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Embassy of Republic of Korea in Kazakhstan
Public-Private Partnership Projects in Kazakhstan
Introduction
The JSC “Kazakhstan Public-Private Partnership Center”, (subsidiary of the Ministry of National Economy) plans to implement 170 projects in 2017, of which 8 are republic and 162 are regional. However, it must be noted that the PPP center only advises and supports PPP initiatives, because project proposals are suggested by local authorities, such as akimats1, or state ministries. At the same time, however, the PPP center assures that any interested party can propose a PPP-schemed project, taking advantage of the center’s expertise in the field. Among the abovementioned major projects, there are projects with social orientation (a correctional facility, 4 hospitals in different cities,) and certain infrastructure initiatives (Almaty light-rail transport, Shymkent bypass road, Almaty ring road (BAKAD), bridge across Bukhtarma reservoir, bypass railway line of Almaty station).
PPP project Process
Below is illustrated a flowchart that has presents a typical order of steps for a PPP project.
1 Governor’s office
2 Government guarantees
According to article 27, part 2 of Kazakhstan’s PPP Law (approved on September 25, 2015), the government provides following guarantees to a private partner:
1) state obligations for infrastructure bonds;
2) state guarantees for loans, attracted for financing public-private partnership projects;
3) transfer of exclusive rights to objects of intellectual property owned by the state;
4) provision of in-kind grants in accordance with the legislation of the Republic of Kazakhstan;
5) co-financing public-private partnership projects;
6) state guarantees a certain amount of consumption of goods, works and services produced in the course of public-project private partnership
In addition to that, the abovementioned law states that government of Kazakhstan reimburses investment expenses through the means below (article 9, part 2):
1) sale of goods, works and services in the course of operation of a PPP project;
2) subsidies from the state in cases established by the legislation of the Republic of Kazakhstan;
3) compensation of investment costs for a PPP project;
4) compensation of operating costs of a PPP project;
5) reward payment for the control of an object of public-private partnership which is a state property, as well as rent payment for the use of the PPP object;
6) availability payment.
Conclusion
Even though Kazakhstani government has not had much experience with public- private partnership, such collaboration shows reasonably good potential, as exemplified by more developed legislature in PPP. Government guarantees and relatively clear project process make PPP enterprises compelling to international investors. One must also note that most of PPP projects have social, technological and infrastructural importance to the Kazakh state, emphasizing the government’s interest in successful project implementation.
3 Appendix: Projects list
Infrastructure
1. Construction and operation of Almaty ring road (BAKAD)
The aim of the project is improving the ecological state of urban and suburban areas by reducing the load on the transport system of Almaty, to eliminate the formation of traffic “congestion” on the main roads, which are the “entrance” to the city.
Project cost is $672 million. Length of the road is 66 km. “1a” category road.
Implementation period of project: Construction period – 4.5 years, Operation period – 15.5 years.
Government support measures – availability payment.
Concessionaire – the preferred bidder has been selected.
2. Construction and operation of bridge across Bukhtarma reservoir in Kurchum district of East Kazakhstan region
Project description – providing a safe crossing facility, decrease number of death incidents, improve traffic conditions for any season and increase volume of cargo transportation, reduce the cost of consumer goods transported
Project cost – 112 million US dollars
Implementation period of project– Construction period – 2,5 years, The operation period– 26 years
Government support measures – compensation of investment costs, profit from the toll road
Parameters – Length of bridge – 1,3 km.
Status – on the 15 October 2014 Kazakhstan PPP Center issued conclusion to rework tender documentation. Presently developer eliminates issued notes.
3. Construction of a bypass railway line pass railway junction of Almaty station Project description - "China - Central Asia" route optimization, reducing the time of delivery, the decline in cargo handling operations at the station Almaty
Project cost: 297 million US dollars.
Implementation period of project – Construction period – 3 years, the operation period – 26 years
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Parameters: Construction length - 53,1 km, Operation length – 61,1 km.
Government support measures – compensation of investment costs
Status – on the 24th August 2015 Kazakhstan PPP Center sent without considering the concession project proposal. Under development of concession proposal
4. Construction and operation of a bypass road in Shymkent Part of route “Silk way - Kazakhstan”
Project description – implementation of the need to ensure sustainable social- economic and transport development in the future. Furthermore, to increase transit potential and competitiveness of the international transit route
Length – 48 km.
Project cost – 65 million US dollars
Government support measures – compensation of investment costs Construction period– 5 years, 2016-2022
The operation period – 19 years, 2023-2042 Status – under development of concession proposal
5. Construction and operation of light rail line in Almaty
The first major PPP project in the field of urban transport in Kazakhstan Contract type – DBFOT PPP
Length – 22.9 km
Project cost– 521 million US dollars
Construction period – 2.5 years, 2016-2018 The operation period– 27.5 years
Status– under development of concession proposal
Government support measures: compensation of investment costs Facts: 1.45 million people everyday use public transport in Almaty
Social
6. Correctional facility for 1500 people in Shymkent
The 34th step in the program "100 concrete steps" proposed by the President of the Republic of Kazakhstan
Project description– Improving living conditions of prisoners to meet international
5 standards
Project cost– est. 98 million US. Dollars
Government support measures – compensation of investment costs Construction period – 3 years, 2016-2019
The operation period– 27 years, 2019-2046 Status– under development of concession proposal
7. Construction and operation of multidisciplinary hospital in Aktau, Mangistau region
Part of Strategic development plan of Republic of Kazakhstan by 2020 Project cost– 72 million US dollars
Capacity– 300 beds
Government support measures: compensation of investment costs of concessionaire, according to the budget law of Republic of Kazakhstan
Contract type - BTO
Construction period – 3 years, 2016-2019 The operation period – 27 years, 2019-2046 Status – under development of concession proposal
8. Construction and operation of multidisciplinary hospital in Oskemen, East Kazakhstan
Project description: To improve the quality and availability of specialized medical assistance to the population of the city. Medical assistance will include neurosurgery, urology, trauma, surgical, gynecological and therapy, stroke Center; To provide high quality medical services.
Capacity - 300 beds
Project cost– 60 million US dollars Construction period - 2 years The operation period - 28 years
Government support measures - compensation of investment costs of concessionaire, according to the budget law of Republic of Kazakhstan Status – development of tender documentation.
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9. Construction and operation of children’s city hospital in Semey, East Kazakhstan
Project description: Improving the health of the child population of Semey city for sustainable social and demographic development of the Republic of
Kazakhstan; Increase coverage of child population of Semey city by qualified and specialized medical care.
Capacity - 200 beds
Project cost – 39,2 million US dollars Construction period - 2 years
The operation period - 28 years
Government support measures - compensation of investment costs of concessionaire, according to the budget law of Republic of Kazakhstan Status - development of tender documentation
10. Construction and operation of multidisciplinary hospital in the state enterprise
“Kazakh Medical University named after S. D. Asfendiyarov” in Almaty Location - Almaty, Kazakhstan
Contract type: DFBTM (Design – Finance – Construction – Transfer – Maintenance)
Project cost – 61 170 million US dollars
Implementation period of project – Construction period – 3 years, The operation period – 17 years
Government support measures – availability payment Capacity – 300 beds
Status– under development of concession proposal
