Law of the Kyrgyz Republic On Public-Private Partnership dated August 11, 2021 No. 98 is the key regulatory act regulating PPP.
Public-private partnership (hereinafter referred to as PPP) is applied to infrastructure facilities and/or infrastructure services[1]. PPP does not apply to infrastructure facilities and/or infrastructure services related to the subsoil use, public procurement and privatization.
PPP is a cooperation between public and private partners in order to develop and implement projects for the creation and/or modernization, operation and maintenance of infrastructure facilities and/or infrastructure services.
The main tasks of PPP:
1) improving the efficiency and quality of the creation of infrastructure facilities and the provision of infrastructure services;
2) increasing the efficiency of public expenditures on the design, construction and/or modernization, operation, maintenance of infrastructure facilities and the provision of infrastructure services;
3) attraction of investments in the country’s economy;
4) involvement of additional management capacity of the private sector;
5) achieving an optimal ratio of price during the life cycle of assets and quality or compliance with their purpose in the implementation of infrastructure projects;
(6) harnessing private sector innovation and efficiency;
7) stimulating the growth and development of new technologies.
PPP entities:
An authorized state body in the field of PPP together with state bodies, local self-government bodies, state, municipal enterprises and institutions, joint-stock companies, 50 percent or more of the voting shares of which belong to the state, in the relevant field of activity, or state bodies, local self-government bodies, state, municipal enterprises and institutions, joint-stock companies have the right to act as a state partner. 50 percent or more of the voting shares of which are owned by the state, in the relevant field of activity for small projects.
Legal entities and individual entrepreneurs have the right to act as a private partner.
PPP benefits:
– PPP projects are concluded for a period of up to 49 years;
– are exempt from VAT and inspections by law enforcement and inspection authorities for up to 3 years after signing the PPP agreement, with the exception of tax audits;
– preferential lease of PPP facilities;
– guarantees from the state and distribution of risks.
Laws and regulations adopted after the conclusion of the PPP agreement and affecting PPP issues do not apply to existing project agreements, unless the initiative to apply them comes from the private partner.
Sources of funding:
The sources of investment in the implementation of the PPP project are:
1) funds of the republican and (or) local budget;
2) funds of the state partner;
3) state and/or municipal property managed by the state partner;
4) funds of the private partner;
5) attracted and other funds not prohibited by the legislation of the Kyrgyz Republic.
Stages of PPP project implementation:
1) initiation of a PPP project;
2) preparation of a PPP project;
3) holding a competition for the selection of a private partner;
4) conclusion of a PPP agreement and its implementation.
Termination of the PPP Agreement
A PPP agreement is terminated in the following cases:
1) ahead of schedule in cases provided for by the agreement;
2) upon expiration;
3) by agreement of the parties;
4) by a court decision;
5) on other grounds arising from the PPP agreement.
Consequences of termination of the PPP agreement
In the event of termination of the PPP agreement, the private partner and/or project company is obliged to perform the following actions, unless otherwise provided in the PPP agreement:
1) transfer to the state partner the infrastructure facility and assets received from the public partner, which must be free from any encumbrances from third parties in accordance with the terms of the PPP agreement;
2) train the personnel of the state partner on the operation and logistics of the infrastructure facility and/or on the provision of infrastructure services,
3) ensure the continuity of the provision of infrastructure services and resources, including the supply of spare parts, if required, for at least 3 months after the transfer of the infrastructure facility to the state partner.
Early termination of the PPP agreement through the fault of the private partner entails obligations for him to compensate the other party for losses incurred in connection with the early termination of the PPP agreement.
Implementation of PPP projects on the principle of “project sandbox”
- In order to test new, innovative PPP projects in a pilot mode, the authorized state body may make a proposal to an interested person on the implementation of a PPP project in the “project sandbox” mode.
- In case of consent of the interested person to implement the PPP project in the “project sandbox” mode, the authorized state body in the field of PPP shall submit a corresponding draft regulatory legal act to the Cabinet of Ministers of the Kyrgyz Republic on the implementation of the PPP project in the “project sandbox” mode.
- If the Cabinet of Ministers of the Kyrgyz Republic makes an appropriate decision on the implementation of a PPP project in the “project sandbox” mode, the authorized state body in the field of PPP shall conclude an appropriate agreement with the interested person and determine the state partner.
- Monitoring of the implementation of the PPP project in the “project sandbox” mode shall be carried out by the state partner and, in case of its socio-economic efficiency, shall make proposals to the Cabinet of Ministers of the Kyrgyz Republic on taking measures to apply this technology in the Kyrgyz Republic within the framework of this PPP project.
Dispute Resolution Procedure
The law provides for the possibility of concluding an arbitration clause to resolve a dispute in international arbitrations.
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* infrastructure services – works and/or services for social, economic or industrial purposes, including works and/or services provided using an infrastructure facility and/or for the maintenance of an infrastructure facility;
* Infrastructure facility – property or property complex of social, economic or industrial purpose, which is in state, municipal or private ownership;