Unofficial translation
In accordance with subparagraph 15) of paragraph 1 of Article 388 of the Environmental Code of the Republic of Kazakhstan dated January 2, 2021, the Government of the Republic of Kazakhstan HEREBY RESOLVES:
1. To approve the attached Rules for financing by the operator of extended obligations of producers (importers) of an organization fifty or more percent of voting shares (stakes in the authorized capital) of which are directly or indirectly owned by the state and (or) the national managing holding, for further financing of projects in the manufacturing industry, aimed at improving the state of the environment.
2. This Resolution shall enter into force upon expiry of ten calendar days after the day of its first official publication.
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Prime-Minister of the Republic of Kazakhstan |
A. Mamin |
| Approved by the Resolution of the Government of the Republic of Kazakhstan dated September 2, 2021 No. 604 |
Rules for financing by the operator of extended obligations of producers (importers) of an organization fifty or more percent of the voting shares (stakes in the authorized capital) of which are directly or indirectly owned by the state and (or) the national managing holding, for further financing of projects in the manufacturing industry aimed at improving the state of the environment
Chapter 1. General provisions
1. These Rules for financing by the operator of the extended obligations of producers (importers) of an organization, fifty or more percent of voting shares (stakes in the authorized capital) of which are directly or indirectly owned by the state and (or) the national managing holding, for further financing of projects in the manufacturing industry aimed at improving the state of the environment (hereinafter- the Rules) shall determine the procedure and conditions for financing by the operator of the extended obligations of producers (importers) of an organization, fifty or more percent of voting shares (stakes in the authorized capital) of which are directly or indirectly owned by the state and (or) the national manager holding, for further financing of projects in the manufacturing industry aimed at improving the state of the environment.
2. The following basic concepts are used in the Rules:
1) a loan agreement is an agreement whereby the operator undertakes to lend a certain amount of money to an organisation to finance projects in the manufacturing sector and the organisation undertakes to repay the money to the operator in a timely manner, subject to the conditions hereof;
2) competent authority responsible for environmental protection - the central executive body in charge of administration and inter-sectoral coordination in the field of environmental protection;
3) extended producer (importer) liability operator (hereinafter referred to as operator) - a legal entity specified by the Government of the Republic of Kazakhstan engaged in organisation of collection, transportation, processing, neutralisation, use and (or) disposal of waste generated after loss of consumer properties of products (goods) subject to extended producer (importer) liability and its (their) packaging;
4) the competent authority responsible for state stimulation of industry (hereinafter referred to as the competent authority) - the central executive body responsible for guidance in the field of industry, as well as, to the extent prescribed by the laws of the Republic of Kazakhstan, for inter-branch coordination and participation in the implementation of state stimulation of industry;
5) a project in the manufacturing sector - a project in the manufacturing industry aimed at improving the environment, including the renewal of vehicles, self-propelled agricultural machinery by stimulating consumer demand in the Republic of Kazakhstan, and/or a breakthrough project aimed at implementing technological and innovative solutions;
6) an organisation - Industry Development Fund Joint Stock Company, established under Decree of the Government of the Republic of Kazakhstan No. 521 of August 18, 2020 “On the Establishment of the Industry Development Fund” to provide affordable financing for breakthrough manufacturing projects under the conditions specified in the documents of the State Planning System;
7) technical regulations - with regard to vehicles - Technical Regulations of the Customs Union “On the Safety of Wheeled Vehicles” (TR CU 018/2011), approved by Decision No. 877 of the Customs Union Commission of December 9, 2011, with regard to self-propelled agricultural machinery - Technical Regulations of the Customs Union “On the Safety of Machinery and Equipment” (TR CU 010/2011), approved by Decision of the Customs Union Commission No. 823 of 18 October 2011, or Technical Regulation of the Customs Union “On the Safety of Agricultural and Forestry Tractors and Trailers (TR CU 031/2012)” approved by Decision No. 60 of the Eurasian Economic Commission Council of July 20, 2012;
8) a leasing company - a legal entity engaged in financial leasing as required by the Law of the Republic of Kazakhstan “On Financial Leasing”;
9) self-propelled agricultural machinery - technical equipment designed to increase agricultural labour productivity by mechanising and automating individual operations or technological processes, independently propelled by an internal combustion engine with a cubic capacity exceeding 50 cubic centimetres or by electric motor(s) with a maximum (total) capacity exceeding 4 kW.
