1 PPP – UK Experience and its Application to the Republic of Kazakhstan – 22 May 2012 Sir John Stuttard Co-Chair, Kazakh-British Trade & Industry Council Chairman, Advisory Board, PricewaterhouseCoopers Kazakhstan Fellow of Churchill College, Cambridge

2 UK has extensive track record of infrastructure through PPP UK has had 900 PPP contracts worth £70bn Wide range of sectors covering: transport, health, education, housing, environment UK has experience of delivering these projects Current issues re financing Introduction

3 Responsibility and risk must be transferred to private partner Private partner responsible for contract life of 15 to 40 years Private partner will design, build, finance, operate and maintain Authority will pay or facilitate revenue to the private partner Authority can penalise for failure to meet service standards Each project will be tailored – BUT a robust contractual framework is essential Key Aspects of PPP

4 Many countries have adopted the UK PPP framework Established well in Canada, France, Germany, Australia Some adoption in Finland, Norway, Slovakia Each country has adapted procedures to meet national circumstances Application to other countries

5 Significant political commitment is the starting point A clear transparent legal framework is essential Private partners will prioritise the projects they appeal to them Market entry costs are high – therefore many projects needed Risk allocation should balance best value and attractiveness Key Lessons Learnt from adoption

6 In Europe: Increased borrowing costs Reduced liquidity Increased uncertainty Reduced appetite for lending to PPP projects + costs are higher Deals are being done, but need: Partners with banking strong relationships Realistic risk allocation Govt grants and guarantees Clever packaging Financing Update with Current Problems

7 In Europe: Increased borrowing costs Reduced liquidity Increased uncertainty Valid UK experience Transferable to Kazakhstan Less easy environment now Many opportunities The Summary of my talk