Effective use of budget funds is a priority task for the Government of the Republic of Kazakhstan. In this regard, a proper approach to planning and implementing public investment projects, including PPP projects, is needed. Structuring and development of project documentation play a key role in  high-quality planning of PPP projects.

Mistakes at the stage of planning PPP projects, in terms of incorrect structuring of projects, lack of qualified specialists, inappropriate distribution of risks between parties can lead to significant spending of budget funds.

To avoid these errors, many countries have implemented a system with creation of a new body responsible for planning and development of PPP projects. In our country, such function is performed by Kazakhstan Project Preparation Fund LLP.

Process of structuring and preparing PPP projects is a priority, as it is necessary to ensure a balance of compliance with the interests of all parties: the state, business, credit institutions and society as a whole.

Lack of well-functioning centers in many countries affects the duration of project planning and delay of negotiations between public and private partners, lack of flexibility in risk allocation and cancellation of many projects with all the ensuing consequences on the country's budget.

Therefore, the Czech Republic's lack of experience and preparedness forced the government to terminate PPP contract. Optimal institutional scheme for the project implementation was proposed by a private partner for construction of autobahn section D 47 with a length of 80 km. However, the state partner could not adequately determine probability of occurrence of all risks, including assessing solvency of the private partner. As a result, all risks were shifted to the state, PPP contract was terminated and the state had to pay a large penalty to the private partner.

Advantage of creating specialized centers is to assist the state in development and integrated planning of PPP projects, which allows:

  • to structure project taking into account the interests of all parties, including credit institutions;
  • to reduce term of PPP project planning;
  • to contribute to further improvement of PPP policy by providing feedback on practical side of project implementation;
  • to guarantee protection of state interests and independence from the private sector, acting in accordance with the state values and principles.

In most of the countries studied, PPP centers for advisory support of projects have been established at the expense of the country's budget at the state levels. For example, PPP centers in Germany, Ireland, Portugal, China, Turkey, India, Malaysia are allocated as separate structural units accountable to the country government. At the same time, transfer of such centers to the private sector is rare due to complexity of management, control and presence of a conflict of interests.

Therefore, Kazakhstan Project Preparation Fund LLP contributes to the rational use of budget funds as a specialized legal entity in development and planning of PPP projects.