KazMunaiGas Onimderi (KMGO) Director General Assylbek Karibayev spoke about how the “KazMunaiGas (KMG) fuel stations network operates today and what projects and business cooperation model in the retail segment, his company is implementing….
For general information:
Assylbek Karibayev was born on September 23, 1977 in Almaty. In 1998 he graduated from the Kazakh State Academy of Management majoring in Economics. He began his career in 1998 as an economist in the corporation “Gazsnabtrans” Novy Kazakhgas. He has extensive experience in the oil and gas industry.
Since 2003 he worked in “KazTransOil” as deputy director of the Western branch. In the period from 2004 to 2009 he was the manager at “TH KazMunaiGaz.” He held the position of Managing Director of “JSC KazMunaiGas Trading House” in 2009. Since October 2009, he was First Vice President, and from 2010 to January 2015 - President of “LLP PetroKazakhstan Oil Products.” From June 2015 until June 2016 he worked as Advisor to the Director General of JSC “KazMunaiGas - Refining and Marketing (KMG-RM).”
You have been head of KMGO for six months, how does it feel to be heading the largest fuel station network in Kazakhstan?
First of all, this is a new direction for me. And just like anything new is interesting to me. My previous experience, of course, is helping me a lot.
At the same time, for me a new assignment - is not the only indicator of confidence, but also the forthcoming serious and responsible work, primarily for the consumers of our large retail network, responsible for the uninterrupted supply of petroleum products. After all, our work with end users will be the judging point of the whole brand “KazMunaiGas.”
What assets is the company managing as of today?
To date, the retail network of fuel stations under the brand “KazMunaiGas” is the most ambitious one in the Republic of Kazakhstan and includes 321 fuel stations, 11 own tank farms, an extensive fleet of oil tankers, as well as the accompanying business assets. The KazMunaiGas fuel stations are placed not only in major cities but also in the most remote areas of the country.
In addition, we have started a new franchise project, according to which further four gas stations were added to our network.
In November you launched the DODO program. Please tell us about this project.
KMGO has launched the DODO project, which means “Partner Owns - Partner Controls” according to the franchising - single fuel stations and small private fuel stations were invited to cooperate with the well-recognizable and popular brand KMG. The main purpose was to enable the fuel station owners to operate under the brand “KazMunaiGas” and that gives opportunities to attract customers, increase fuel sales volumes and goods at their fuel stations, guaranteed delivery and reliable quality of petroleum products, which can sell for cash and cashless payments. This project offers a more effective management of their existing stations.
In addition to the benefits for small businesses, the program has a positive factor for the country as a whole, including the reduction of the shadow economy, improvement of the quality of roadside service and oil products and increase of tax collection.
What are the results of the company’s works in 2016?
This year we achieved an 8 percent growth in sales compared to the same period last year. The company also managed to optimize the 6 percent of the costs, on the basis of the transformation program (CODO project) – 4 percent.
KMGO annually acts as operator for the supply of domestic agricultural producers of subsidized diesel fuel during the sowing and harvesting campaigns.
As a result, we achieved a positive economic result despite the fact that the company has adhered to the socially-oriented pricing policy.
Also this year we presented to our customers the new program “KazMunaiGas Club” - our regular customers can purchase petroleum products at discounted prices. In view of our pricing policies and additional discounts, the proposal was very favorably welcomed by our customers. The program has more than 80,000 permanent members. Special promotions are held constantly and drawings of valuable prizes to support this program. We recently held a campaign and gave away three SUVs and 21,000 liters of gasoline. The draw was attended by about 30,000 people.
In addition to discounts for holders of the KMG Club cards the company’s bonus system of discounts provided is provided at company’s discretion separately for birthdays, holidays, local gifts, additional fuel and others.
We are always looking for effective ways to attract and retain customers. We have increased the number of different stimulating events and activities.
In March the KMG fuel station network, together with the Fortebank, offered customers an advantageous offer. Holders of the ForteCards could pay for fuel at the KMG stations and receive a higher CashBack (refund to the card) in the amount of 5 percent of the paid amount.
The same promotional campaign was launched with the “Halyk Bank Kazakhstan” to accrue bonuses in the amount of 3 percent when paying with cards like Mastercard HalykBank at all KMG stations.
So, thanks to the KMG Club program and joint actions of our partners, we always offer our customers the best price.
I want to note the KMG’s active work with its customers. Every year the company organizes round tables, where there are exchanges of views and discussions on the production and quality of fuel. So, in July we had a visiting workshop-meeting on the theme “Monitoring the quality and safety of petroleum products at KMG sites, where we demonstrated to auto sales dealers, government agencies and journalists, the process of quality preservation of petroleum products at our facilities.
Also this year, we have assisted in such activities as the rally-marathon “Silk Road – 2016,” the rally “Glory to the winners!” and the test drive of Volkswagen Amarok cars and others.
