Kazakhstan to reevaluate fixed assets of national companies

/IRBIS, May 30, 01/ - According to REUTERS, Kazakhstan government intends to reevaluate fixed assets of national state companies with a view to acquire exact information on their market value. Mr. Akhmetov, vice-premier of the government reported that transparency of national companies require real evaluation of assets. The national companies are 100% owned by the government. As a rule, they are monopolistic, as for instance, rail road Kazakhstan Temir Joly or, nuclear Kazatomprom. The real valuation of companies is also needed to learn cost and price formation structure of goods and services. "From this point, we would come to understanding of investment policy of national companies," reported Mr. Akhmetov. At the meeting with the government, officials from national companies themselves expressed interest in revaluation of assets. The vice-president of Kazakhoil, Mr. Abulgazin said that value of fixed assets affects capital investments. He noted that the capital investments are made out of depreciation and net profit. As the fixed assets are undervalued and depreciation is low, then, the net profit are becoming a main source of capital investments. Kazakhoil has planned to increase oil production from 6.1m to 9.9m tons in 2005. Mr. Abulgazin reported that Ernst & Young has conducted valuation of affiliated Uzenmunaigas and found out that company's assets were underestimated 12.9 times. The same company revalued Kazakhoil-Emba (another affiliated company). The figures showed five-time underestimation. The executive director of Kazakhstan Temir Joly informed that that Ernst & Young would prepare report by June 15. However, preliminary data show that assets' value was understated 1.5 times.