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Public-private partnership in Kazakhstan

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

Basically, public-private partnership was considered as an element of management of the state assets. The main normative legal acts, controlled these mutual relations, were the Civil Code of the Republic of Kazakhstan dated 27 December 1994, the laws of the Republic of Kazakhstan: «On privatization» dated 23 December 1995, «On joint-stock companies» dated 13 May 2003, «On state purchases» dated 21 July 2007.

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

In addition, the legislation in the sphere of concession is improved with the best international practice in mind. 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 binding infrastructure bonds issue upon providing certain state support measures.

Nowadays PPP’s approaches, levels and directions of its 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 can 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 the specialized PPP institution.

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 barriers;

3rd phase: perfection

• Elaborating 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 officers on issues of PPP.

The implementation stage is under completion in Kazakhstan. In addition, the implementation of certain measures of the perfection phase indicates the beginning of the third stage of the active phase, namely:

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

• PPP Centers, including PPP EKR Regional Center conducts advanced training seminars concerning PPP.

Currently, the Law of the Republic of Kazakhstan dated October 31, 2015 No. 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. trust management of state property;

3. property lease (rent) of the state property;

4. leasing;

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

6. the life cycle contract;

7. a service contract ;

8. other contracts , being consistent with public-private partnership.

When implementing the individual types of contract of public- private partnership in the part not regulated by this Law, the provisions of the relevant laws of the Republic of Kazakhstan, including the features, specified by the Law of the Republic of Kazakhstan “On concessions” are used.

“Regional Center of Public-Private Partnership” JSC (further - Society) has been functioning since 2010 in East Kazakhstan region.

By the decisions of akimat of East Kazakhstan region from January 20, 2014 No.13, from January 28, 2014 No.17 and from February 24, 2016 No.43 the Society is recognized as a legal person providing advisory services on local projects of PPP, carrying out expert examination of concept, tender documents and drafts of PPP contracts of local projects.

East Kazakhstan region has currently concluded contracts on 114 projects worth KZT35.4 billion, including: the implementation time frame is over on 60 projects worth 5.2 billion, and 54 projects worth 30.2 billion are under implementation.

30 public-private partnership projects worth KZT 52 billion are nearing completion.

The list of public-private partnership projects which are underway and those proposed ones is posted on the official Internet resources:

- Kazakhstan Center for Public-Private Partnership JSC - https://kzppp.kz/projects;

- Regional Center for Public-Private Partnership of East Kazakhstan region JSC - https://ppp-vko.kz/rus/project.