This presentation was made by Nurlan Shokbarbayev, Kazakhstan, at the 12th Annual Meeting of the OECD Network of Senior PPP and Infrastructure Officials, held in Paris on 16 April 2019.

1. PUBLIC-PRIVATE
PARTNERSHIP
IN KAZAKHSTAN
Ministry
of National Economy
of the Republic of
Kazakhstan
OECD HQ, PARIS

2. 2
Formation of
Concession
Legislation
Searching
the PPP model
Formation
& Improvement
of PPP Legislation
•1991-1993.
•The First Law of the Republic
of Kazakhstan "On
Concessions" Regulated the
organizational, economic and
legal conditions for granting
concessions, in the form of
property, land and natural
resources to foreign investors
•2005 year
•The beginning of
implementation of pilot
concession projects (railway
Shar - Ust-Kamenogorsk,
power transmission line North
Kazakhstan - Aktobe region)
based on Civil Code
•2006
•The Law of the Republic of
Kazakhstan "On Concessions" -
the necessary legislative
framework has been created in
the field of concession
•2008, 2010
• Amendments to the concession
legislation, based on experience
in the implementation of
concession projects
•2008 year
•Creation of a specialized
organization on concession
issues (Kaz Center of PPP)
•2011
•PPP Development Program in
the Republic of Kazakhstan for
2011-2015
•2012-2014
•Amendments to the legislation
on introduction of new forms of
PPP and expansion of their
applications "
•2015
•The Law of the Republic of
Kazakhstan "On public-private
partnership"
• Adoption of subordinate
legislation in the field of PPP
•2017
•Amendments to the Law "On
public-private partnership"
Evolution of PPP legislation in Kazakhstan

3. ЦЕЛЬGOAL
ЦЕЛЬTASKS
formation and strengthening of long-term
cooperation between the state and private
sector by pooling resources to improve the
level of accessibility and quality of public
goods and services
3
PPP LAW
involvement of the private sector in the
management of state assets
reducing the burden on the budget
attraction of investments
extension of cooperation models between
government and business
PPP Law was launched in November 2015
The PPP legislation have been developed with the assistance of IFIs
(EBRD, IBRD, IFC, ADB) and agreed by the National Chamber of
Entrepreneurs of Kazakhstan and other organizations

4. 4
PPP LEGISLATION: KEY ADVANTAGES FOR INVESTORS
DIVERSIFIED SECTORS & PARTICIPANTS OF PPP
WIDE RANGE OF PPP FORMS & CONTRACTS
STATE SUPPORT AND PAYMENTS
DIRECT AGREEMENT & STEP-IN RIGHT
COMPETITIVE DIALOGUE
FOREIGN EXCHANGE RISKS COMPENSATION
INTERNATIONAL ARBITRAGE
TERMINATION PAYMENTS
LONG-TERM TARIFFS FOR PPP PROJECTS
WIDENING TENDER TYPES

5. SECTORS PARTICIPANTS
EDUCATION
HEALTHCARE
TRANSPORT
ENERGY
HOUSING
PPP is possible in ALL
sectors of the
economy
BEFORE: considered as
basic sectors:
NOW: sector
restrictions removed:
STATE PARTNER
BEFORE: considered as participants:
FINANCIAL AND OTHER
ORGANIZATIONS
Funding of PPP
projects
Service Support
NOW: new members added:
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DIVERSIFIED SECTORS & PARTICIPANTS OF PPP
NATIONAL INDUSTRY
OPERATOR
(KTZ, KEGOC,
Kazakhtelecom, etc.)
Land, Engineering Infra,
Support &Payments
Construction, Operation,
Management, Design
PRIVATE PARTNER
STATE-OWNED
COMPANIES
= State Partner

6. Contract PPP
Wide range of PPP contracts
Institutional PPP
Joint Venture
Private
Partner
State Partner
JV
Alternative for state
entrepreneurship
66
Exit mechanism
for public partner
Private & public
partners form up
equity for lenders
WIDENING PPP FORMS & CONTRACTS
Long term
lease of
private
property
Lease
Contract
New tech,
scientific
research
R&D
Contract
From Design
to
Maintenance
Life Cycle
Contract
Service &
Maintenance
Service
Contract
Trust
management
of state
property (for
existing
social
facilities)
Management
Contract
Rent of
state/
private
property
Rent
Contract
Construction
& operation
of facilities
(for large
infrastructure
projects)
Concession
Contract
Mixed
contracts
that
correspond
to PPP
features
Mixed
Contracts

7. 7
STATE SUPPORT & PAYMENTS
All payments from the state
budget (state obligations) are
protected from sequestration
SUPPORT
state guarantee
guaranteed consumption
of goods and services by
the state
transfer of intellectual
property rights
provision of in-kind grants
co-funding of projects
subsidies
PAYMENTS
availability payment
compensation of
investment costs
compensation of
operation costs
management fee
including:

