Kazakhstan Introduces Public Private Partnership Law

On 31 October 2015 a new RK Law on Public Private Partnership ('PPP Law') was signed. We summarize below the key aspects and developments of the PPP Law.

1. PPP Law vs. Concession Law

   Historically, the Concession Law was applicable exclusively to BTO (build-transfer-operate) projects. Amendments were introduced in July 2013 which attempted to broaden the scope of application of the Concessions Law. The PPP Law further enhances the attempt to introduce and institutionalize PPPs with a view to creating a more extensive legal framework. Notably, the PPP Law reinvigorates the classification of PPPs into contractual and institutional which has been initially declared in the aforementioned 2013 amendments in the Concessions Law.

   A question arises as regards the interaction of the PPP Law and the Concessions Law and their respective scopes of application. While as drafted the PPP Law purports to take precedence as far as concession projects are concerned, it remains to be seen how the laws will apply particularly with respect to ongoing projects.

2. Government Owned Companies as Public Partners

   The PPP Law introduces the concept of government owned companies acting as public partners in PPP projects. Previously (i.e. under the Concessions Law), only governmental institutions could act as grantors. At the same time, the PPP Law contains very few specific rules defining the process in which government owned companies shall act in PPPs. Presumably each respective company will be guided by the general statutory, corporate and other policies and rules. We therefore expect that a further harmonization effort will be undertaken to ensure that the rules applicable to government owned companies are made consistent with the provisions of the PPP Law.

   For example, the PPP Law states that the Law on State Procurement shall not apply to the matters covered by the PPP Law, including off-take by the state of goods, services, and works. However, this provision does seem to be mirrored in the Law of the Republic of Kazakhstan On State Procurement. Also, the PPP Law does not provide for exemption from the application of other procurement regimes. Specifically, we refer to the procurement rules applicable to various national holdings and companies which can act as public partner or operator under the PPP Law. It appears that the National Welfare Fund Law, which governs the operations of Samruk-Kazyna, makes no exception with respect to PPP projects in terms of...