50 Questions on Public–Private Partnership in Uzbekistan

1. What is the purpose of the Law on Public–Private Partnership?

Answer: The purpose of the Law is to regulate legal relations between the state and the private sector in the implementation of public–private partnership (PPP) projects, including concessions. The Law aims to attract private investment, improve the quality of public infrastructure and public services, and reduce the budgetary burden in the implementation of socio-economic and infrastructure projects.

2. Does the Law on PPP apply to public procurement and production sharing agreements?

Answer: No. The Law explicitly excludes production sharing agreements (PSAs) and public procurement from its scope. These relations are governed by special laws and do not fall under the PPP regime, even if they involve elements of private investment.

3. What is the legal significance of international treaties in the field of PPP?

Answer: If an international treaty of the Republic of Uzbekistan establishes rules different from those provided for by national PPP legislation, the provisions of the international treaty shall prevail. This ensures investment predictability and protection of foreign investors.

4. What is meant by public–private partnership?

Answer: A PPP is a legally formalized cooperation between a public partner and a private partner for a defined period, based on the pooling of their resources for the implementation of a project aimed at achieving socially significant objectives.

5. How does a PPP project differ from an ordinary investment project?

Answer: A PPP project always involves:

• participation of a public partner;
• implementation of socially significant objectives;
• allocation of risks between the parties;
• a long-term nature;
• a special legal regime established by the PPP Law.

6. What is a PPP project concept and what is its role?

Answer: A PPP project concept is a key substantiating document containing an economic, financial and social assessment of the project, sources of financing, profitability and relevance. Implementation of a project is impossible without an approved concept.

7. What assets may constitute PPP objects?

Answer: PPP objects may include:

• property and property complexes;
• public infrastructure facilities;
• land plots;
• works, services and innovations, including design, construction, reconstruction, operation and maintenance.

8. What is an availability payment in a PPP project?

Answer: It is a payment made by the public partner to the private partner for ensuring the readiness and availability of the facility for use, regardless of actual consumer demand.

9. What is the difference between an availability payment and a usage fee?

Answer:

• An availability payment is paid by the state to the private partner.
• A usage fee is charged by the private partner to consumers of goods, works or services.

10. What are the fundamental principles of PPP?

Answer: The key principles include:

• equality of the parties;
• transparency of procedures;
• competitive selection;
• non-discrimination;
• prevention of corruption.

11. What are the main directions of state policy in the PPP sphere?

Answer: State policy is aimed at stimulating economic growth, developing infrastructure, improving the quality of public services and attracting private, including foreign, investment.

12. What role does the Cabinet of Ministers play in the PPP sphere?

Answer: The Cabinet of Ministers determines state policy, approves project concepts exceeding USD 10 million, establishes the procedure for maintaining the PPP Register and determines the amount of the one-time fee for registration of agreements.

13. Which body is the authorized PPP authority?

Answer: The authorized body is the PPP Development Agency under the Ministry of Finance of the Republic of Uzbekistan, which carries out coordination, methodological support and monitoring of projects.

14. What functions does the authorized body perform?

Answer: It develops standard agreements, approves tender documentation, maintains the PPP Project Register, interacts with investors and international organizations, and monitors project implementation.

15. What powers do local executive authorities have?

Answer: They identify potential PPP objects, allocate land plots without auction, identify obstacles to project implementation and ensure their elimination.

16. Who are the parties to a PPP agreement?

Answer: The parties are the public partner and the private partner. Both parties bear full responsibility for the performance of obligations, even if certain functions are delegated to third parties.

17. May the private partner delegate its obligations?

Answer: Yes, however, the private partner retains full responsibility to the public partner for proper performance of the agreement.

18. What rights does the public partner have?

Answer: The public partner has the right to exercise control, request reports, demand elimination of violations and compensation for damages, and engage consultants.

19. What key obligations are imposed on the public partner?

Answer: These include provision of property and land plots, assistance in obtaining permits, non-interference in the activities of the private partner, and compliance with the terms of the agreement.

20. What rights are granted to the private partner?

Answer: The private partner has the right to obtain information, initiate amendments to the agreement and demand compensation for losses caused by actions of the public partner.

21. Who may initiate a PPP project?

Answer: A PPP project may be initiated by a public authority or by a private person (an individual entrepreneur or a legal entity).