Also such measures as support of various organizations in the social sphere, the sphere of preschool education and sport must not be overlooked. On the eve of the 25th anniversary of Independence of Kazakhstan KMG held a charity campaign “25 good deeds” for social support of the needy. I note that the assistance was provided by voluntary contributions from KMGO employees.
Speaking about the quality of fuel and service level, I can say only one fact. Kazakhstani consumers in the last six years, cast their votes for the KMG fuel station network as part of the national project “Choice of the Year No. 1 in Kazakhstan.” We thank our customers for their trust. And for our part, we promise to provide the best service and quality product.
Last year KMG launched the CODO program. Please tell us how the project is doing. How many stations today have been transferred to partners? Are you satisfied with the results of this program?
We launched the CODO program, which means “Company owns - Dealer controls,” in July 2015. It was the first large-scale project in Kazakhstan, when big business outsources one of the main business processes - sales of oil products. The program has a lot of tasks. It aims to support small businesses in regions of the country and contributes to the creation of an efficient private sector, the development of public-private partnership (PPP).
As part of the project we have transferred to private management, as planned, about half the KMG fuel stations. Today, in different regions of the country, there are 110 entrepreneurs successfully running 150 KMG fuel stations.
The positive effects of the project can already be seen now, these are the increase in sales volumes, a positive economic impact in terms of reduced costs and improved service quality.
Kudos to both our partners and KMG, which is making countless efforts to make our cooperation fruitful. Both parties - the national company and business - are interested in a further increase in the volume of sales of petroleum products. We are expecting a conscientious attitude from the management of the transferred stations, respect for to the “KazMunaiGas” brand, preservation of quality of petroleum products, proper quality of service and compliance with corporate standards.
Of course there have been certain difficulties with the fulfillment of obligations by some unscrupulous partners. In all cases we have tried to objectively approach the different situations, but unfortunately we had to part with eight partners. In their place we have attracted both existing partners and new as of the results of the tender.
The quality of petroleum products is the main demand of the consumers. How is the quality control of petroleum products conducted on your sites?
Providing consumers with high quality products and services is a strategic focus of “KazMunaiGas Onimderi.” Unique technical capabilities are being demonstrated through continuous quality control at all stages of the fuel movement, from its acceptance at the tank farm to storage and then sales at the stations.
To ensure the control and preservation of the quality of fuel in the storage facilities, the company has three testing laboratories in the cities of Astana, Almaty and Atyrau, which are accredited in the state accreditation system of the Republic of Kazakhstan for compliance with the GOST ISO/IEC 17025-2009. They are equipped with a single technical control system that allows us to monitor all the qualitative parameters of oil products for compliance with the technical regulations of the Customs Union and the normative documentation on production, and can provide services for testing of petroleum products to third parties.
Not only laboratory workers are involved in the production of petroleum products quality control processes but also workers from industrial branches.
The above system of quality control of petroleum products, as well as work carried out by production units to comply with the technology of reception, storage, transportation and dispensing of petroleum products, allows us to ensure the preservation of the quality of fuel factory settings for the end user.
What is the company’s strategy in terms of expansion in Kazakhstan?
What are the company’s development plans for the coming years?
The strategic plans of the company in the near future include expansion through the public-private partnership via the franchising system. The company bets on the franchising system as the main instrument of development: next year we are planning to expand the KMG network with another 25 stations. To date under this program, were launched three fuel stations in the city of Kostanai and one more in the city of Priozersk. Also in the near future, we are planning to expand the franchise network in the South-Kazakhstan region. These were two regions where we have a weak presence, and they were the targets of our development. On the whole KMG is on the path of dynamic development and innovation, in particular, we are focused on the use of more modern payment systems at the fuel stations. Our oil product market has been “ripe” for modern online technologies for a long time. The old system no longer meets modern requirements of both customers and fuel station owners. The transition to the new electronic payment methods would open up a large field of possibilities for development of new and unique services to customers: cost effective management system for fuel discounts, significant cost savings, participation in special promotions and sweepstakes. So today one of the most popular and effective electronic means of payment are KMG fuel cards that are replacing paper coupons, and are a perfect means of cashless payment. The obvious shortcoming of the paper coupons is the possibility of its misuse, lack of control costs and complexity of the financial statements. Starting from January 2017, we will cancel the paper coupons. The KMG retail network has been successfully using customer service system at the fuel stations via fuel cards. The share of sales of fuel cards in the company is constantly growing. Having petroleum products on the card is carried out both in the monetary terms and in the fuel purses. A significant advantage of the card is the possibility of its use throughout the territory of Kazakhstan. In addition, for the convenience of customers an online recharge service is available via the “KazMunaiGas Club” in the Personal Cabinet on the mobile app and our website www.azskmg.kz. In addition, we plan to launch a new store format, arranged in accordance with the best Western standards, with an invitation of experts from this field. This year we are planning a pilot project that will launch 20 such stores at the best fuel stations. In the future, the project will be introduced throughout the network at all fuel stations.