12 February 2022
On 3 January 2022, the Law of the RK “on Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on the Development of Competition” No. 101-VII (hereinafter – the “Law”) was adopted.
The Law introduced significant changes in number of legislative acts of the Republic of Kazakhstan, including: the Entrepreneurial Code, the Land Code, the Law on Electricity, the PPP Law and others. This Law will be enacted after 60 calendar days after the date of its first official publication i.e. on 7 March 2022 (except for certain articles).
Unicase team has prepared an overview of the most important changes stipulated by this Law related to land, PPPs, energy, entrepreneurship and other aspects.
Abolition of single operator institutions
With the adoption of the Law, the following organisations lost their status of a single market operator:
• Astana SSC LLP;
• Regional Public-Private Partnership Centre of Kyzylorda Oblast LLP;
• JSC Kazakhstan Centre for Modernisation and Development of Housing and Communal Services;
• JSC National Centre for Public Service Personnel Management;
• Republican State Enterprise on the Right of Economic Management “Republican e-Health Centre”;
• Centre for the development of labour resources JSC;
• Kazakhstan Project Preparation Fund LLP;
• Information and Analytical Centre of Oil and Gas JSC;
• KOREM JSC.
Following abolition of the “single operator” status, these organisations will operate in accordance with market rules, some of them will be privatised and the rest will operate as subordinate state organisations.
Entrepreneurial Code of Kazakhstan
• The term “special right entity” has been introduced. This entity can be established in a form of a state-owned enterprise, JSC or an LLP. The “special right” is an exclusive or preferential right of a market entity, provided by law, to produce, sell and/or buy a product on a competitive market. The antimonopoly authority is responsible for the formation and maintenance of the state register of the “special right entities”. The Law establishes requirements and restrictions on the activities of the special right entities. These innovations are aimed to stimulate the country’s market and give the possibility to transfer the production of some goods to private entities with the possibility to control the market. The institution of the “special right” is also intended to make it much more difficult to establish public and private operators.
• The concept of “key commodity of the market” has been introduced as well as the order of ensuring equal access to it. “Key commodity of the market” is a commodity, an object of infrastructure of a market entity with a dominant or monopolistic position, without access to which other market entities cannot produce and/or sell a commodity in the relevant or adjacent commodity market. The Law stipulates requirements and obligations for the “key commodity of the market”. This amendment is intended to ensure continuous operation of other market entities and continuous access to all goods on the country’s market.
• A new type of unfair competition has been added in the form of “creating barriers to change the seller (supplier) of goods”. The creation of barriers to change the seller (supplier) of goods is making claims towards the consumer at the termination of the contract, which were not agreed earlier by the parties or exceeding the requirements at the conclusion of the contract, as well as the failure to place in the public domain the information necessary to ensure a free change of the seller (supplier) of goods.
• The term “trustee” has been introduced which is a specialist with a special scientific or practical knowledge of the issues related to the economic concentration object when carrying out expert assessments of the compliance with the requirements and obligations provided for in the antimonopoly authority’s approval of the economic concentration. This will enable professional advice to be obtained in conducting expert assessments and increase the general competence of the staff of the antimonopoly authority.
Law on Electricity
• According to the amendments, the institution of a single electricity trading operator has been abolished. Several centralised trading market operators can now operate in the wholesale electricity market. At the moment, KOREM continues to function as the only electricity trading operator in the country.
• The competent authority, in coordination with the antimonopoly authority, will determine the share of electricity subject to compulsory sale through centralised trade for the medium and long period.
• The Law introduced a ban on sales of electricity by energy supply companies to the wholesale electricity market participants that are included in the list of capacity market consumers formed by the system operator.
PPP and Concession Law
• Advisory support for the PPP and concession projects can now be rendered by any legal entity on a competitive basis. Previously, KPPF JSC and Turar Healthcare JSC had exclusive rights to provide advisory services to the public side with respect to the PPP and concession projects implementation.
Land Code of Kazakhstan
• The permissible period of non-use of a land intended for peasant or agricultural farming has been reduced from 2 years to 1 year. In case of violation, such land shall be subject to compulsory seizure. This norm is intended to ensure the interests of other possible landowners who are waiting to receive the land and are ready to use it to the fullest extent for their farming activities.
• The Law introduces a possibility of performing a state control over the use and protection of land in the form of inspection and preventive control with or without a visit to the object of control. In this connection a new article 145-1, regulating the activity of state inspectors during an inspection without visiting the subject of control has been adopted.
For further information, please contact:
Saniya Perzadayeva, Managing Partner, Unicase Law Firm