Lawyers of the banking and finance practice of GRATA International are pleased to present you with a brief overview of the main changes and/or additions to the legislation of Kazakhstan in the field of electric power industry and PPP in the first quarter of 2024 which may affect your business.
Please contact us if you have any questions, we will be happy to answer them.
IN THIS ISSUE:
● Changes in the electric power industry
1) Decree on economic liberalisation
2) Action plan for development of the electric power industry until 2035
3) Auction bidding schedule for 2024
4) Changes in the regulation of organisation and conduct of auction bidding for construction of newly commissioned generating units with flexible generation mode
5) Changes in the regulation of organisation and conduct of auction bidding
6) Changes in the regulation of tariff formation
● Changes in the field of PPP
7) Changes in the regulation of planning and implementation of PPP projects
THE DECREE ON ECONOMIC LIBERALISATION WAS APPROVED
On 8 May 2024, Decree of the President of the Republic of Kazakhstan dated 8 May 2024 No. 542 “On Liberalisation of the Economy” was approved. The decree was developed as part of the execution of the order of the head of the state given at the extended Government meeting on 7 February 2024 and is aimed at ensuring freedom of entrepreneurship by developing competition, reducing state participation in the economy and reducing business costs.
The decree provides, in particular, for the following measures:
1. reducing state participation in the economy:
- introducing moratorium on the creation of quasi-state sector entities – until 31 December 2026;
- audit of all state and quasi-state assets at the republican and local levels with subsequent updating of the unified public register of state property – until 31 December 2024;
- development of criteria for state objects subject to mandatory privatisation; formation of a list of state assets subject to privatisation with the provision of the possibility of privatisation of the objects at the initiative of private business entities, created by the National Privatisation Office – until 31 December 2024;
- completion of the privatisation process – until 31 December 2028;
- revision of the list of permitted activities for quasi-state sector entities with indication of the geographical boundaries and period of presence of the entity in the relevant market;
- revision of existing legislative grounds for state participation in business activities;
2. increasing the autonomy, quality and independence of corporate governance of National Welfare Fund Samruk-Kazyna JSC and its subsidiaries and affiliates until 1 September 2024;
3. competition development:
- qualitative reduction in the share of the quasi-state sector in the market for the supply of oil to oil refineries – until 31 December 2024;
- revision of the grounds for public procurement of goods, works and services from a single source through direct conclusion of a contract – until 31 December 2024;
- practical application of incentive tariff setting methodology in order to attract private investment and increase the investment attractiveness of the field of natural monopolies – until 31 December 2025;
- exclusion of restrictions on the freedom to form prices and tariffs, with the exception of monopoly markets – until 31 December 2027;
- transition from product-specific subsidies to preferential lending – until 31 December 2028;
- exclusion of cross-subsidisation of tariffs within and between economic sectors (electricity supply, water supply and sanitation services) – until 31 December 2029;
4. competition development in financial markets:
- expanding the opportunity to open new banks, subsidiaries of foreign banks and branches of foreign banks – until 31 December 2024;
5. implementation of the fundamental principles of freedom of entrepreneurship:
- possibility of using international projects developed in accordance with advanced global standards for the construction of objects without the mandatory development of design and estimate documentation in accordance with Kazakhstani requirements – until 1 July 2024;
- revision of the qualification requirements for obtaining permits as well as optimisation of the procedure and timing for obtaining them – until the end of 2025.
Considering that this Decree may be of interest to our clients, we describe it shortly after its adoption in this issue for the first quarter of 2024. Other changes to the legislation adopted in the second quarter of 2024 will be described in the next issue.
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Lola Abdukhalykova, Counsel