KazTransOil subsidiary issues further $43 mln in bonds to modernize Astrakhan-Mangyshlak water pipeline

ALMATY. Nov 27 (Interfax) - Kazakhstan's national oil and gas company KazMunayGas (KMG) has purchased 20 million unsecured bonds issued by Water Pipeline LLP, which is wholly owned by KazTransOil (KTO), for a total value of 20 billion tenge or $43.2 million to finance the modernization of the Astrakhan-Mangyshlak water pipeline, KTO said in a press release.

To finance the same project, KMG raised another 20 billion tenge through the purchase of bonds issued by Sovereign Wealth Fund Samruk-Kazyna.

KazTransOil said earlier that its board had opted for a second bond placement by its subsidiary Water Pipeline LLP for 20 billion tenge to back the upgrade of the Astrakhan-Mangyshlak water pipeline.

The 20 million bonds purchased by KMG will mature in 10 years, including a two year grace period for the principal debt. The face value per bond is 1,000 tenge. Interest will be paid twice a year - on April 1 and October 1; the coupon rate is set at 0.5% per annum.

In April of this year, Water Pipeline LLP issued 50 billion tenge worth of ten-year unsecured bonds, acquired by KazMunayGas with the funds raised from the Samruk-Kazyna bond-secured loan, which holds a 90% stake in KMG.

The Astrakhan-Mangyshlak water pipeline is of strategic importance for Kazakhstan, for the pipeline supplies water from the Volga River to households and oil fields in west Kazakhstan. The pipeline is 1,286 km long, and its capacity is 94,000 cubic meters of water daily.

The Astrakhan-Mangyshlak pipeline is the only centralized source of water supply to three districts of the Atyrau region, the city of Zhanaozen, and four districts in the Mangistau region. Water consumption by the households grows by 4-5% each year.

The Astrakhan-Mangyshlak first stage water pipeline project involves the construction of two pipeline sections, spanning a total length of approximately 176 km. The successful execution of this project will lead to an increase in the water pipeline's throughput from 110,000 to 170,000 cubic meters per day by 2024.

This water pipeline was built in 1988, and it has deteriorated to a poor state and now cannot satisfy the growing demand for water from households and industrial facilities.