Reformatics. New reforms on improvement of Kazakhstan s position in the World Bank s Doing Business ranking. 2-3 March 2015

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1 New reforms on improvement of Kazakhstan s position in the World Bank s Doing Business ranking 2-3 March 2015 Intercontinental Almaty (181 Zheltoksan Str., Almaty, , Kazakhstan)

2 Kazakhstan in DB 2015 report General ranking of Kazakhstan in DB report 77 th place Due to changes in methodology the 50 th place in DB 2014 ranking is equal to 76 th place in DB 2015 ranking Kazakhstan lost its position as a leader in the region and the third place among post Soviet area after Georgia and Armenia In DB 2014 ranking Kazakhstan had above average rate among countries of Central Asia and Europe and was ahead of Customs Union members (Russia 92th place, Belorussia 63 rd place) Having 77 th place in DB 2015 ranking, Kazakhstan s position is Lower than average 68 th place for countries of Central Asia and Europe Lower than Customs Union members: Belorussia is on 57 th place, Russia is on 62 nd place Kazakhstan is still the best executor among countries of Central Asia Kazakhstan s position in DB ranking by years (as of 2015) How Kazakhstan and comparative economies are estimated by ease of doing business Belorussia (57 th place) Europe and Central Asia (68 th place) Russian Federation (62 nd place) Moldova (63 rd place) Kazakhstan (77 th place) Ukraine (96 th place) Kyrgyzstan (102 nd place) Tajikistan (166 th place) Which place Kazakhstan had in DB 2015 ranking Distance to frontier Source: Doing Business 2015 Registration of companies (55) Solution of insolvency (63) Providing implementation of contracts (30) Receiving permissions for construction (154) Connection to electric power supply systems (97) Trade across borders (185) Taxation (17) Ownership registration (14) Receiving loans (71) Source: Doing Business 2015 Protection of minority investors (25) Source: Doing Business

3 Connection to electric power supply systems Reforms implemented by the Government of Kazakhstan for improvement of Doing Business ranking Vahtang Lezhava Tamara Kovziridze David Koberidze

4 Connection to electric power supply system All over the world Kazakhstan is on the 97 th place in ranking of 189 economies by ease of connection to electric power supply system. According to data collected by Doing Business research, connection to electric power supply system requires 6 procedures, takes 88 days and costs 56,6% from income per capita. All over the world, Kazakhstan is on the 97 th place in ranking of 189 economies by Connection to electric power supply system Kazakhstan (97 th place) Europe and Central Asia (120 th place) Russian Federation (143 rd place) Belorussia (148 th place) Moldova (149 th place) Kyrgyzstan (168 th place) Tajikistan (178 th place) Ukraine (185 th place) Distance to frontier Connection to electric power supply system from 92 to 97 position No reform were registered in this area. Kazakhstan reduced the cost from 65,3 to 56,6% from income per capita (due to the further increase). Position of Kazakhstan became worse due to improvement made by other countries in this area. 4

5 Methodology Connection to electric power supply system CONNECTION OF STANDARD WAREHOUSE TO ELECTRIC POWER SUPPLY SYSTEM Warehouse is the property of a local entrepreneur. Is located in the city which is the largest center of business activity in the country. Is in the center where usually such warehouses locate. New connections to electric power supply system in this region are not subject to the special regime of investments assisting (for example, which proposes subsidizing or faster service). There are no physical obstacles for connection in this region. For example, warehouse is not close to the railroad. Is a new building and connects to electric power supply system for the first time. Has two floors with a total are of approximately 1 300,6 sq. m. ( sq. ft.) Area of the land plot where the warehouse is built is 929 sq. m. ( sq. ft.) Is used for storage of chilled products. 5

