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Comparison of Two-Tier Auction Mechanism with Priority for DMPs and 51% Residency Requirement for Auctions over 499 MW
| Criterion | Current Edition: 51% Kazakhstani Ownership for Auctions Above 499 MW | Alternative from NPP RK: Priority for Projects with DMP Equipment |
|---|---|---|
| Goal | Formal restriction on foreign capital admission at the application stage | Create sustainable demand for products of Kazakhstani manufacturers |
| Implementation | Requirement: core shareholder must be a Kazakhstani resident | Introduction of two-tier procedure: selection among projects with DMP equipment. Obligation to use locally produced equipment is legally secured |
| Legal Consequences | No restriction on ownership change after auction win — easily bypassed | Requirement legally binding |
| Impact on GDP (example project) | Equipment and works are done abroad, VAT and tax base minimal | From 50% or more: equipment and service localization, VAT and tax growth, added value created |
| Impact on DMP Development | None: winners use familiar foreign suppliers | Systemic incentives for production, services, employment |
| Control & Monitoring | Virtually absent post-auction | Legal obligation to use local equipment, control instruments provided |
| Financial Efficiency for Kazakhstan | Potential capital outflow, technological dependency, reduced tax base | VAT growth, tax base, technology, DMP export potential |
| Risks | Circumvention of rules through post-auction share sales | Limited number of participants with older equipment — requires phased launch |
Key Points:
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Share sale after auction win is not prohibited, making the initial ownership requirement ineffective.
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No added value growth: equipment is still purchased abroad — no stimulus for the economy.
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No localization in VAT and taxes: over 2,600 MW of WPPs since 2014 implemented without obligations = GDP loss over 260 bln KZT.
Conclusion:
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51% Kazakhstani ownership requirement does not achieve the goals of industrial development and GDP growth at the investment stage.
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Two-tier auction procedure with priority for projects using DMP equipment offers effective incentives:
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Stimulates manufacturing and technology transfer;
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Increases VAT and tax base;
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Creates jobs in Kazakhstan.
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