What is PPP ? : PPP in the Kazakhstan

PPP in Kazakhstan

After receiving the independence in 1991, the Republic of Kazakhstan possessed of the large stocks of natural and energy resources, industrial and transport capacity.

Basically, public-private partnership is considered as element of management of the state assets. Civil Code of the Republic of Kazakhstan dated 27 December 1994, the laws of the Republic of Kazakhstan: «Concerning privatization» dated 23 December 1995, «Concerning joint-stock companies» dated 13 May 2003, «Concerning state purchases» dated 21 July 2007 were the main regulatory legal acts (regulations), which controls these mutual relations.

The exclusive tool, which has been offered to the investors by the first legal basis controlling public-private partnership in Kazakhstan, was concession. In the original version, the concession has been considered as leasing of the property, land, natural resources to the foreign legal or physical body – to the concessioner. In other words, the concession has been determined through the prism of lease contract (property lease), but at the same time elements of the works contracts, insurance contracts, labor contracts could be present in the concession agreements.

At the present time different governmental objects are in the property lease (lease of the nonresidential properties, equipment, land) or in the trust management on the basis of the concluded contracts.

The «pioneers» of the contracts, in which the term «concession» is used were the projects of transfer of the gas transportation system of the Republic of Kazakhstan to the control of «Intergas Central Asia» JSC, and transfer to the concession of Shulba, Ust-Kamenogorsk and Bukhtarma hydro power plants (HPP).

Later, the concession is used during implementation of the projects in transport infrastructure and power engineering: construction of the railway line «Charsk – Ust-Kamenogorsk» and power supply line «North Kazakhstan – Aktobe Region».

The legal field for implementation of the investment projects with use of the concession’s mechanisms has been created in 2006 upon adopting of the Law of the Republic of Kazakhstan «Concerning concessions».

In addition, the legislation in the sphere of concession is improved with allowance for best international practice. Thus, in 2008 and 2010 has been entered a number of amendments to the concession legislation concerning the issues of projects transfer procedures to the concession, expansion of the state support measures and increase of the concession projects appeal, cancellation of obligatoriness of infrastructure bonds issue upon providing certain state support measures.

Nowadays the approaches to PPP, levels and directions of it development in each country are different, and the process of formation and introduction of PPP’s mechanisms is still carried out in many countries.

The development of PPP could be conventionally divided into three phases:

1st phase: preparation

• Formulation of the state policy in the area of PPP;

• Analysis of legislation;

• Determination of the pilot projects portfolio;

• Analysis of factors for usage of PPP;

• Formation of the legislation;

• Establishing of the specialized entity on issues of PPP.

2nd phase: implementation

• Expansion of PPP’s scope of application;

• Search of new sources of the projects financing;

• Formation of the integral system of PPP;

• Elimination of the legal difficulties;

3rd phase: perfection

• Elaborating of the systematic instructions and manuals;

• Improvement of PPP’s implementation models;

• Further perfection of the implementation models of PPP’s projects;

• Developed system of the projects financing;

• Highly-skilled state employees on issues of PPP.

In Kazakhstan, nearly completed the implementation stage. In addition, the implementation of certain measures improving the step indicates the beginning of the third stage of the active phase, namely:

• Kazakhstan PPP center develops practical recommendations for implementation of PPP projects ;

• Centers the PPP, including PPP EKR Regional Center conducts training seminars on PPP for training in this area.

Currently, the Law of the Republic of Kazakhstan dated October 31, 2015 № 379 -V «On Public-Private Partnership " , defines the legal conditions of public-private partnership , its methods of implementation and regulates public relations arising in the process of preparing and implementing public-private project partnership , conclusion, execution and termination of the contract of public-private partnership.

Public-private partnership for the implementation of the method is divided into institutional and contract. Institutional public-private partnership is implemented by public-private partnership in accordance with the contract of public-private partnership. In other cases, public-private partnership contract is carried out by the method of public-private partnership.

Contractual public-private partnership is implemented through the conclusion of the contract of public- private partnership, including in the following ways:

1. concession ;

2. rust management of state property ;

3. property lease ( rent ) the state property ;

4. leasing;

5. contracts concluded in the technology development , prototyping, pilot tests and small-scale production ;

6. the life cycle of a contract ;

7. a service contract ;

8. other contracts , the relevant grounds of public-private partnership.

If the implementation of individual types of contract of public- private partnership in the part not regulated by this Act , the provisions of the relevant laws of the Republic of Kazakhstan , including the features , stipulated "On concessions" Law of the Republic of Kazakhstan.

PPP is regulated by normative legal acts in this area.