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IMPLEMENTED PROJECT: Provision of broadband access to rural settlements of the Republic of Kazakhstan using fiber-optic communication lines technology

About the project

Project status

On October 4, 2018, PPP Agreements were signed between the state partner represented by the Ministry of Information and Communications of the Republic of Kazakhstan and private partners.

Private partners:

1) Kazakhtelecom JSC;

2) Transtelecom JSC and SilkNetCom LLP Consortium.

Type of contract

PPP Agreements for the provision of broadband access services for state and budgetary institutions under FOCL technology in 1,249 settlements.

Public partner

Ministry of Information and Communications of the Republic of Kazakhstan

Industry

Information and communication technologies (ICT)

Project objective

The goal of the Project is to expand access to fiber-optic telecommunications for state and budgetary institutions, private organizations and the population in villages with a population of more than 500 people (1,249 villages).

Implementation period

2018 - 2032 (14 years).

Cost of construction

Project cost:

Under the PPP Agreement No.1: the total investment amount is KZT 52,610,104 thous., including VAT (20% - equity, 80% - borrowed).

Under the PPP Agreement No.2: the total investment amount is KZT 21,000,000 thous., including VAT (20% - equity, 80% - borrowed).

Technical and technological parameters of the project

Provision of broadband access (BBA) services for users in rural settlements through ground infrastructure using fiber-optic communication lines technology with a total communication channel capacity to a settlement of at least 50 Mbit/s.

Positive effects

Direct results:

1) connection of 3,718 points of state bodies and budgetary institutions to broadband access services in 1,249 rural settlements of the Republic of Kazakhstan using fiber-optic communication lines technology;

2) provision of broadband access services to 3,718 points of state bodies and budgetary institutions in 1,249 rural settlements of the Republic of Kazakhstan using fiber-optic communication lines technology;

3) creating conditions for the development of fixed broadband access services by fixed-line providers for the population and private companies in 1,249 rural settlements;

4) creating conditions for the development of mobile broadband access services by mobile providers for the population and private companies in 1,249 rural settlements;

5) Ensuring GDP growth to 2% by 2031:

Year

2018

2020

2025

2030

2031

GDP growth, %

0.1%

0.3%

0.8%

1.8%

2%

 

6) Ensuring the growth in tax revenues:

Year

2018

2020

2025

2030

2031

Growth in tax revenues, KZT bln.

2.771

8.314

22.170

49.883

55.426

Environmental impact of the project

The level of environmental impact is defined as minimal. Therewith, in accordance with the PPP Agreements, private partners undertook commitments to comply with any international obligations assumed by the Republic of Kazakhstan, including in the field of environmental protection.

To ensure safety and environmental protection, Private Partners are required to:

1) observe and monitor compliance with the standards and requirements set by the laws and regulations of the Republic of Kazakhstan with regard to the safety of the personnel involved in carrying out the work required for the connection of points and the operation of the Infrastructure;

2) ensure compliance with the norms and requirements established by the laws and regulations of the Republic of Kazakhstan for the safety of personnel engaged to ensure the operation of the Infrastructure;

3) ensure compliance with the standards on the quantity and chemical composition of air emissions from the operation of the Infrastructure, in accordance with the environmental legislation of the Republic of Kazakhstan, and International Treaties of Kazakhstan;

4) take all necessary measures to prevent accidents and other dangerous situations endangering human life and health, and the environment, as well as the threat of property destruction, in accordance with good working practices;

5) ensure the implementation of other measures in accordance with the environmental legislation of the Republic of Kazakhstan and International Treaties of the Republic of Kazakhstan in the field of environmental protection, aimed at minimizing environmental damage caused by the activities of a Private Partner in the operation of the Infrastructure.

KPPF's role in the Project

Provision of advisory services to the Ministry of Information and Communications of the Republic of Kazakhstan for the project support at the stage of the competition for selecting private partners.

Project description

According to Internet Live Stats analysts, as of July 1, 2016, Kazakhstan ranks 43 (out of 201 countries) in the number of Internet users (9.9 mln people, with an increase of 1.8% over the year), the Internet connectivity in Kazakhstan in H1 2016 was 55.8%.

Currently, broadband access has a high impact on economic and social development in the world. In developed countries, the contribution of the Internet economy to the country's GDP reaches up to 7%, which exceeds the contribution of such industries like education, agriculture, and mining.

Currently, there are two main operators in the Republic of Kazakhstan with developed backbone FOCL in Kazakhstan, connecting settlements to BBA, and providing universal services in rural settlements.

A list of 1,249 rural settlements (RSs) to be included in the Concept was formed by MIC RK based on the following criteria:

- socio-economic importance of RSs (regional centers, rural district centers and reference RSs);

- less distance of RSs from regional centers and towns;

- population (500+);

- LEAs, educational and medical organizations in the village (2 or more);

- less distance of RSs from the existing main FOCL.

The project will affect 2.4 mln residents, associating about 3,718 state bodies and budgetary institutions in 1,249 villages. This figure reflects about fifty percent of 7.75 mln residents of the regions (districts) that will be connected by a high-speed broadband network, and about twenty-six percent (26 %) of the total population of the Republic of Kazakhstan (18 mln in 2017).

Provision of broadband connections in villages will contribute to the achievement of the goals defined by the Digital Kazakhstan-2020 State Program. The Program provides conditions for creating opportunities for citizens to learn and acquire skills in information technologies through distance learning, advanced training and retraining courses, for telework, and receiving existing telemedicine services. In addition, the Program is designed to build a more open, accessible and competitive economy through the maximum implementation of intelligent systems in the main sectors of the economy.

Within the framework of the Project under consideration, it is planned to organize BBA services for state bodies and budget institutions in RSs of the Republic of Kazakhstan with a population of at least 500 inhabitants.  The fiber-optic infrastructure organized under the Project will allow mobile providers to develop mobile broadband access services for the population in rural settlements in accordance with the obligations of mobile providers to cover rural settlements (with a population of more than 500 people) with 3G communication services by 2021. Also, the organized fiber-optic infrastructure will allow fixed-line providers to develop fixed broadband access services on the B2C segment for the population in rural settlements within the framework of their own investment programs.