Footnote. Paragraph 2 - as reworded by Decree of the Government of the Republic of Kazakhstan No. 530 of 04.08.2022 (shall be enacted from the date of its first official publication).3. Projects in the manufacturing sector, financed by the operator, shall be selected under these Rules and the internal acts of the organisation, with the aim of renewing vehicles, self-propelled agricultural machinery by stimulating consumer demand in the Republic of Kazakhstan, subject to the following conditions:
1) the final volume of financing by the operator in 2022 of projects in the manufacturing industry related to the renewal of vehicles by stimulating consumer demand in the Republic of Kazakhstan for new passenger cars of domestic manufacture is KZT 100,000,000,000 (one hundred billion), for buses of domestic manufacture KZT 300,000,000 (thirty billion) and for self-propelled agricultural machinery of domestic manufacture KZT 300,000,000 (thirty billion);
2) the organisation shall borrow from the operator under the following main conditions:
KZT 100,000,000,000 (one hundred billion) at an interest rate of 0.1% in a lump sum for the whole term of the loan, with a term of 30 years, for the purpose of: further financing of projects in the manufacturing industry, aimed at improving the environment by stimulating consumer demand and the renewal of vehicles in the Republic of Kazakhstan, as part of conditional financing for second-tier banks to finance individuals - buyers of domestically produced passenger cars (hereinafter referred to as the borrowers);
KZT 30,000,000,000 (thirty billion) at an interest rate of 0.01% in a lump sum over the term of the loan, with a term of 30 years, for the purpose of further financing manufacturing projects aimed at improving the environment by stimulating consumer demand and vehicle upgrading in the Republic of Kazakhstan, within the framework of conditional financing of socio-business corporations (hereinafter referred to as SBC) under local authorities and/or transporters (hereinafter jointly referred to as the lessees of buses) purchasing buses of domestic production of environmental class pursuant to the technical regulations from vehicle manufacturers who have entered into an agreement on the industrial assembly of vehicles, with their subsequent provision for joint management to legal entities and individual entrepreneurs operating in the passenger transport sector;
KZT 30,000,000,000 (thirty billion) at an interest rate of 0.1% in a lump sum over the term of the loan, with a term of 20 years, for the purpose of further financing of projects in the manufacturing industry aimed at improving the environment by stimulating consumer demand and upgrading self-propelled agricultural machinery in the Republic of Kazakhstan, within the framework of conditional financing of leasing companies to finance agribusinesses that acquire in financial leasing new domestically produced machinery that meets environmental requirements specified in the technical regulations of domestic manufacturers who have entered into an agreement on the industrial assembly of agricultural machinery (hereinafter - the lessees of the machinery);
repayment of principal - at the end of the term with the right of early repayment at the initiative of the organisation;
the borrowing is performed by the organisation from the operator without providing collateral;
3) the organisation enters into loan agreements with borrowers under the following basic conditions:
interest rate - not more than 1.0% per annum;
loan term - up to 30 years;
payment of loan interest - once a year;
the period of disbursement of loan proceeds by the borrowers - up to 18 months from the date of the loan agreement/supplementary agreement to the loan agreement between the organisation and the borrower to increase the loan amount;
the currency of the loan is tenge;
repayment of principal - at the end of the term with the right of partial or full early repayment;
funds under the loan agreement shall be used to finance individuals who are buyers of domestically produced motor vehicles, and borrowers are prohibited from investing in foreign currencies or other instruments that are inconsistent with the intended use of the loan;
for transparency of financing, include a condition for mandatory implementation/availability of an automated system at the borrower to track the maturity status of the final borrower/lessee's financing;
other terms and conditions of the loan agreement shall be established as required by the organisation and/or as agreed by the parties;
4) the financing limit for each domestic producer is determined by a decision of a commission composed of representatives of industrial enterprises participating in the financing under these Rules, approved by the Industrial Development Committee of the competent authority, and approved by the management board of the organisation;
5) in cases of misuse and/or untimely disbursement of allocated funds, as well as in cases stipulated in the loan agreement between the organisation and the borrower, the organisation has the right to terminate the respective loan agreement early and withdraw the allocated funds for which the above violations have been identified;
6) in the event of early repayment of the loan by the borrower, the reuse of these funds is subject to the decisions of the competent authorities of the organisation;
7) main financing conditions for end-borrowers purchasing domestically produced vehicles:
target group - natural persons, buyers of domestically produced passenger cars in the environmental class as per technical regulations;
