Azernews.Az

By Aynur Jafarova

The headquarters of the European Bank for Reconstruction and Development (EBRD) in London hosted the first public presentation of the Almaty Ring Road Concession project on December 9.

The presentation was led by representatives of the Kazakh government, as well as by the International Finance Corporation (IFC), which acts as an advisor to the project, and the EBRD, which also provides advisory services and expects to become an investor in the project.

The event, opened by Kazakh National Economy Minister Yerbolat Dosayev was attended by over 100 representatives of international companies.

“If successful, the Almaty Ring Road PPP will serve as a blueprint for new public-private partnerships in Kazakhstan in the transport infrastructure sector and possibly in other sectors that need to attract private funding. This will be the first PPP structure of its type not only in Kazakhstan but in whole of Central Asia,” EBRD Managing Director for Infrastructure Thomas Maier said.

Janet Heckman, the EBRD Director for Kazakhstan, noted the EBRD will invest a record $750 million this year in Kazakhstan.

“But we offer more than financing. Innovative structures and projects such as BAKAD can really open up the industry to foreign investors,” Heckman added.

The Almaty Ring Road Concession project, also known as BAKAD, is the first public-private partnership (PPP) structured under the new regulatory framework for such ventures. Substantial amendments to the existing legislation were passed in June 2014 as part of a new reform program in Kazakhstan. In its current form, the legislation creates the necessary conditions that enable international investors to invest in PPPs such as BAKAD.

The project involves the construction of a 66-kilometer road around Kazakhstan’s largest city, under a 20-year concession contract. The contract is based on an availability payment scheme, which means a lower risk for the operator (compensation is based on the number of lanes available instead of the less-predictable traffic volume). The authorities selected this project as a pilot, to demonstrate the viability of PPP/concession funding structures in the Kazakh road sector. The government mandated the IFC advisory team and the advisors appointed by the EBRD to prepare the project.

“Providing better and more efficient infrastructure services is one of the highest priorities for the government of Kazakhstan, and an effort that IFC strongly supports,” IFC Regional Manager for Central Asia Moazzam Mekan said. “This project underscores the great value of public-private partnerships in meeting the country’s infrastructure needs, and opens up opportunities for private-sector investment in PPP projects in Kazakhstan.”

Since the beginning of its operations in Kazakhstan, the EBRD has invested close to $6.75 billion in the country’s economy, with more than half of the total supporting projects in the private sector.