General Knowledge of PPP Projects in Uzbekistan

Under Public-Private-Partnership (PPP) law, PPP is a legally formalized cooperation between a public partner and a private partner for a specified period, based on the pooling of their resources for the PPP project implementation.

The following terms are used in this article:

public partner — the Republic of Uzbekistan and (or) state administration bodies, local executive authorities, as well as other legal entities or their associations authorized by the Cabinet of Ministers of the Republic of Uzbekistan;

private partner — an individual entrepreneur, legal entity or association of legal entities registered under the legislation of the Republic of Uzbekistan or a foreign state that has concluded a PPP agreement with a public partner.

Opportunities and benefits for private sectors

PPP in Uzbekistan is an excellent method of transferring a wide range of rights and leasing assets to the private sector, thereby supporting projects of national importance on various terms. These benefits have become mandatory under the country's legislation.

To protect the interests of the private partner and (or) the creditor (creditors) under the PPP agreement, the state may provide the following types of support:

• subsidies, including subsidies aimed at ensuring the guaranteed minimum income of the private partner from the implementation of the PPP project;
• Investments in the form of assets and property necessary for the implementation of the PPP project;
• budget funds of the budget system of the Republic of Uzbekistan directed to payment for consuming or using a certain amount or part of the goods (works, services) produced or delivered during the implementation of the PPP project;
• issuing budget loans, loans, grants, credit lines and other types of financing;
• additional guarantees by mutual agreement to ensure the fulfilment of obligations by investors;
• tax credits and preferences, as well as other benefits;
• other guarantees and (or) compensations.

The land plots on which the object of the PPP is located and (or) necessary for the implementation of the activities provided for in the agreement on the PPP, belonging to the state partner based on the right of permanent use, or a part of them by the state partner leased to a private partner for the period and conditions specified in the PPP agreement. The rent paid for the land plots leased by the state partner to the private partner is equal to the land tax. Land tax benefits are taken into account when calculating the rent. Tax benefits and preferences are determined under the Tax Code of the Republic of Uzbekistan.

The principle of selection under the PPP law

The private partner is determined by the results of a tender or direct negotiations. Tenders may be one-stage or two-stage depending on certain criteria.

The detailed procedure to enter into a PPP agreement on a tender basis is mentioned below:

• A one-stage tender is held for the equivalent PPP project with a total value of up to one million US dollars.
• The procedure for holding a one-stage tender includes the following:some text
  • publication of the tender announcement in the mass media and on the official websites of the state partner and the authorized state body;
  • receiving tender offers from applicants for participation in the tender;
  • submit a request for the issuance of preliminary qualification documents and a set of tender documents to the applicants who expressed their desire to participate in the tender;
  • opening the envelopes containing tender offers of applicants; evaluation of tender offers;
  • determine the winner of the tender and the reserve winner;
  • conducting negotiations with the tender winner or a special design company;
  • concluding a PPP agreement with the tender winner.
• A two-stage tender will be held for the equivalent PPP project with a total cost of more than one million US dollars. The two-stage tender includes the stages of pre-qualification and selection of the tender winner.

At the first stage, applicants' qualification documents are reviewed and their compliance with the qualification criteria specified in the tender documents is assessed. It is allowed to conduct negotiations with applicants on the parameters of the tender subject. Technical and commercial (financial) proposals entered in the second stage are reviewed and evaluated, taking into account the specified parameters of the subject of the tender, and specifying the price (tariff).

The two-stage tender procedure includes:

• publication of the tender announcement and the request for preliminary qualification documents in the mass media and on the official websites of the state partner and the authorized state body;
• collection and evaluation of preliminary qualification orders confirming the qualifications of applicants;
• forming a list of applicants who have passed preliminary qualification;
• sending a set of tender documents by the state partner to applicants who have passed the initial qualification;
• submission of tender offers by pre-qualified applicants;
• opening the envelopes containing the tender offers of applicants who have passed the preliminary qualification;
• evaluation of tender offers;
• determine the winner of the tender and the reserve winner;
• conducting negotiations with the tender winner.

Direct negotiations

The parties may agree on PPP under the decision of the state partner based on direct negotiations without holding a tender in the following cases:

• in ensuring the state's defence capability and security;
• when exclusive rights to the results of intellectual activity, other exclusive rights, a plot of land, other immovable property and other property belonging to a specific person, which is considered a prerequisite for implementing the PPP. 

The agreement on state support for implementing PPP projects is signed by the Ministry of Finance of the Republic of Uzbekistan on behalf of the Republic of Uzbekistan. The state partner submits a report on the implementation of the PPP project to the authorized state body every six months, signed by the parties to the PPP agreement.

The procedure for submitting the report on the implementation of the PPP project and its form shall be approved by the Cabinet of Ministers of the Republic of Uzbekistan.

What should tender documentation contain

Before participating in a tender, it is essential to ensure that the tender documentation contains the following information:

• requirements for documents confirming compliance with qualification requirements of applicants;
• the location of the PPP facility;
• terms of design, construction, financing, reconstruction, use and service of the PPP facility;
• indicators of the quality of services provided by a PPP object or a private partner or the minimum requirements for it;
• the amount of financing provided by the public partner to the private partner to execute the PPP agreement, a list of property or property rights;
• risks assumed by the parties to the PPP agreement;
• the currency in which the parameters of the PPP project should be reflected and the exchange rate of the currency used in calculations to bring them into a single currency for comparison and evaluation;
• description of tender criteria;
• language requirements for the tender offer;
• the content of the tender offer, the method, place and terms of issuing tender offers and their validity;
• conditions for entering security for the tender offer;
• procedures, place, date and time for opening tender envelopes.

Tender qualification 

The applicant must meet the following criteria when participating in the tender to express his interest in the implementation of the PPP project:

• to have legal capacity;
• to have the necessary financial and (or) material, technical resources and (or) qualified labour resources to fulfil the obligations related to the PPP agreement;
• not to have grounds whose existence could lead to a conflict of interest.

Applicants in the stages of re-organization, liquidation and (or) insolvency are not allowed to participate in the tender.

The following criteria are used in the tender selection stage:

• the amount of payments made by the public partner and the private partner;
• highest prices and tariffs;
• the amount of funds of the private partner to be attracted for the execution of the PPP agreement;
• the amount and types of state support to the private partner;
• period of designing and (or) construction, construction, reconstruction, modernization, use and service of the PPP facility;
• technical and technological advantages, functional and innovative characteristics of the PPP project.

Esplora Legal provides expert guidance on PPP in Uzbekistan. Our team of seasoned legal professionals and business consultants can assist your company in different stages of PPP project development, ensuring compliance with local regulations and international standards.

We offer comprehensive support, from securing necessary approvals to facilitating negotiations with government agencies. Moreover, Esplora Legal offer comprehensive legal services to assist your company in managing PPP projects effectively.

‍