the loan is granted to ultimate borrowers on terms of purpose, payment, maturity, repayment and security, including:
financing amount per 1 light vehicle unit is not more than KZT 10,000,000 (ten million) with the cost of a light vehicle not more than KZT 150,000,000 (fifteen million);
financing per final borrower is not available more than once per biennium;
financing period - maximum 7 years;
down payment - from 0%;
loan currency - tenge;
the nominal interest rate for the final borrower must not exceed 4.0% per annum. In this case, the annual effective interest rate for the ultimate borrower, calculated as required by the National Bank of the Republic of Kazakhstan, shall not exceed 7.5% per annum, considering the expenses of the ultimate borrower for insurance and registration of the vehicle (including as a pledge);
final borrowers pay the cost of insurance and collateralisation of domestically produced passenger cars;
when the final borrower repays the obligations to the borrower, the borrower may reuse the funds as intended and within the term of the loan;
financing of final borrowers is revolving; payments from repayment of existing loans are re-directed to finance borrowers;
8) the organisation enters into financial leasing agreements with lessees of buses purchasing domestically produced buses under the following main conditions:
lease term - up to 7 years;
interest rate for the lessee of the buses - 0.01% as a single payment for the entire lease term;
initial payment (down payment) for the lease - 0 % of the value of the leased asset;
additional costs (insurance, service and maintenance of the leased item) - at the expense of the lessee of the buses;
under joint activity agreements, the lessee of the SBC is not entitled to increase the carrier's expenses associated with the payment of remuneration and other commissions for the use of the leased asset;
the financing of bus lessees is revolving, with payments from the repayment of existing leases being reinvested into new finance leases with bus lessees;
lessees of buses which operate in cities of republican significance and regional centres of the Republic of Kazakhstan are not eligible for financing conditions, while in the absence of bus lessees' applications approved for financing by the organisation after one year from the date of their receipt from the operator or the date of their return under the revolving principle, the organisation is entitled to finance bus lessees operating in the regional centres of the Republic of Kazakhstan;
when funding carriers other than SBC, the guarantee of full joint and several liability for the carrier by the SBC for the carrier's obligations and/or financing it in a public-private partnership, and/or sufficient security for the carrier's obligations as per the internal acts of the organisation, are mandatory requirements of the organisation;
other terms and conditions of the financial lease agreement shall be established pursuant to the requirements of the organisation and/or by agreement between the parties;
9) the organisation enters into loan agreements with leasing companies under the following basic conditions
interest rate - not exceeding 0.35% per annum;
loan term - up to 20 years;
payment of loan interest - once a year;
loan disbursement period for leasing companies - up to 18 months from the date of the loan agreement/supplementary agreement to the loan agreement between the organisation and the leasing company to increase the loan amount;
the currency of the loan is tenge;
repayment of principal - at the end of the term with the right of partial or full early repayment;
under the loan agreement, funds are allocated to finance lessees of machinery, and the leasing companies are prohibited from allocating the funds to invest in foreign currency or other instruments that do not correspond to the intended purpose of the loan;
in the event of misuse and/or late disbursement of allocated funds as well as the occurrence of cases specified in the loan agreement between the organisation and the leasing company, the organisation may terminate the relevant loan agreement prematurely and withdraw the allocated funds for which the above violations have been identified;
for transparency of financing, to oblige leasing companies to introduce/institute an automated system to track the status of the term of financing to the lessee of machinery;
other terms and conditions of the loan agreement shall be established as required by the organisation and/or as agreed by the parties;
10) the leasing company enters into financial leasing agreements with lessees of machinery purchasing self-propelled agricultural machinery of domestic manufacture under the following basic conditions:
lease term - up to 10 years;
interest rate - 6.0% per annum;
initial payment (down payment) under the leasing - 0% of the value of the leased asset;
grace period for principal repayment - 1 year;
additional costs (insurance, service and maintenance of the leased asset) - at the expense of the lessee of the equipment;
the financing of machinery lessees is of a revolving nature, with payments from the repayment of existing leases being reallocated to the conclusion of new finance leases with machinery lessees;
the amount of financing per lessee of machinery is not exceeding KZT 205,000,000 (two hundred and five million) and not exceeding three units of self-propelled agricultural machinery, one lessee of machinery shall not be financed more than once during a two-year period;
other terms and conditions of the financial lease agreement shall be established based on the requirements of the leasing company and/or by agreement between the parties.
