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OCTOBER 2013
Legal Focus
95 Public Private Partnerships and Projects
This month we take a look at Public Private Partnerships and Projects by speaking to Aigoul Kenjebayeva, managing partner of Dentons’ Almaty and Astana offices. Aigoul has extensive experience in dealing with the legal aspects and tax implications of investing in Kazakhstan. Her particular areas of specialisation have been acquired from over 35 years as a practising lawyer and include PPP and infrastructure projects, corporate/M&A, energy/natural resources, competition law and dispute resolution.
Please introduce yourself, your role and your firm.
I am a member of the Stockholm Arbitration Report Editorial Board, the Kazakhstan Petroleum Lawyers Association Board, the Foreign Investors Council Legal Working Group (under the auspices of the President of Kazakhstan), as well as a member of the Board of the Kazakhstan Bar Association.
Dentons is a global firm founded by the March 2013 combination of international law firm Salans, Canadian law firm Fraser Milner Casgrain (FMC) and international law firm SNR Denton. The firm now constitutes one of the largest full service law firms situated in 75 locations spanning 50-plus countries across Africa, Asia Pacific, Canada, Europe, the CIS, the Middle East, the UK and the US, operating across borders and cultures.
In Kazakhstan, following the combination, the Almaty teams of legacy SNR Denton and Salans have joined together to firm the leading and largest international law firm in the country, Dentons Kazakhstan.
The combined Kazakh practice of Dentons now has over 45 fee earners (including six partners) with further growth expected yet this year. The team has unparalleled experience in oil and gas, mining, transport and infrastructure, banking and finance, M&A, dispute resolution and intellectual property.
What are the main types of cases you work on?
PPP is a developing area of law. Being a vast country equal to the size of Western Europe, Kazakhstan needs a lot of infrastructure, and PPP is one of the ways for developing such infrastructure where the state and private business could join forces and reach the goal. Unfortunately, it appears that straightforward importation of experience of other countries in this area is not feasible. The society and state officials, in particular, need time and effort to fully understand and appreciate the concept of PPP, especially the concept that risks should be distributed between
the state and private parties and that the projects must be bankable. Almost all PPP projects that were undertaken in Kazakhstan so far failed. The Government is learning from the mistakes and is working on gradually changing the legislation to make PPP projects attractive. Several years ago our firm worked as a member of a consortium together with KPMG, Arup and Pinsent & Masons on a PPP projects finance by EBRD for construction of an automobile road Shymkent-Tashkent. Our task was to analyze the legislation and propose the necessary changes to it, prepare a feasibility study and financial model, conduct a tender and help the Government implement this project. The results of our work on the first stage were not satisfactory to the Government mostly because the proposed legislative changes were received as too burdensome by the Government and requiring too much time for implementation. The Government wanted to start the project ASAP and, therefore, terminated this interesting project hoping to make it a success without the suggested changes. As we see now, this was not a success, and now the Government started implementing some of the suggested changes.
Have there been any legislative developments that have affected this practice area recently?
During the last couple of years the Kazakhstan Government has been making attempts at encouraging and intensifying private investments in infrastructure and social sectors of Kazakhstan economy. These attempts, however, have been relatively unsuccessful so far. Amongst the reasons for this was an insufficiently developed legal framework for PPP-type arrangements.
Now, and in order to achieve a desired level of private investments, the Kazakhstan Government is considering the adoption of comprehensive changes into Kazakhstan legislation based on which genuine PPP-type projects would be possible to arrange. In particular, the Draft Law on New Forms of PPP has recently proposed for discussion in Kazakhstan.
If the Draft Law on New Form of PPP is adopted, then it may considerably improve the existing legal framework for launching PPP-type projects in Kazakhstan. Some of the reasons for this are as follows:
1. The Draft Law aims to change significantly the concept of ‘concession agreement’. If the Draft Law is adopted, it would be generally possible to incorporate under a given concession agreement the elements of any civil law agreements, including, without limitations, trust management and lease. As a result, all legal terms and rules, which are specifically designed for concession projects (both the current and the proposed), would be equally applicable to all (future) concession agreements with the elements of other civil law agreements.
2. The Draft Law aims to extend the current list of sources, from which the concessionaire may recover ts cost and/or generate income.
3. The Draft Law states that the concessionaire shall be entitled to pledge or assign its rights, or transfer
its debt, under the concession
agreement provided that there is a written consent of the grantor thereto. LM
contact: aigoul Kenjebayeva Managing Partner, almaty
tel: +7 727 258 2380 Mob: +7 701 744 62 29 Fax: +7 727 258 2381
dentons Kazakhstan LLP 135 abylai Khan avenue almaty, Kazakhstan 050000
Email: aigoul.kenjebayeva@dentons.com Website: www.dentons.com