6 Methodology Connection to electric power supply system PROPOSALS FOR CONNECTION TO ELECTRIC POWER SUPPLY SYSTEM Is three-phased, wired, with a regulatory power supply of 140 kwa. (Note: for countries with line voltage of 120/208 W the current shall be approximately 400 A. For countries with line voltage of 230/400 W the current shall be approximately 200 A). The length of line is 150 m. At that it is meant that connection is either to low line voltage, or middle line voltage, as well as either connection by air, or land, depending on which of them is more common in the country and the warehouse location region. Works on connection provide crossing of 10 meter road (affordable by excavation works or laying the air lines), but all of them are done on the public land. These works touch other land sections, as the warehouse has its own driveway. The length of connection (or its part) on private land is insufficient. Monthly use of electricity shall be 0.07gw-hr. Assembling the internal wiring has been completed up to installation of exploitation panel/switchboard of client and meter inclusive. 6

7 Procedures for Connection to electric power supply systems in Kazakhstan Connection to electric power supply in DB 2015 No. Procedure Time for completion Cost for completion 1 Submitting application for connection to electric power supply to the Department of architecture and city planning and waiting for technical terms. 2 Expectation of completion and coordination of electricity project developed by the electric planning company, and its confirmation. 14 days Free 26 days KZT 255,000 3 Receiving permission for excavation works from the Department of architecture and city planning management in Almaty and Almaty oblast. 1 day Free 4 Expectation of completion of external works on connection to electric power supply by the provider. 5 Expectation and receiving of inspections of external connection works from Alatau Zharyk and other members of the Commission. 6 Signing the contract for delivery with the company-supplier and expectation for Alatau Zharyk to seal the meter. 27 days KZT 750,000 7 days Free 7 days Free 7

8 Reforms for Connection to electric power supply system in Kazakhstan No. Procedure Time for completion Cost of completion 1 Submitting application for connection of electric power supply system to the 14 days Free Department of architecture and city planning and expectation of technical terms. Customer submits the application for connection to electricity / technical terms to the Almaty Department of city planning and architecture and expects the technical terms. Technical terms for electricity are received together with technical terms from other utility providers (wate, gas, etc.) Together with the application the Customer should provide the following documents: application for technical terms, confirmation of ownership rights, ID card, calculation of the requested load, topographic map / survey. Specification of the technical terms among other terms define the power of the existing electric objects in geographic location where the warehouse of the Customer is located, and states which stations or which connection point are given to the Customer. Planned reforms in 2015 Technical terms for connection is given within 5 working days. «Rules of using of electricity» Electricity transferring or electricity producing company gives the technical terms for connection of new or reconstructed systems after receiving the application from the customer: With a power of up to 200 kw, within 5 working days;» Doing Business Methodology Proposals on connection to electric power supply system: 1. Is three-phased, wired, with a regulatory power supply of 140 kwa. (Note: for countries with line voltage of 120/208 W the current shall be approximately 400 A. For countries with line voltage of 230/400 W the current shall be approximately 200 A). 8

9 Reforms for Connection to electric power supply system in Kazakhstan No. Procedure Time for completion Cost of completion 2 Expecting completion and coordination of electric project developed by the private 26 days KZT 255,000 company on electric planning, and its confirmation. After the issuance of technical terms the Customer hires the private project company for preparation of project-plan for external connection, and if at the moment the topographic plan of warehouse is not available. The same company on behalf of the client shall receive the approval of the project from different authorities. Time necessary for this procedure includes the time for preparation of the project and its coordination/approval. Planned reforms in 2015 Confirmation of the project decisions takes 3 days. «Rules of using the electricity» Project documentation for construction, reconstruction or modernization of electric stations of consumers should be approved before starting the constructing and assembling works with the authority which gave the technical terms. Approval of the project decisions is made in regards to its correspondence to issued technical terms within the following period: For electric stations with a power up to 200 kw within 3 working days;» When connecting of the object to the system of electric power supply it is not necessary to receive permissions for connection from the territorial department of the Committee of the atomic and energetic supervision of the Ministry of Energy of the Republic of Kazakhstan. This procedure took up to 20 days before, and now it is fully removed. 9

