Uzbekistan improves legal framework for public-private partnership projects

On April 26, 2020, the Cabinet of Ministers of Uzbekistan enacted Resolution No. 259 “On Improving the Procedure for Implementation of Public-Private Partnership Projects”. The Resolution approves the Regulation on the Procedure for Implementation of PPP projects (the Regulation), which complements and clarifies the Law “On Public-Private Partnership” adopted on May 10, 2019 (the Law; our insight on this Law is available here). In particular, the Regulation provides for detailed rules and procedures with respect to the following matters:

initiation and development of a PPP project by either public or private parties;

selection of a private partner through tender or direct negotiations;

appraisal of a PPP project;

preparation of a PPP project concept;

monitoring of implementation of PPP projects.

Importantly, the Regulation does not apply to PPP projects that are already at the tender stage as to the effective date of the Regulation (i.e. April 27, 2020). In this regard, it should be noted that in accordance with the Law, the tender stage commences with the request for qualifications (if any) or request for proposals, rather than the expression of interest, which is also provided for by the Law.

While some parts of the Regulation duplicate provisions of the Law, there are a number of developments as summarized below. 

Project initiation and appraisal

The Regulation contains the detailed rules and procedures on initiation and development of a PPP project by either public or private parties and divides the responsibilities of the concerned parties in relation to this process.

Apart from this, the Regulation establishes the requirement for carrying out project appraisal as an additional stage at the preparation phase of the project. In particular, in accordance with the Regulation, the public partner should make a preliminary appraisal of the project and determine whether it can be implemented as a PPP. In accordance with the Regulation, the criteria for such a preliminary appraisal include inter alia the following: 

the project is aimed at solving economic, social and infrastructural problems;

the quality and level of goods (works, services) to be provided by the proposed project are higher than the current indicators;

attracting private investments;

the allocation of risks related to the project implementation. 

Following the positive results of the preliminary appraisal of the proposed project, the project is allowed to be initiated and prepared as a PPP project in accordance with the procedures set out by the Regulation and the Law. In particular, it should be noted that under the Law, initiation of the PPP project requires preparation of a PPP project concept. The Law, however, does not regulate the contents of such a concept and the Regulation fills this gap by providing a model form of a PPP project concept.

Apart from this, the Regulation provides for another document that is required to be developed before the private partner selection process commences, viz. a project appraisal document. Pursuant to the Regulation, the project appraisal document should cover financial and organizational matters pertaining to the project, as well as a justification for the technological solutions chosen for its implementation and it therefore resembles a feasibility study used in conventional public procurement transactions. 

Tender and execution of a PPP agreement

The Regulation reflects the common practice whereby applicants interested in participating in the tender should purchase tender documents for a price established by the tender commission.

Pursuant to the Regulation, the tender documentation should also include the data on the sources of financing used for the project.

Furthermore, the Regulation establishes the requirements applicable to the bidding consortia as follows:

a consortium leader is obliged to fully comply with the technical requirements of the tender;

the total capacities of all consortium members should be taken into account with respect to the financial requirements of the tender;

a notarized copy of the document confirming the execution of a consortium agreement should be attached to the proposal submitted by the consortium leader. 

The Regulation requires the signing a PPP agreement within 10 calendar days of the official announcement of the winner, whilst under the Law this period should have been determined in the tender documentation. In addition, the Regulation clarifies the concept of a reserve winner employed in the Law and defines it  as the bidder with the best bid proposal after the bid proposal of the winner of the tender, in the view of the tender commission. Pursuant to the Law, in the event of the disqualification of the winner of the tender, the reserve winner should be asked to conclude a PPP agreement within 10 calendar days from the date of the disqualification of the winner. If the reserve winner does not accept the proposal, the tender commission should announce the tender to be unsuccessful and re-launch the tender. 

In addition, the Regulation sets out the procedures applicable to the execution of the PPP agreement through direct negotiations, i.e. without a tender. In particular, the Regulation establishes that the projects implemented in this way also require the development and approval of the project concept and project appraisal document.

Price Determination

The Regulation clarifies the rules applicable to the determination of the price (tariff) for the output (i.e. goods, works or services) produced by the PPP project. In particular, the Regulation establishes that the expenses on the production and sale of the output of PPP projects, which serve as a justification for the final price (tariff), should be calculated in accordance with the general regulatory acts of Uzbekistan.1

Moreover, pursuant to the Regulation, in the event the PPP project produces goods subject to monopoly or natural monopoly regulation, the prices (tariffs) for such goods should be approved by the Ministry of Finance upon a written application of the public partner. Alternatively, fixed or marginal prices (tariffs) for certain types of such goods may be set in accordance with the decisions of the President. 

Monitoring

Under the Law, the PPP Development Agency (the PPPDA) is charged with monitoring the implementation of PPP projects for compliance with the relevant PPP agreement. The Regulation sets out the rules for such monitoring and additionally entitles the PPPDA to involve specialists from ministries, agencies, international organizations and consulting companies for the purposes of monitoring the PPP project implementation. 

Under the Regulation, information on implementation of PPP projects should be published on the official websites of the public partner and the PPPDA.

 

Source: Jdsupra