our local partner ZKMK. That project includes a long-term technology transfer and license agreement, which will enable ZKMK to locally maintain the fleet of GE Oil & Gas turbines and compressors installed across Kazakhstan and Central Asia. That's an important capability because it gives our customers confidence in knowing that potential issues can be resolved quickly with local resources. It also demonstrates GE's commitment to develop human talent by localizing technical expertise. We have had great success with this same approach in healthcare. In 2007, we localized expertise in maintaining medical equipment by establishing a service center in Almaty. That has supported the growth of our installed base to over 2,000 ultrasounds, MRIs, PET/CTs and other high-tech equipment at hospitals and clinics across the country. In addition, we are also offering our Crotonville leadership training as part of our strategic cooperation with Nazarbayev University. GE is recognized as one of the world's top companies for professional development, and we are committed to helping train the next generation of leaders in Kazakhstan.

How would you assess the role that GE plays in the diversification strategy adopted by the Kazakhstani government?

We are certainly contributing. Diversification is a long-term process that requires investment in many areas, including education. We try to make use of every available opportunity to transfer knowledge. In addition to higher education, GE is also lending its expertise in important growth segments. For example, we are sharing global best practices with the Ministry of Energy as it develops regulations for the renewables sector. We see significant potential for renewable energy in Kazakhstan, especially wind power. Obviously, it is difficult to build an industry from scratch, but companies like GE can offer vast international expertise to help make it happen.

Which sectors have the most potential for investment in public-private partnerships?

Kazakhstan is now undergoing its largest economic transformation since independence. We see great potential to energize the economy by streamlining state holdings and transferring non-core assets to private investors. From our point of view, we see major opportunities for modernization in the power sector, given that today about 85% of electricity is generated by coal. We also see great potential for digital solutions to improve the efficiency of industrial assets. In a world of limited investment, it is a good time to focus on technologies that can get more value from existing infrastructure. We believe digitization can help improve Kazakhstan's competitive advantage.

GE is a major partner of the upcoming Expo. What will be the long-term impact of the event in promoting the country and on Kazakhstan's overall economy?

EXPO-2017 is a timely platform for the global community to join together to discuss our common energy challenges. It will also give business leaders and government officials from around the world the chance to see the progress achieved in Kazakhstan with their own eyes. As an energy infrastructure company, we are excited about this opportunity to showcase our capabilities and share our vision. We will be actively participating throughout the event, from the Energy Best Practices area (eBPa) to the USA Pavilion, which will feature cutting-edge technologies from around the US across all energy sectors. We believe that energy access is a basic human right and we are committed to helping provide affordable, reliable, and sustainable energy to every person and industry on the planet. We are on the edge of great change in the energy industry, especially in the renewables segment. The development of technology has reached a point where we need to stop and think about ways to improve the efficiency of everything around us. Among other factors, digitization and the “industrial internet" will play a significant role. This can only happen if the entire global community is involved, and Kazakhstan will play a key role in enabling that discussion by hosting EXPO-2017.

What are your expectations for the coming year?

The current environment remains complicated and industrial growth around the world continues to be constrained by limited investment. At the same time, we are beginning to see positive signs on the horizon. Overall, the last three or four years have shown us that resource-rich countries can no longer rely on high commodity prices—they need to learn to adapt and live in a new environment. The president and government of Kazakhstan have taken steps to lay a solid foundation for future growth. I live and work in Astana and every day I see the great potential here. I am an optimist about the long term, and am looking forward to what the new year will bring.