The president of the Republic of Kazakhstan signed Law No. 399-VI, On Amendments into Certain Labour-Related Legislative Acts of the Republic of Kazakhstan (the Amendment Law), on January 2, 2021. The Amendment Law entered into force on January 16 and amended a number of legislative acts of the Republic of Kazakhstan, including the Civil Code, the Budget Code, and the Entrepreneurial Code as well as the Law of the Republic of Kazakhstan on Public-Private Partnership (PPP), No. 379-V, dated October 31, 2015 (the PPP Law). This LawFlash summarizes the most important new elements introduced into the PPP Law through the Amendment Law.
The list of qualification criteria that must be satisfied by bidders in order to qualify as a private partner was updated to include the following new or updated criteria:
The PPP Law, as amended, includes the following restrictions on amendments or termination of the PPP agreement:
Any terms of the PPP agreement that have been specified by the PPP Law (i.e., the scope and types of work and services, requirements as to the quality of goods, works, and services) are considered material and can only be changed by agreement of the parties, if
The PPP Law, as amended, sets out a nonexhaustive list of grounds for early termination of the PPP agreement, which includes liquidation of the private partner, along with any other grounds provided for under Kazakhstan law.
The PPP Law, as amended, extends the circumstances in which the parties to the PPP agreement may agree on Kazakhstan or international arbitration for dispute resolution purposes. In addition to the case where the private partner is a nonresident, the PPP Law now allows for arbitration to be selected if at least one of the private partner's shareholders holding 25% or more of voting shares is nonresident in Kazakhstan. However, this provision applies only to PPP projects costing more than four million times MCI (currently, approx. US $28 million).
The PPP Law, as amended, provides that under the PPP agreement, the private partner will be able to receive compensation for costs incurred in connection with developing engineering and transport infrastructure as part of the development of a production (industrial) facility. We understand that this provision was introduced in order to address investors' concerns regarding lack of compensation for the private partner's cost of building the infrastructure required for the underlying industrial PPP project.
The PPP Law, as amended, provides that with respect to the implementation of PPP projects of particular importance, the state partner may, on the basis of the decision of the tender commission, enter into the PPP agreement with a project special purpose company that is incorporated by the tender winner, subject to the tender winner providing bank guarantees to secure proper performance by the project company of its obligations under the PPP agreement. In such cases, and in contrast to the institutional PPP structure, the project company will act as the private partner and there is no participation of the state partner in the project company.
Other significant amendments made to the PPP Law by the Amendment Law include the following:
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:
 KZT 17 502 (approx. US $42).
 Previously, the PPP Law did not allow for the existence of any tax arrears.
 A budget commission is responsible for allocation of funds required for implementation of PPP projects. Therefore, any amendments to the PPP agreement entailing a change of state’s commitments under the PPP project must be approved by the relevant budget commission.
 The implementation period covers the term of development, construction, modernization or reconstruction (as applicable), as well as the period of operation, trust management, maintenance or lease of the PPP facility (as applicable).