"Purely out of Good Intentions": Vice Minister on Sale of the Zenit Ural Plant to Turkish Company

A Turkish construction company wants to  buy 85% of the Ural Zenit plant in exchange for investments in the construction of a shipyard in the Caspian Sea. Vice-Minister of Industry and Construction Azamat Beispekov has explained why they want to give shipbuilding production to foreigners.

The Zenit plant’s employees have written an open letter addressed to the president. They believe that, despite the need to build a shipyard for large-capacity vessels, the sale of a majority stake in the Ural enterprise contradicts the interests of the company, its employees and the state.

Vyacheslav Valiev, Zenit’s former General Director, called the position of the Ministry of Industry and Construction "anti-state and aimed at destroying domestic industry."

 Vice Minister of Industry and Construction Azamat Beispekov in a conversation with an Orda correspondent explained that Kazakhstan needs to build a shipyard in the Caspian Sea. The department is also concerned that JSC Ural Plant Zenit will not be able to compete with the new manufacturer.

We have no desire to just sell the plant. We understand that a successfully operating plant must maintain capacity. No one is forcing us to become partners with those who build a shipyard. When they build it and organize production, our Zenit plant may be left out of business. The new company will be located on the shores of the Caspian Sea, and the Urals are now getting shallow. I was at the Zenit plant on November 11, I met with the staff. After the negotiations, a significant part of the staff supported my proposals. The task is not to sell the plant, the state will not see much income from this. The main thing is to provide Zenit with such cooperation so that it is kept busy for a long time, Beispekov said.

 As it turned out, the Ural Zenit plant has orders for next year and part of 2025. It is unknown what will happen later with production volumes.

I understand the position of the factory workers, I met with them and talked to them. I said at the meeting: "Well, if you say no now, we will exclude the matter of selling. There will be no investor. But then let's agree that in three or four years you won't say that ‘you don't have any orders.’ If they build a modern plant on the shore of the Caspian Sea now, then we will not force our security forces to order a ship using Zenit technologies. Purely out of good intentions, we started considering this project, Beispekov explained.

According to the Vice minister, for so many years the enterprise had problems with investments. Production also requires the renewal of production assets, modernization and expansion of the production line.

What makes the plant interesting for the investor? We talked openly with representatives of Turkish companies who came. They say that with Zenit, they will need to make fewer investments in the Caspian Sea. They will use the production facilities of the Ural plant, float ships to the Caspian Sea and make the final assembly there. For so many years, there has been no investment in the plant as such.

Competitive Terms

Vice Minister Azamat Beispekov clarified that the state has no obligations to the Turkish company YDA Group. The issue of the sale of shares will be submitted to the State Commission for Economic Modernization under the Prime Minister. If a favorable decision is made there, the government will hold a competition on general terms.

There will be no such thing that we will sell to one person and will not consider an alternative. YDA Group is not a shipbuilding company, it is an investor. The main partner we are focusing on is ASFAT. It is better to sell 74%, then we will have a package that can block any decisions of the foreign investor. All conditions are prescribed in the founding agreement. It is possible to block with 1%, the Vice minister said.

When selling the majority part of the shares of the Ural plant, the government plans to set two conditions for the new owner: keeping the activity profile and maintaining the number of employees.

Words alone won't get you far. Therefore, it is necessary to prescribe all this in the contract during implementation. At the factory, I told the team to form requirements for the investor. In my understanding, these are the minimum requirements that we can immediately prescribe: keeping jobs, investing in modernization, maintaining the  the plant's direction, that it is shipbuilding and acts in the interests of the country's defense capability. Nothing lasts forever, but the obligations written on paper must be fulfilled.

The official hopes the newly created Fund of the Military-industrial complex will support and modernize enterprises. Orda.kz will continue to monitor developments.

Original Author: Maria Gorbokonenko

DISCLAIMER: This is a translated piece. The text has been modified, the content is the same. Please refer to the original article in Russian for accuracy.