The procedure for conclusion of Public Private Partnership Agreement in Uzbekistan

The procedure for conclusion of Public Private Partnership Agreement in Uzbekistan

Under the Law “On Public-Private Partnership” No. 527 dated 10.05.2019 [https://lex.uz/ru/docs/4329272] (hereinafter – the “Law”) public-private partnership (hereinafter – the “PPP”) is a legally arranged cooperation for a definite period between a public partner and a private partner, founded on pooling of their resources for the implementation of the public-private partnership project.

 Leges Advokat herewith presents the six-stage procedure for the conclusion of the PPP agreement.

 STEP-1. Preliminary assessment of the project.

 To examine the feasibility of the implementation of the proposed project based on PPP mechanisms, the public partner shall conduct a preliminary assessment of a particular project. To implement PPP mechanisms, projects must meet the criteria established by paragraph 4 of the Regulation on the Implementation of Public-Private Partnership Projects, approved by the Decree of the Cabinet of Ministers of the Republic of Uzbekistan dated 26.04.2020 № 259 [https://lex.uz/docs/4798603] (hereinafter - the Regulation).

STEP-2. Initiation and preparation of a public-private partnership project.

According to Article 15 of the Law, the PPP project must be initiated by one of the parties (a public body or a legal entity) in the form according to Appendix N 1 to the Regulations [https://lex.uz/docs/4798603#4800858]. Most of the time in Uzbekistan, the initiator is a state body (organization). The project initiator develops a PPP project concept and a project evaluation document (hereinafter – the “PED”) in the form according to Appendix N 1 to the Regulation [https://lex.uz/docs/4798603#4800953].

 According to Article 17 of the Law, if the PPP project concept has been prepared by a legal entity (private initiator), the latter submits the PPP project concept and the PED to the potential state partner for approval.

 STEP-3. Approval of the PPP project concept

In conformity with Article 18 of the Law, the public partner shall, within thirty calendar days, decide whether to approve or reject the PPP project concept and the PED proposed by the private initiator and notify the private initiator about this. 

Depending on the cost of the project the Law provides distinct ways of the approval of the PPP project concept and the PED. If the project cost is:

<1,000,000 USD – it is approved by the state partner itself;

<10,000,000 USD – the project and PED is submitted by the state partner in writing to the Public-Private Partnership Development Agency under the Ministry of Finance of the Republic of Uzbekistan (hereinafter - the Agency) for approval;

>10,000,000 USD - the Agency submits the concept of a public-private partnership project for approval to the Cabinet of Ministers of the Republic of Uzbekistan. In turn, the Cabinet of Ministers within ten days reviews and makes decisions on approval, rejection, or return for revision of the PPP project concept.

If at the stage of approval of the PPP project concept, it appears that the financing from the state budget is required, the state partner shall obtain the relevant conclusions from the Ministry of Finance of the Republic of Uzbekistan on the project, regardless of the project cost.

In case of approval of the PPP project concept, the potential public partner publishes on its official website, on the official website of the Agency, and other specialized state organs the PPP project concept itself and offers other candidates to express their interest in the implementation of the PPP project.

STAGE-4. Selecting a private partner

A private partner is selected in accordance with the requirements of Article 21 of the Law. This selection is carried out through tender or direct negotiations. The tender can be of one or two stages.

The one-stage tender is for public-private partnership projects with an equivalent value of not exceeding 1,000,000 USD. The main criteria for participation of the candidate in the tender to express an interest in the implementation of a PPP project are:

  • the legal capacity of the applicant;
  • availability of financial and (or) material, technical and (or) qualified labor resources necessary to fulfill the obligations under the PPP agreement;
  • absence of grounds that could lead to the conflict of interests.

Candidates’ detailed technical and commercial (financial) proposals that are developed based on the conceptual solution and conditions specified in the tender documents are considered and evaluated during a one-stage tender. Negotiations may be conducted with bidders on the subject of the tender during a tender process.

A two-stage tender is held for PPP projects with a total value equivalent to exceeding 1,000,000 USD, except when a PPP project is prepared by a private initiator.

The two-stage tender shall include the stages of pre-qualification and selection of a winner. In the first phase, the qualification documents of the applicants are considered and their compliance with the qualification criteria specified in the tender documents is assessed. In the second phase, the submitted technical and commercial (financial) proposals are considered and evaluated, considering the specified parameters of the tender subject with an indication of the price (tariff).

The private initiator may be reimbursed for the costs associated with the preparation of the PPP project, in an amount not exceeding one percent of the total cost of the PPP project at the expense of the winner or the reserve winner of the tender.

STEP – 5. PPP Agreement

PPP agreements can be concluded through direct negotiations without a tender in exceptional cases established by Article 25 of the Law:

  • to ensure defense and security capacity of the state;
  • in case a certain person possesses exclusive rights to intellectual property, other exclusive rights, owns a land plot, other items of immovable and other property, which is a pre-requisite for implementation of the PPP project;
  • determined by decrees and resolutions of the President of the Republic of Uzbekistan, as well as resolutions of the Cabinet of Ministers of the Republic of Uzbekistan.

For the project with a total cost exceeding 1,000,000 US dollars, the draft PPP agreement is coordinated with the Agency.

After completion of the tender process or direct negotiations, the public partner concludes a PPP agreement with the winner of the tender, a direct negotiator, or a special project company per Articles 26 and 27 of the Law.

If the winning tenderer does not sign the agreement within the period specified in the tender documents, the tender commission will disqualify them and announce the reserve winner as the winning tenderer.

The reserve winner is invited to conclude a PPP agreement as a winner within 10 calendar days from the date of the disqualification of the winning tenderer. If the tender commission does not receive a positive response from the reserve winner within thirty calendar days from the date of sending him a proposal to conclude an agreement on PPP, the tender commission shall declare the tender invalid and will reinitiate the tender.

Potential government partner and winning tenderer or reserve winner shall begin project implementation after signing of the PPP agreement.

STEP-6. The registry of PPP projects

According to Chapter 12 of the Regulation, the state partner, within three calendar days after the approval of the PPP project concept and conclusion of the PPP agreement, shall officially submit three electronic and paper copies of the PPP project concept, PED and PPP agreement to the authorized state body for inclusion in the registry of PPP projects.

Within three working days from the date of full submission of the PPP project concept, PED, and the PPP agreement, the authorized state body affixes each page of the documents with the mark "INCLUDED IN THE REGISTRY", then makes entries into the registry and registers.

One copy shall be kept by the authorized state body, and two copies shall be returned to the state partner within two working days.

PPP projects shall be posted on the official website of the authorized state body [https://pppda.uz/ru/projects-custom] and the state partner, as well as on the open data portal of the Republic of Uzbekistan [www.data.gov.uz] within five working days after registration.

Modification, amendment, or termination of the PPP agreement

The PPP agreement may be modified, amended, or terminated by the agreement of the parties or by a court decision unless otherwise provided by legislation or a PPP agreement.

Modification, amendment, or termination of the PPP agreement is carried out for the projects in the amount:

<$1,000,000 – independently by public and private partner;

<$10,000,000 – after the approval by the Agency;

>$10,000,000 – after the approval by the Cabinet of Ministers of the Republic of Uzbekistan.