Concession

Public-Private Partnership

At present, the Republic of Kazakhstan implements a program to promote the public private partnership in the Republic of Kazakhstan for 2011-2015 (hereinafter- the Program), which is developed in order to implement the Message of the President of the Republic of Kazakhstan to the People of Kazakhstan as of January 29, 2010 -”New decade-new economic upturn-new possibilities of Kazakhstan", Decree of the President of Republic Kazakhstan as of March 19, 2010 # 958 "On the State program of forced industrial-innovative development of the Republic of Kazakhstan for 2010-2014 and repealing certain decrees of the President of the Republic of Kazakhstan”.

The need to develop the Programme depends on the development of State policy in the area of public-private partnerships (hereinafter-PPP).

PPP is spread worldwide and it has proven as one of the possible and effective mechanisms for  involvement of private business subjects to implement the socially important projects.

The application of mechanisms of public-private partnership provides a number of advantages, both for the State and for the business development. New investment opportunities and, accordingly, new sources of revenues, possibility of participating in large projects, are opened for the private businesses. PPP involves the use of resource and intellectual potential of the private sector in the areas of traditional state responsibility.

The international practice lacks  a generally accepted definition of PPP- normally,  the essence of PPP is a mutually advantageous cooperation between the State and the private sector in the industries that traditionally belonged to the sphere of responsibility of the State, given the balanced distribution of risks, benefits and costs of rights and responsibilities, as defined in the relevant contracts.

In the international practice, there are two forms of PPP: institutional and contractual ones.

Kazakhstan has the legislation and experience in the application of one of the contractual forms of PPPs, based on the concession contract when implementing projects in the transport and energy sector.

Currently, Kazakhstan is being at the implementation stage of 5 concession projects in the transport and energy sectors, where one of the most successful ones is: “Construction and operation of the North Kazakhstan – Aktobe Region inter-regional transmission line, implemented by Batys Tranzit Joint Stock Company.

Successful experience of one of the first concession projects has shown the following positive effects of PPP arrangements:

- attracting non-state financing for the investments into the facilities of State importance;

- risk sharing project between the state and private investors;

- provision of economically efficient project management by transferring the management responsibilities to a private investor;

- attraction of modern, highly efficient technologies into infrastructure development.