Infrastructure Projects. Public-Private Partnership
Infrastructure Projects. Public-Private Partnership
One of the top priorities of the Kazakhstan-2050 Strategy is active engagement of the business community in cooperation with the government aimed at finding the best solutions to social and economic problems on the principles of a public-private partnership and implementing the “strong business, strong government” idea.
Public-Private Partnership is a cooperative arrangement between the public and private sectors, typically of a mid- or long-term nature, used to finance, build and operate infrastructure and socially important projects on the principles of balanced distribution of risks, benefits, costs, rights and obligations.
In Kazakhstan, the PPP legal framework development was triggered by the adoption, on 7 July 2006, of the Concession Law which fostered a clear, fair, predictable and stable legal environment for investment of financial and other resources in the implementation of concession-based projects.
On 31 October 2015, Kazakhstan adopted the Public-Private Partnership Law intended to enhance the role of private-public partnership in initiating and developing PPP projects.
PPP mechanisms offer benefits to both the public and private sectors – the public sector gets a chance to address a number of public problems by reducing the burden on the government budget and taking advantage of the private sector expertise and technology, while the private sector is given a free hand to invest in new infrastructure projects and to find additional sources of revenue.
In Kazakhstan, the PPP framework is developed and promoted by the Kazakhstan Public-Private Partnership Centre established in pursuance of Kazakhstan Government Resolution Regarding the Founding of an Organisation Specialising in Concession Projects No. 693 of 17 July 2008. Besides, the Kazakhstan Government has set up a number of PPP centres at the regional level which are called to deal directly with projects and to assist local executive authorities with their implementation.
Local executive authorities have started to show an interest in how best to use and implement PPP mechanisms. If in 2012 PPP was actually implemented only in 6 regions, nowadays, all regions across Kazakhstan try to attract investments for such socially important projects as the construction, upgrade and reconstruction of hospitals, kindergartens, schools, health centres, roads and various housing/utility facilities.
Notwithstanding a number of deterrents to the development of PPP framework at the local level, lately, this model of interaction between public and private sectors is very much sought after. Sayat Zholshy & Partners keeps abreast of the times and has accumulated enormous experience in supporting the projects that use PPP mechanisms. For example, we advised a major Kazakhstan investment company with regard to the development of fee-based municipal parking facilities in Almaty, including the construction and operation of multilevel car-parks.
We also advised and provided legal support to a Client in connection with the development of a municipal solid waste recycling system in Almaty allowing for separate collection, transportation, processing (sorting), utilisation and disposal of solid municipal waste, including the construction of a single waste sorting plant in Almaty.Besides, our Firm was engaged to work on many other similar projects in various sectors of economy.
- Conducting due diligence of a PPP project beginning from the PPP project development and implementation through the process of the PPP contract execution/performance/ termination
- Drafting legal documents, including, but not limited to, concession agreements, project contracts, agreements for trust management of state-owned assets, lease agreements in respect of state-owned assets, lease financing agreements, service contracts and other related documents
- Advising potential private partners on project risks and appropriate risk allocation methods, forms of participation in a project appropriate for a public partner and for a potential private partner, and compliance of tender documentation with Kazakhstan law
- Obtaining from government authorities any licenses, permits and approvals which might be required for implementation of a PPP project
- Representing clients effectively in negotiations with public officers
- Rendering legal advice in various areas of law, including, but not limited to, antitrust, tax, corporate, labour, currency and other laws applicable to infrastructure and PPP projects
- Advising on alternative forms of cooperation between the public and private sectors, apart from public-private partnership (PPP)
- Advising a Client at the stage of a PPP project planning with regard to the choice of its implementation method, types of PPP contracts, financing of the project from public funds, government support, currency and other risks, and many other relevant issues
In the light of active promotion of a PPP approach in Kazakhstan, the number of our Clients interested in this form of cooperation between the public and private sectors is steadily growing. The most popular services include legal advice, project support, legal due diligence, etc.
Our vast experience in this area includes numerous successfully completed projects, in particular:
- Legal advice and support in connection with the development of fee-based municipal parking facilities in Almaty, including the construction and operation of multilevel car-parks. This project implied the legal review of a draft PPP contract, legal advice on project risks and appropriate risk allocation methods, and support through negotiations with representatives of the public partner
- Legal advice and support in connection with the development of a municipal solid waste recycling system in Almaty allowing for separate collection, transportation, processing (sorting), utilisation and disposal of solid municipal waste, including the construction of a single waste sorting plant in Almaty. Under the scope of this Project we drafted a PPP contract, advised on antitrust and environment law issues, and drafted amendments to regulations of local executive and representative authorities
- Issuance of a legal opinion for a major Kazakhstan company on the assessment of currency and other risks associated with the project involvement, the choice of appropriate risk allocation methods, government support and other related issues.