Summary Report

TAJIKISTAN

Overview

Tajikistan has had a legal framework for concessions since 1997 when the Law regulating concessions was first adopted. The Law on concessions in force today was adopted on 26 December 2011 – the Law No. 783 on Concessions (the “Concession Law“).

The Concession Law is quite brief and leaves much room for interpretation by the relevant authority. The provisions regarding the evaluation of projects, predefined criteria, grounds for termination and collection of tariffs or fees especially should be further elaborated on in future amendments to the Concession Law.

Consequently, the Concession Law does not provide for a sufficiently satisfying set of rules regulating the PPPs. Therefore, the Republic of Tajikistan adopted a new Law No 907 on Public Private Partnerships dated 28 December 2012 (the “PPP Law“).

The PPP Law does not exclude the application of the Concession Law. The provisions of the Concession Law as far as a concession can be considered a PPP will be applicable to the extent to which they are consistent with the provisions of the PPP Law, which may cause some confusion. The PPP Law does not apply to mining concessions. The PPP Law does not apply to public procurement either.

In cases where the provisions of other regulatory acts governing PPPs conflict with the provisions of the PPP Law, the provisions of the PPP Law will prevail.

Project Agreement

The PPP Law governs the PPP approval process and the content of a PPP agreement contains provisions on the termination of a PPP agreement as well as the dispute resolution mechanisms to be employed. The Resolution of the Board No 81 dated 25 September 2014 on “The Preparation and Implementation of PPP Projects in the Republic of Tajikistan“ provides some guidelines on the preparation and implementation of projects, along with guidelines and responsibilities of the PPP Council/Unit.

The scope of the PPP Law includes the implementation of projects in the area of infrastructure and social services but does not explicitly cover facilities/infrastructure for the non-merchant sector.

The scope of the PPP Law does not seem to include mixed companies (IPPP) and the involvement of former state-owned companies that have been privatised or any public participation in joint venture cases. It is furthermore not clear whether the Law excludes a PPP agreement where there is no return on assets such as a BOO.

The Government of the Republic of Tajikistan determines the list of infrastructure facilities and social services for which the PPP Law is not applicable and determines the objects for which a concession cannot be granted or can only be granted with certain restrictions.

Unlike the Concession Law, the PPP Law now provides for clearer provisions on the preliminary feasibility study of PPP projects and regulates unsolicited proposals.

Due consideration has been given to the extraordinary circumstances that can occur due to changes in economic or financial conditions, or changes in legislation affecting the financial balance of a PPP, so that the private partner is entitled to seek revision of the agreement. It would also be useful to stipulate the circumstances in which the contracting authority will be given the right to revise the agreement, thereby offering more flexibility when market conditions change. The right of recourse of non-successful bidders also needs to be clarified.

Securities

With regard to bankability, although the PPP Law provides for security over a concessionaire’s rights and assets, the creation of security over public property or other property, assets or rights needed for the provision of public services is prohibited if the creation of such security is prohibited by the legislation of the Republic of Tajikistan.

It is unclear whether a PPP agreement can be subject to international arbitration as the PPP Law provisions do not explicitly provide for any kind of arbitration and the Republic of Tajikistan has not ratified the International Convention on the Settlement of International Investment Disputes (ICSID). There are no clear provisions regarding the possibility of entering into a direct agreement with lenders.

A positive improvement for Tajikistan is the ratification of the New York Convention on Enforcement of Foreign Arbitral Awards. The New York Convention entered into force for Tajikistan on 12 November 2012.

Policy Framework

There is no national policy framework for PPPs for infrastructure or public services. At the same time, the division of power between different public authorities involved in the PPP granting process is coordinated.

Institutional Framework

As for the institutional framework, two public entities have been created – the authorised governmental body and the PPP Council. The Government approves the composition of the PPP Council and decides which public body will take the role of the authorised governmental body. By a Decree No 250 dated 3 June 2013, the Government declared the state Committee for Investments and state Property Management of the Republic of Tajikistan to be the authorised governmental body. The PPP Council is composed exclusively of high ranking government officials and public servants (heads of ministries or public agencies) and appears to be involved more at the operational level rather than at the policy and strategic level. Many approvals have to be issued by the Council for each individual PPP project at every stage of both the project selection process and the contract award.

Practical Experience

In Tajikistan, PPPs have been awarded in the water, energy, transport sectors and non-merchant sectors. There are currently four PPP projects at the initiation stage and one PPP project whose status is unknown.

Business Environment

There is no capital/bond market in the country and there are no project funds or specific banking facilities available to facilitate the development of PPPs in the country. On the other hand, a reliable PPP project insurance policy is available locally.

Possible Improvements

The relation between the PPP Law and the Concession Law should be further elaborated to avoid legal uncertainty and clearly determine which provisions are applicable for each type of PPP. The PPP legal framework should include clear rules regarding the possibility of entering into direct agreements.

An additional positive sign would be for Tajikistan to sign and ratify the International Convention on the Settlement of International Investment Disputes (ICSID) and to provide for direct provisions allowing international arbitration in the PPP agreements.

It would be useful to adopt a national policy framework for concessions/PPPs and to keep record of its implementation in practice.