The country has no acts specifically dealing with (non-concession) PPPs.
Concessions are regulated by the Law of Turkmenistan on Foreign Concessions of 1 October 1993. The Concession Law however follows a very traditional approach and restricts concessions (mainly) to the exploitation of natural resources, which is not part of the scope of this assessment. In practice, (non-concession) PPP Projects as well as concession PPPs are handled under the Law “On tenders for the supply of goods, works, services for state needs”. So, in the 2017/2018 PPP assessment the scoring of (non-concession) PPPs was also applied to concession PPPs and concessions were not scored individually in the LFA.
Turkmenistan scores very low in most areas, mostly because there are no rules at all. This leads to legal uncertainty.
The Cabinet of Ministers of Turkmenistan approves priority sectors for concession activities by branches of industry, territories and objects. However, identification of the priority sectors seems not to be as detailed as an investment plan.
Selection of the Private Party
Concessions are granted on a tender basis. The terms and procedure for the competition is determined by the Cabinet of Ministers of Turkmenistan. When granting objects for concessions, the tender must be publicised. There is no provision in the Law concerning the publication of information relating to the competitive procedures neither in the media of the country nor in the international media.
The Law provides only the basic contents of a concession agreement. The Law states that a concession agreement shall be signed for a period of 5 to 40 years.
The state body of Turkmenistan that granted a particular concession has the right to monitor the performance of the concession agreement. These monitoring provisions are very loose and subject to specifications in the concession agreement.
The Law provides for court protection against illegal actions by state administrative bodies and their officials. However, the Law remains silent on compensation resulting from other Awarding Authority actions apart from termination.
Securities and Government Support
Turkmen law does not provide or prevent the possibility to obtain security or pledge the assets for the Parties to the concession agreement.
In Turkmenistan a concession activity is carried out with the assistance of the authorities and governmental agencies of Turkmenistan to enable concessionaires to achieve the objectives set out in concession agreements.
The Law does not clearly state which public authorities are responsible for providing support. Such issues are provided individually in each individual case by the project agreement.
All this is also the main reason for the low compliance of the legislation: Most matters are not regulated at all, particularly the Law concerning non-concession PPPs, but also the Law for concessions, while very structured and clear concerning the matters it covers, is not sufficiently comprehensive compared with international standards.
Turkmen law is not highly developed in the sphere of PPP except agreements for the execution of petroleum works. The majority of issues are decided on a case-by-case basis in the project agreement.
The Cabinet of Ministers holds the highest authority over concession agreements. It decides the conditions and the procedure to be followed in both the tendering and granting process.
There is no specialised state authority established to deal with PPP policy and/or strategy.
Such information is not publicly available in Turkmenistan.
In Turkmenistan this sphere is in the earliest stage of development and it is not well regulated. Thus, the capital market exists, but does not have a practical application.
Many red flags must be pointed out:
•one red flag because of a lack of non-concession PPP legislation;
•one red flag for lack of investor protection against discrimination in non-concession PPPs;
•one red flag for a lack of termination compensation in non-concession PPPs;
•one red flag for a complete lack of legal protection concerning the award process;
•three red flags in dispute resolution: No international arbitration is possible for non-concession PPPs (except for ICSID arbitration).