Footnote. Paragraph 3 - as reworded by Decree of the Government of the Republic of Kazakhstan No. 530 of 04.08.2022 (shall come into force on the date of its first official publication).Chapter 2. Financing procedure
4. Projects in the manufacturing sector shall be financed in the following order:
1) on an annual basis, by August 31 of the respective year, the responsible authority shall send to the operator a request for the provision of forecasts of the amount of financing of projects in the manufacturing sector from the operator's funds (hereinafter referred to as the request) for the respective financial year;
2) after considering the request, the operator shall, within seven working days, include the projected amount of funding in the relevant section of its investment policy and submit it for approval to the competent authority in the field of environmental protection;
3) the environmental protection authority shall, within ten working days of receiving the investment policy, approve it or send a reasoned refusal of approval to the operator.
If a reasoned refusal is sent by the environmental authority, the operator shall, within three working days, eliminate the ground for the reasoned refusal and submit the investment policy to the environmental authority for re-approval;
4) in the case of approval by the competent environmental authority of the amount of funding in the investment policy, the operator shall, within five working days of receipt of the approval, send a response to the request for the financial year in question to the competent authority;
5) within three business days of receiving the response to the request, the responsible authority shall send to the organisation details of the projected amount of funding for projects in the manufacturing sector for the financial year concerned;
6) once the organisation has received information on the projected amount of funding for manufacturing projects for the financial year in question, it shall submit an application, accompanied by a business plan for the manufacturing project under consideration for funding, including environmental quality targets, to the competent authority in the field of environmental protection for approval.
For projects aimed at the renewal of vehicles by stimulating consumer demand in the Republic of Kazakhstan, the organisation shall file an application, accompanied by details of domestically produced vehicles complying with the environmental class as per the technical regulations, for the full amount of funding for approval to the competent authority in the field of environmental protection.
For projects aimed at upgrading self-propelled agricultural machinery by stimulating consumer demand in the Republic of Kazakhstan, the organisation shall forward an application with information on domestically produced self-propelled agricultural machinery complying with the environmental requirements set out in the technical regulations, including copies of certificates of compliance issued by a conformity assessment authority under the laws of the Republic of Kazakhstan on technical regulation, the availability of which confirms compliance with environmental requirements specified in technical regulations, for the full amount of funding to be agreed with the competent authority in the field of environmental protection;
7) within twenty-two business days of receipt of the application, the competent authority for environmental protection shall review the project in the manufacturing sector for conformity with the target environmental quality indicators or technical regulations, approve the submitted application or provide a reasoned refusal;
8) within five business days of receipt of the approval of the environmental authority referred to in sub-paragraph 7) of paragraph 4 hereof, the organisation shall conclude a loan agreement with the operator for each individual project in the manufacturing sector for further financing of projects in the manufacturing sector.
In the event of a refusal of the environmental protection authority under sub-paragraph 7) of paragraph 4 hereof, the organisation shall finalise the application and resubmit it for approval under subparagraph 6) of paragraph 4 hereof.
Footnote. Paragraph 4 - as reworded by Decree of the Government of the Republic of Kazakhstan No. 227 of 15.04.2022 (shall be put into effect ten calendar days after its first official publication); as amended by Decree of the Government of the Republic of Kazakhstan No. 530 of 04.08.2022 (shall enter into force from the date of its first official publication).5. Projects in the manufacturing sector shall be further financed by the organisation at rates of up to 3%, and from 0.01% or more for projects aimed at renewing vehicles by stimulating consumer demand in the Republic of Kazakhstan, including under the terms of State Planning System documents and/or internal acts and decisions of the organisation's competent authorities.
Footnote. Paragraph 5 - as reworded by Decree of the Government of the Republic of Kazakhstan No. 227 of 15.04.2022 (shall be put into effect ten calendar days after the date of its first official publication).6. Control over the targeted use of funds allocated for the implementation of projects in the manufacturing industry, in accordance with these Rules shall be carried out by the organization.
7. Control over the targeted use of funds received by the organization from the operator in accordance with these Rules shall be carried out by the authorized body and the authorized body in the field of environmental protection.
8. If the project in the manufacturing industry, for which the operator has previously financed, fails to achieve the goals of improving the state of the environment, the amount of allocated funds shall be returned by the organization to the operator in the manner and on the terms determined by the loan agreement.
