24 APRIL 2020
Introduction
Status Quo – Kazakhstan
• State of Emergency1 is introduced from 16 March until 1 May
• The introduction of quarantine and the implementation of sanitation and epidemic prevention measures2
• Quarantine is introduced from 30 March until 1 May:
▪ Shutdown, except for certain enterprises (pharmacies, grocery stores, post offices, banks etc)
▪ Restrictions on public transport ▪ Restrictions on the mobility of people, especially after 19.00
• Restrictions on entry into and exit from the territory of Kazakhstan by all means of transport
• Liability for violation of the regime or failure to comply with the restrictions3 (in the form of a warning, a fine of KZT 27 780 (~USD 66) or arrest for up to 15 days)
Interim state measures
• Business support measures4 :
▪ The deadline for submitting certain 2019 tax returns is extended for 30 calendar days (CIT and personal income tax returns, etc.)
▪ Exemption from payment of taxes until 31 December 2020 (for certain taxpayers)
▪ Suspension of interest on unfulfilled tax liabilities until 15 August 2020
▪ The deadline for submitting tax reports is postponed for the third quarter of 2020
• The total cost of anti-crisis measures amounted to over KZT 4 trillion
• Quarantine may be recognized as an event of force majeure:
▪ The occurrence of force majeure circumstances is testified by the National Chamber of Entrepreneurs of the Republic of Kazakhstan ”Atameken”
▪ The issue of the letter is free of charge
▪ The issuance term was reduced from 15 to 5 business days
• About 200 people are to be called up for 1 month of military training (in Almaty)
Current External Issues – Renewable Energy
• The fall of the national currency* (KZT):
▪ The PPA tariffs are defined in KZT
▪ Transportation became more expensive for ongoing projects
▪ The purchase price of the imported equipment increased
• Mobility Restrictions:
▪ Import of equipment is limited
▪ Arrival of foreign specialists is restrained
▪ Site visit under pipeline RES projects is impossible
▪ Due Diligence can not be performed
• As a result:
▪ Some ongoing projects are delayed until summer or a later period
▪ Auctions are currently halted
▪ All transactions are suspended
▪ The supply chain has been disrupted
▪ Auction schedule for 2020 is not announced yet (to be approved soon)
Numbers and Calculations
• The indexation formula5 : 70% based on the national currency exchange rate to convertible currencies and 30% based on the consumer price index (Covid-19 is a test for it's effectiveness)
|
Tt+1= Tt×(1+0,3 × ( CPIt−100%) +0,7 USD t +1−USDt USDt ) 100% USDt |
Tt+1 is an indexed auction price, calculated by the above formula, rounded downwards to the nearest whole tiyn
Tt is an auction price, taking into account the previous indexation, if there was any
CPIt is a consumer price index, accumulated for the 12 months preceding October 1 of the year of indexation
USDt+1 is a current exchange rate of KZT to USD as of October 1 of the year of indexation
USDt is an average exchange rate of KZT to USD for the 12 months preceding October 1 of the year of indexation
• The PPA tariffs for 2019 (net of VAT):
▪ Wind power plants – KZT 26.66/kWh (USD 0.063)
▪ Solar power plants – KZT 29.00/kWh (USD 0.068)
▪ Hydroelectric power plants – KZT 15.48/kWh (USD 0.036)
▪ Biogas plants – KZT 32.15/kWh (USD 0.075)
• The PPA fixed tariffs6 (net of VAT) *not pegged in currency/not applicable for PPA’s concluded after 2015:
▪ Wind power plants – KZT 22,68/kWh
▪ Solar power plants – KZT 34,61/kWh
▪ Hydroelectric power plants – KZT 16,71/kWh
▪ Biogas plants – KZT 32,23/kWh
The status of RE projects
• RE Resource Potential in Kazakhstan:
▪ Wind – 920 billion kWh/year
▪ Hydro – 62 billion kWh/year
▪ Solar – 2.5 billion kWh/year
▪ Geothermal – 4.3 GW1
• Operating RE facilities – 90:
▪ Wind power plants – 19
▪ Solar power plants – 31 ▪ Hydroelectric power plants – 37
▪ Biogas plants – 3
• Launched RE facilities in 2019 – 21
• Total installed capacity of RE facilities increase in 2019 – 1,050.1 MW (from 537MW in 2018)
• The share of RES in total electricity generated in 2019 – 2.3% (from 1.3% in 2018) • PPA’s concluded in 2019 – 12 (out of 32 auctions) • Project increase planned in 2020 – + 108
State support/Investment Preferences
• RE projects are now included in the list of priority investment projects7 :
▪ Tax preferences:
✓ reducing the amount of calculated corporate income tax by 100%
✓ applying the coefficient “0” to land tax rates
✓ calculating the property tax rate of “0” % to the tax base
▪ An investment subsidy (not provided for expansion and/or renovation projects):
✓ provided on a non-repayable basis (for investments of at least 5 million MCI*)
• Investment protection measures (officially not announced, by initiative and support of Solar Power Association of Kazakhstan):
▪ The PPA performance bond timeframe is extended for 1 year (for non-operating facilities ) ▪ Submission of the operational acceptance certificate to FSC** is extended for 1 year
For further information, please contact:
Saniya Perzadayeva, Managing Partner, Unicase Law Firm
saniya.p@unicaselaw.com