22. What stages does PPP project initiation include?

Answer: Development of the concept, its coordination and approval, review by the authorized body, and inclusion of the project in the PPP Register.

23. What are the specifics of project preparation by a public initiator?

Answer: The project is developed in priority sectors of the economy and social sphere and is accompanied by public consultations.

24. What are the features of initiation by a private initiator?

Answer: A private initiator proposes an innovative solution and, in the absence of competitors, may implement the project without a tender through direct negotiations.

25. In what cases may a private initiator be refused?

Answer: Grounds include lack of economic feasibility, lack of rights to the object, absence of public need, or non-compliance with the requirements of the Law.

26. What forms of private partner selection are provided by the Law?

Answer: Selection is carried out through a tender (single-stage or two-stage) or through direct negotiations in strictly defined cases.

27. When is a single-stage tender conducted?

Answer: It is applied to projects with a value of up to USD 1 million inclusive.

28. In what cases is a two-stage tender conducted?

Answer: For projects exceeding USD 1 million, except for cases expressly provided for in Article 17 of the Law.

29. What criteria apply to bidders?

Answer: Bidders must have legal capacity, financial and technical resources, and must not have a conflict of interest.

30. In what cases are direct negotiations without a tender permitted?

Answer: In cases of ensuring state security, existence of exclusive rights, or by decisions of the President and the Cabinet of Ministers.

31. What is a PPP agreement?

Answer: It is the main legal document defining rights, obligations, risks, payments and the mechanism for implementation of a PPP project.

32. What terms are mandatory in a PPP agreement?

Answer: Subject matter, term, risk allocation, payments, tariffs, procedure for transfer of property, liability of the parties and dispute resolution mechanisms.

33. What is the permissible term of a PPP agreement?

Answer: The minimum term is 3 years and the maximum term is 49 years, with the possibility of extension or reduction within established limits.

34. What is the procedure for amendment or termination of a PPP agreement?

Answer: Amendments are made by agreement of the parties or by court decision, and for large-scale projects — with mandatory approval of authorized bodies.

35. How is the allocation of land plots regulated?

Answer: Land plots are leased by the public partner to the private partner without auction, at a rate equivalent to the land tax.

36. What guarantees are provided to the private partner?

Answer: Compensation is guaranteed for negative consequences of legislative changes, except for tax-related changes.

37. How are creditors’ interests protected in PPP projects?

Answer: Through direct agreements, the possibility of substituting the private partner, and protection of creditors’ rights without conducting a new tender.

38. How is monitoring of PPP project implementation carried out?

Answer: Monitoring is conducted by the authorized body, and the private partner is obliged to provide access to facilities and documentation.

39. What reporting is required for PPP projects?

Answer: Every six months, the public partner submits a project implementation report signed by both parties.

40. What types of state support are permitted?

Answer: Subsidies, budgetary funds, assets, tax incentives, guarantees, loans and other forms of support, including state support agreements.

41. How are disputes in the PPP sphere resolved?

Answer: Disputes are resolved through court proceedings or other methods provided for by the agreement and legislation.

42. What liability is provided for violations of PPP legislation?

Answer: Persons guilty of violations bear civil, administrative or other liability in accordance with the law.

43. Who is responsible for providing explanations of the PPP Law?

Answer: This responsibility is vested in the authorized body and other relevant state authorities.

44. When was the PPP Law adopted?

Answer: The Law was signed by the President of the Republic of Uzbekistan on 10 May 2019 (Law No. ZRU-537).

45. What is the significance of the PPP Project Register?

Answer: The Register ensures publicity, transparency and systematic accounting of all PPP projects being implemented.

46. May a private partner be a foreign entity?

Answer: Yes, foreign legal entities and investors enjoy equal rights and a non-discriminatory legal regime.

47. Is currency indexation of tariffs allowed in PPP projects?

Answer: Yes, in exceptional cases by decisions of the President of the Republic of Uzbekistan.

48. Is it possible for a private partner to open foreign bank accounts?

Answer: Yes, if this is stipulated by the PPP agreement or a state support agreement.

49. May a PPP object be transferred into state ownership?

Answer: Yes, the procedure and timing of transfer of ownership are expressly determined by the PPP agreement.

50. What is the overall significance of the PPP Law for the economy of Uzbekistan?

Answer: The Law establishes an institutional framework for sustainable development, investment attraction, infrastructure modernization and implementation of international standards of partnership between the state and business.