10 Reforms for Connection to electric power supply system in Kazakhstan No. Procedure Time for completion Cost of completion 3 Receiving permissions for excavation works from the Department of architecture and city planning in Almaty and Almaty oblast. Permissions for excavation works is received by the contractor for supply of electricity. 1 day Free Planned reforms in 2015 Permission for excavation works is removed. Notifications should be done by the project maker, not by the customer. Law of the Republic of Kazakhstan On architecture, city planning and construction activity in the Republic of Kazakhstan as of 16 July 2001 Article 68. Main requirements for construction process 11. Before starting the construction and assembling works the customer shall be obliged to notify the authorities making the state control of architectural and construction works about the start of activity as set out by the Law of the Republic of Kazakhstan On permissions and notifications. At that the project maker has the right to notify on the start of construction and assembling works for connection to electric power supply if the objects are not technically difficult. 10

11 Reforms for Connection to electric power supply system in Kazakhstan No. Procedure Time for completion Cost of completion 5 Expectation and receiving the inspection of external connection works from Alatau 7 days Free Zharyk and other members of the Commission. The Contractor on behalf of the client applies with a written request for making inspection of the completed external connection works. The works should be approved by the Commission (members of the Commission are: Alatau Zharyk, Committee on state energy control, Customer, Contractor of electricity connection). Reform Permission from the Commission for connection to electric power supply systems is removed. Permission for connection to electric power supply systems, as well as control and supervision by means of inspections is removed: Law of the Republic of Kazakhstan On electricity as of 9 July 2004 Article 6. State energy control 3. State energy supervision and control is made by means of inspection. 10. Authority on state energy control: «3) Issues permissions for connection to electricity systems with a power of more than 100 kw - REMOVED 11

12 Reforms for Connection to electric power supply system in Kazakhstan No. Procedure Time for completion Cost of completion 6 Signing contract for supply with a company-supplier and expectation of Alatau Zharyk 7 days Free to seal the meter. In accordance with the Law On electricity in the Republic of Kazakhstan the contract for electricity supply is signed with a company-supplier of electricity Almaty Energo Sbyt. After signing the contract Almaty Energo Sbyt directly notifies the system of Alatau Zharyk distribution without interaction with client. After Alatau Zharyk receive the application for sealing the meter, its representative shall come to the construction place within 2 days to seal the meter. Planned reform in 2015 Signing of contract and electricity supply takes 3 days. «Rules of electricity using» «Signing the contract for electric power supply with a set out power of electric stations (up to 200 kw inclusive) - 1 day Notification of the energy transferring (energy producing) company about signing of the contract - 1 day Supply of the power to electric stations of the consumer - 1 day» 12

13 Procedures for Connection to electric power supply system in Kazakhstan Connection to electric power supply system in DB 2016 No. Procedure 1 Submitting application for electric power supply to the Department of architecture and city planning and expecting of the technical terms. 2 Expectation of completion and coordination of electric project developed by the private company on electric planning and its approval. 3 Expectation of completion of external works by the contractor to supply the electricity. Time for Cost of completion completion 5 days Free [9 days] (preliminary ) 4 Signing the contract for delivery with company-supplier and expectation for Alatau Zharyk to seal the meter. 3 days Free Technical terms for connection is issues within 5 working days. Confirmation of the project decisions takes 3 days. Permission for excavation works is removed. Notification is made by project maker, not by customer. Permission from the Commission for connection to electric power supply systems is removed. Signing the contract and electricity supply takes 3 days. 13

14 Additional aspects for Connection to electric power supply system in Kazakhstan Connection to electric power supply system in DB 2016 Information on size, differentiation of tariffs is on website: If failure or emergency signal come from ПС kw the dispatcher s monitor set with mechanical equipment shall have the Signals sign, sound alarm shall work, and in the events register the note comes stating the time and signals emergency or failure. After analysis of emergency or failure signals from ПС kw the dispatcher shall give the signal to the brigade for inspection of ПС kw. 14

15 Additional aspects for Connection to electric power supply system in Kazakhstan Connection to electric power supply system in DB 2016 Published the official statistic data on the website of the distributor of the electricity on average index of interruption duration (SAIDI) and index of average frequency of system interruption (SAIFI). Data by years SAIFI (coefficient) average frequency of interruptions in the system 4,33 2,74 1,16 SAIDI, min per year average duration of interruption in electricity supply in the system Source:

16 Thank you for attention! Discussion on the theme, Q&A