8. DIRECT
AGREEMENT
PUBLIC
PARTNER
CREDITORPRIVATE
PARTNER
Protection of creditors in case of material
breach of private partner’s obligations of
that could lead to the default terms of the
PPP contract
 Obligation of public partners to inform
creditors about the breaches of private
partners
 Pledge of rights under the PPP contract
and (or) assignment of claims, or transfer
of private partner’s debt
 Step-in right (the right of creditor to
replace private partner)
 Procedure of replacement of private
partner
Goal
Include
8
DIRECT AGREEMENT & STEP-IN RIGHT

9. COMPETITIVE DIALOGUE
Proposal 1
Proposal 2
Proposal 3
WHEN?
 BEFORE THE TENDER PROCESS
Participation in process of
tender documentation
development, working under
draft of PPP contract
 DURING THE TENDER
PROCESS
Tender documents correction
PPP Contract provisions
negotiations
WHAT FOR?
 to accommodate the needs
of potential private partners
 to reach optimal technical,
financial and legal parameters
of PPP project
TENDER DOCUMENTS
PPP CONTRACT
PROJECT TEAM
9

10. ADDITIONAL BENEFITS
10
For foreign PPP investors all the disputes regarding the
execution and termination of PPP contracts can be resolved
by INTERNATIONAL ARBITRATION
All the PPP contracts must contain the mechanism for covering the
FOREIGN EXCHANGE RISKS
In case of early TERMINATION of PPP contract private partner
has a right to get PAYMENTS AND COMPENSATION
The CONSUMPTION of goods and services guaranteed by the
state during the PPP project is set for a period of NOT LESS THAN
3 YEARS and can be extended (to plan long-term investments)
WIDE RANGE OF TENDER types (one-stage, two-stage, closed
and simplified)

11. VS
BEFORE
NOW
NUMBER OF PPP CONTRACTS

12. 2005-2015
FOR THE PERIOD
7 contracts
$152,8 millions
(49,05 billions KZT)
2019
543 contracts
$ 3,7 billions
(1376,3 billions KZT)
NUMBER OF PPP CONTRACTS

13. 13
BAKAD
BIG
ALMATY
RING
ROAD
PROJECT Designed basing on international
best practices under consultation
of the International Finance
Corporation and the European
Bank for Reconstruction and
Development

14. BAKAD project: key points
14
Type of PPP: Concession (BTO)
Public Partner (grantor): Ministry for
Investments and Development
Private Partner (concessionaire):
Consortium (SK, Korea Expressway
Corporation, Alsim Alarko, Makyol)
Total Investments: $560,7 millions (180 billions KZT)
Government Payments & Support:
Availability payments: $1,6 billions (512,3 billions KZT), incl.:
- Compensations of Investment Costs: $548,7 millions (176,7 billions KZT)
- Compensation of Operating Costs: $87,3 millions (28,03 billions KZT)
- Management Fee: $958,2 millions (307,6 billions KZT)
Direct agreement (state-creditor-concessionaire), arbitration, step-in rights - protection of creditors
Currency risk compensation – additional payment to compensate for devaluation of KZT vs USD
Termination payments - compensation payments due to concessionaire default, Grantor
(Government) fault or termination, prolonged Force Majeure
Period of Project: 2018-2036, incl.:
- Construction period: 2018-2021
- Operation period: 2021-2036

15. 15
"NUR ZHOLY"
Motor Vehicle
Crossing Point

16. "NUR ZHOLY“ project: key points
16
Private Partner: EurotransitTerminal LLС
Government Payments & Support:
Compensation of Investment Costs: $217,3 millions (69,7 billions KZT)
Compensation of Operating Costs: $89,04 millions (28,6 billions KZT)
Total: $306,34 millions (98,3 billions KZT)
Cost of the contract: $245,05 millions (79,6 billion KZT)
Public Partner: Government of Kazakhstan (Ministry
for Investments and Development)
Period of Project: 2017-2026
Construction period: 2017-2018
Operation period: 2018-2026
Type of PPP: Private Finance Initiative (PFI)

17. 17
Providing Rural Areas
of Kazakhstan with
Broadband Internet
Access

18. 18
Scope: 1249 villages with a population of more than 500
people in 14 oblasts (regions) of Kazakhstan
BROADBAND INTERNET ACCESS IN RURAL AREAS: key points
State support: guaranteed consumption
Income generation: - purchase of services by the Government
- additional Internet services to residents of the villages
Cost of the contract: $653,8 millions (209 billion KZT)
Public Partner: Government of Kazakhstan (Ministry of
Information and Communication)
Period of Project: 2018-2031
Implementation Period: 2018-2020
Operation Period: 2018-2031
Type of PPP : Service Contract

19. 19
OTHER PPP PROJECTS (National Level)
Design, implementation and operation of "Kundelik" information system
in the Republic of Kazakhstan
Construction and operation of hospital under S.D. Asfendiyarov Kazakh
National Medical University
Construction and operation of hospital under Karaganda State Medical
University
Construction and operation of transmission line “North Kazakhstan –
Aktyubinsk region”
Construction and operation of bypass railway in Almaty region
Construction and operation of new passenger terminal of Aktau
International Airport
Construction and operation of the highway” South-West bypass of
Shymkent “with a length of
Information and contacts on planned, announced and implemented
PPP projects in all sectors are available on the Project Database
(www.kzppp.kz/project_base)

20. Thank you!
20