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Features of the PPP project in Namangan

Management of the PPP project

There is an extremely important point, which, in my opinion, is missed in this project — a working group is not established, with the participation of the Ministry of Housing and Utilities, the Ministry of Finance, the khokimiyat of Namangan and the district, the PPP Agency and the joint stock company «Uzsuvtaaminot» — the intended public partner.
Usually an independent financial and independent technical expert is also invited to this group

This working group shall regularly, at least once a week, make decisions on various issues: selection criteria for the private partner, the structure of the transaction, the basic conditions of the PPP agreement, the expected state support, features of the tender documentation, issues related to land, environment, local communities, etc., and bring the decisions made or options of such decisions to the heads of departments…

In the future, when the agreement on PPP will be signed, this group will include representatives of the private partner and this group, in theory, should ensure continuity of all decisions and discussion of problematic issues, so to speak, in the «pre-trial order».

And of course it is obvious that members of the working group cannot be members of the tender commission — this is a completely different job…

Without such a working body, it will be difficult to agree on the parameters of the project, especially the budget funds

Preparation of a PPP project

Before proceeding to the selection of a private partner, it is still necessary to prepare a number of documents describing the following points:

Legal points
— Draft bidding documents (qualification requirements, criteria, etc.)
— drafts of all agreements: on PPP, on state support, on allocation of land, on guarantees of payment, etc.
— to analyze the regulatory framework of Uzbekistan, how far there is no contradiction with the structure of the project of the proposed PPP, etc.

Each time, the lawyers at this stage, there is one obstacle in the law on PPP in the Republic of Uzbekistan, which prevents the full implementation of the PPP project in the country.
It is an article, according to which the PPP agreement is made with the winner of tender. In fact, the agreement is signed with the Special Purpose Veicle (SPV), a new company that is created by the winner (consortium) in Uzbekistan to implement the project.

By the way, the question is whether the state itself can be a participant in this SPV? The answer is yes, it can. The same JSC Uzsuvtayminot can enter the list of founders

Technical points
It is not difficult to build a STC — every year all over the world they are put into operation, if not thousands, then certainly hundreds.
And you can set yourself beautiful goals in this PPP project:
1) reduce the amount of untreated sewage into the Syrdarya
2) to clean the drains and direct part of the treated water for irrigation to nearby fields or for irrigation of lawns in Namangan itself
3) Prepare the sludge in marketable form and sell it, for example, to the cement industry or use it as fertilizer in agriculture…

… and quite a fantastic looking goal
4) methane production (from digestion of sewage sludge) and using it for heat (drying or heating sludge) and even for electricity generation
Now that would be beautiful…

The first three goals can and should be achieved in this project, but the fourth goal will take time until the technology becomes cheaper. Or one could ask for money from donors concerned about «green» technologies to fund the construction of digesters and mini cogeneration plants (for ~15-20 mW) as part of the project…

You also need to answer the questions: what is the engineering armament of the site? what will be the maximum capacity of the sewage treatment plant? how the volume of effluents will be distributed over time ? etc.

Commercial questions
— Financial model with consideration of technical aspects
— Market soundings: negotiations with potential bidders
— project design with description of commercial risks, political risks, etc. and
— distribution of risks among the parties, etc.

This is a list of questions that must be answered and it is far from complete…

The tender process

It should be noted at once — in Uzbekistan there are no statutory requirements for the tender process of PPP projects. In fact, each time separately for each PPP project a separate tender documentation is formed (requirements for participants, procedural aspects, evaluation criteria, the «weight» of these criteria, etc.).

My personal opinion — this is correct, because it is difficult to prescribe all the issues in the current legal framework, and in addition, each of the international financial institutions, which is a consultant on the deal — its own tender procedures. The Asian Development Bank has its own procedures, the International Finance Corporation has its own procedures, the Asian Infrastructure Investment Bank has its own procedures, and the EBRD has its own procedures as well…

The «Request for Interest» stage
So, back to the project.
The Republic of Uzbekistan in August 2020 invited private companies to bid for the design, financing, construction and operation of a wastewater treatment plant on a PPP basis in Namangan. The request for expressions of

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