The Atameken NCE RK hosted a regular meeting of the PPP Project Monitoring Council. More than 100 people in the capital and regions took part in the discussion.

Opening the meeting, the Chairman of the Council, Member of the Mazhilis of the Parliament of the Republic of Kazakhstan Amanzhan Zhamalov noted the poor development of financial models of projects, lack of protection of investors and creditors. Therefore, banks are still reluctant to lend PPP projects, the deputy said.

"As of today, the debt on public-private partnership projects has turned into one of the types of public debt. This is the internal debt of the state, which is comparable to the external debt - almost 1.5 trillion tenge. Where did we get the need to make changes to the legislation and settle this issue? The state cannot uncontrollably assume so many obligations," the deputy said.

Vice-Minister of National Economy of the Republic of Kazakhstan Zhaslan Madiev in his speech informed the audience about the work of the Ministry on changing the legislation.

"Today we work on changes of the legislation in the sphere of public-private partnership. They will help to strengthen budgetary stability, to raise the responsibility of the consulting organizations working in the sphere of rendering services, and also orientation in the attraction of investments to our country. We are discussing these amendments with all stakeholders. The market, government agencies, and international financial institutions are involved. We are trying to find consensus to pass the bill that will facilitate the conditions for doing business via PPP instruments," Deputy Minister Zhaslan Madiev said.

Yuliya Yakupbayeva, Deputy Chairperson of the Board of Atameken, expressed the key positions of the business community and proposals of the Chamber in her report.

"We support the goal of the declared draft law – from quantity to quality. But we slightly differ with the developers on the tools to achieve this goal. In particular, the Ministry proposes to abolish all support measures for PPP projects and combine them into one payment. We believe that this will further reduce the transparency. On the contrary, we propose to develop a methodology for the application of possible sources of public support specifically for each form of PPP contract, and determine the conditions for the provision of such support," Yuliya Yakupbayeva said.

Deputy Chairperson of the Board of Astana invest, the City Investment Development Center,  Zhanar Musataeva supported this position and added that the abolition of cost recovery for private partners in PPP projects will lead to higher tariffs for services.

"According to our calculations, in case of cancellation of compensation of investment costs on the example of kindergarten on PPP, we will have to pay from 80,000 to 180,000 tenge per month per child," she said.

The Chamber together with industry experts is ready to start the development of standardized investment solutions - PPP Package in areas that have the potential of PPP development. In particular, we are talking about housing and public utilities, healthcare facilities, education, digitalization, road infrastructure.

"There are only six areas. We have to develop a clear pool of documents taking into account the specifics of the industry, including the financial model, document templates, for further replication. This will allow minimizing the risks of investors, creditors, and the state," Yuliya Yakupbayeva said.

Similar experience in financing PPP transactions has already been applied by Sberbank of Russia JSC. In 2018, the Bank implemented 30 projects worth RUB 12.2 billion. In 2019, the Bank plans to double this figure.

The expert community opposed the provision of the draft law on the monopolisation of consulting services for project support by KazCentre PPP.

"The functions of the KazCenter should be reoriented towards building a knowledge base in the area of PPPs, replicating best practices and monitoring projects. At the same time, simply maintaining a register of projects is no longer enough. The market and auditors need a digital platform with a clear project passport," Yuliya Yakupbayeva said.

The Council also discussed the complaints of entrepreneurs from the regions.

"Delaying the terms of approval and consideration of projects by the akimats continues to lead in the list of accepted problems. There is a default on payments from the part of the state partner, which is a gross violation of contractual obligations," the Director of the PPP Department of the National Park of Entrepreneurship Nazgul Uzalina said.

The Chairman of the Council instructed the Ministry of National Economy together with the Chamber to work out the proposals of business and expert community in the framework of the Working Group on the bill and proposed to start with the creation of subgroups in several sectors on the issue of PPP Package.

"Let's take 3 pilot areas: housing and public utilities, healthcare, education. The groups will develop their proposals and financial models taking into account their industry specifics and will report to us at the next meeting of the Council. Today, we need to develop proposals and financial models based on our industry specifics, and we will be briefed at the next meeting of the Council. Today it is necessary to recognize that there is a need for a permanent platform that would systematically work out proposals for the development of PPPs,”  Amanzhan Zhamalov summed up.