Transcript PPP and Project Finance in Kazakhstan

Обдуманные ходы
Эффективные решения
‘Public Private Partnerships
Kazakhstan case study: some lessons
for Kyrgyz Republic’
Shaimerden Chikanayev
May 2013
17.07.2015
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Обдуманные ходы
Эффективные решения
RECENT LEGAL DEVELOPMENTS
The Law of Kazakhstan ‘On
Concessions’;
The Law of Kazakhstan ‘On
Project Finance and
Securitisation’;
Draft PPP Law
The Law of Kazakhstan ‘On
State Support of Industrial
Innovative Activity’.
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Обдуманные ходы
Эффективные решения
On-going concession projects in Kazakhstan
Passenger
terminal of the
airport in Aktau
Shar – UstKamenogorsk
railway
(tenor of the project 30
years)
(tenor of the project 23
years)
North Kazakhstan
– Aktobe region
power line
(tenor of the project 17
years)
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Обдуманные ходы
Эффективные решения
LESSON 1: Government must be ready to share the risks
Current status in Kazakhstan:
• Both Kazakh Central Government and local
governments of regions (Akimats) are often not
ready to assume any risks.
• Current Kazakh law is rather unclear on government
authorities in cases where the concession form of
PPPs is not used (e.g. Akims (i.e. mayors) are
hesitant to sign any support/implementation
agreements).
• Current legislation of Kazakhstan effectively makes it
impossible to get operation costs compensation
under a PPP project (i.e. no ‘availability payment’).
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Обдуманные ходы
Эффективные решения
LESSON 2: Relevant legislation shall be adequately
flexible and whole process shall be straightforward
Current status in Kazakhstan:
• Excessive regulation of concession relationships
diminishes the parties’ flexibility in determining
project terms and makes current Concession
Law unacceptable for investors.
• Delays in decision making, absence of one
responsible and duly authorised governmental
agency and non-transparent process scares of
foreign investors.
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Обдуманные ходы
Эффективные решения
LESSON 3: PPP Centre shall be duly authorised
Current status in Kazakhstan:
• PPP Centre was established in 2008 but so far it has NOT
facilitated even one real PPP project.
• As of today PPP Centre plays the role of mere external
advisor of the Government of Kazakhstan.
• Main activity of the PPP Centre is limited to economic
evaluation and monitoring of concession projects.
• Karaganda and Oskemen local PPP Centers have been
established but also have no proper mandate and authority
to make good push for PPP development (kindergarten
concession signed in Karaganda - is it really success story?).
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Обдуманные ходы
Эффективные решения
LESSON 4: Tariff regulation shall not affect bankability of
the PPP project
The existing procedure for setting tariffs in Kazakhstan is
based on the broad discretion of the tariff regulator in
determining the components of a particular tariff. In
addition, tariffs are introduced for a limited period of time
that makes PPP projects in Kazakhstan non-bankable.
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Обдуманные ходы
Эффективные решения
LESSON 5: ‘Good to have’ to make PPP project bankable
(currently not available in Kazakhstan)
Direct
Agreements
and Step-In
Rights
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International
arbitration
(if a natural monopoly or
interests of state
involved)
Stability of
Legislation
Liquid Local
Capital
Market
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Обдуманные ходы
Эффективные решения
DRAFT PPP LAW: what to expect?
Bankability of PPP projects would improve:
• Availability Payment would be introduced.
• Stability of Tariff Regulation (concessionaries would
be able to have special tariffs that can be determined
on the basis of special calculation formulas as to be
stipulated in the concession agreements).
• Simplified
Own
Capital
Requirement
(the
concessionaire would be obliged to have own capital
of not less than 10 (instead of 20 as of today) per cent
of the value of the concession facilities).
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Обдуманные ходы
Эффективные решения
DRAFT PPP LAW: what else to expect?
Bankability of PPP projects would improve:
• New Forms of PPP (the possibility of having
concession facilities in private property enables to
structure other forms of PPP (eg, BOT, BOO, DBFO etc.)
under the concession agreement).
• Improved Tender Process (tenders of potential
concession projects would be, generally, required to be
conducted in two stages and not one as under current
legislation framework).
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Обдуманные ходы
Эффективные решения
Debut IPP in Kazakhstan: $4 bn. Balkhash Power Plant
Kazakhstan
Government
Korean
Government
Intergovernmental Agreement
Sponsors
(Samruk-Energy/Samsung)
Equity
Capacity
Buyer
Capacity purchase
agreement
(take or pay basis)
Project
Company
Debt
Lenders
(KEGOC)
Energy Sales Agreement
Energy
offtaker
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O&M
Agreement
Coal Supply
Agreement
EPC
Contract
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Обдуманные ходы
Эффективные решения
Unprecedented HGA: $2 bn. Fertilizer Production Plant
Kazakhstan
Government
Subsoil use
contract
(Ministry of
Industry)
Host Government Agreement (HGA)
Project
Company
OJSC
Eurochem
Investment
Agreement
(Investment Committee of the
Ministry of Industry)
Gas Supply
Agreement
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Обдуманные ходы
Эффективные решения
ANY QUESTIONS?
Shaimerden Chikanayev
Partner
Kazakhstan
Almaty, Ospanova 104
Tel: +7 (701) 7878020
[email protected]
17.07.2015
GRATA Bishkek Office
Office 2, 33/1 Razzakova Street, Bishkek
Tel: +996 312 31 40 50
[email protected]
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