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Regulation of specific industries

ELECTRIC POWER INDUSTRY

 

State Regulation

The Government of the Kyrgyz Republic develops a general policy for the electric power industry.

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Licensing

In the Kyrgyz Republic the following are subject to licensing: the production, transmission, distribution, and sale of electricity, the construction of power stations, substations and power lines, and the import and export of electricity  (except for the activities in the field of renewable energy sources). According to the amendments to the Law of the Kyrgyz Republic "On renewable energy" in October 10, 2012, a license to operate in the field of renewable energy sources was abolished.

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Construction and Reconstruction of Generating Capacities

The total Kyrgyz hydropower capacity is estimated at 142.5 billion kWh (placing Kyrgyzstan in 3rd position among CIS counties after Russia and Tajikistan). The total established capacity of all 17 electric power plants existing in Kyrgyzstan, of which 2 are thermal power plants (Bishkek and Osh Heat and Power Plants), the other 15 are hydro power plants is 3,586.48 MW.[1] (120)Only on the Naryn River, it is feasible to build 7 more cascades consisting of 33 hydropower plants, with summarized installed capacity of 6,450 mw and annual power output of more than 22 billion kWh.[2](121)

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Construction of power lines and substations

In November 2005, the Government of the United States and the Government of the Kyrgyz Republic signed a grant agreement to finance the preparation of a feasibility study:[3](128)

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Electric Power Market and Setting Tariffs

To assure a functional system of commercial relations in the process of production, sale and purchase of electric power, the following rules of electric power market have been developed:[4](136)

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Renewable energy sources  

In 2008, the Law of the Kyrgyz Republic “On Renewable Energy Sources” was adopted.[5] (138) The purpose of the law is to provide legal basis for the development and use of renewable energy sources, improvement of energy structure; diversification of energy resources, improvement of social welfare, energy safety of the republic, environmental protection and sustainable economic development. According to the mentioned law:

Privatization of Energy Facilities

In 2008 - 2012, the Government of the Kyrgyz Republic made a decision to carry out privatization of the following:[6]

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MINERAL RESOURCES

There are various mineral deposits identified and explored in the Kyrgyz Republic. The country has great potential for many minerals such as gold, mercury, antimony, rare earths, tin, tungsten, coal, non-metallic materials, underground water. There are prospects for the production of iron, titanium, vanadium, aluminum, copper, molybdenum, and beryllium. Industrial significance of tantalum niobate, cobalt, zirconium, lithium, gemstones[7] (141) is also high.

 

State Regulation

The state regulation of mining activities is performed by the Ministry of Economy of the Kyrgyz Republic and the State Agency for Geology and Mineral Resources under the Government of the Kyrgyz Republic.

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Types of Mineral Rights

The right to use subsoil arises under the license, the concession agreement, the production sharing agreement and the state registration.   

 

License

In most cases; mineral rights are provided  under a license . The State Agency for Geology and Mineral Resources issues licenses subject to the procedure and on conditions set forth in the Law of the Kyrgyz Republic “On Mineral Resources ”,[8]  adopted in accordance with it laws on specific mineral resources, such as coal, oil, and gas,[9] (148) and Regulations on the Procedure for Mineral Rights  Licensing.[10](149)

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Concession

Mineral rights  may be granted on the basis of a concession. Procedure and conditions on which a concession is granted and a concession agreement is concluded are provided by the Law “On Concessions and Concession Enterprises in the Kyrgyz Republic”,[1] the Civil Code, and the Law of the Kyrgyz Republic “On Investments in the Kyrgyz Republic”.[2].

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Production Sharing Agreement[1]

According to the Law of the Kyrgyz Republic “On Mineral Production Sharing Agreements ”,[2] the Kyrgyz Republic, based on a production sharing agreement, may for a fee provide to an investor using mineral resources  the prerogative right to search, explore and mine mineral resource deposits and perform related works within an established time, while the investor using mineral resources , in their turn, must undertake performance of these works at their own expense and their own risk. The respective agreement shall contain all necessary conditions related to mineral rights, including those on processing of raw minerals, procedures and conditions of production sharing between the parties in accordance with the Law of the Kyrgyz Republic “On Mineral Production Sharing Agreements ”.

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State Registration

State registration is required for scientific mineral researches conducted according to the approved program and for individual artisan mining. State registration of scientific mineral research is performed by the State Agency for Geology and Mineral Resources. The term established for the accomplishment of scientific research programs is the same as the term of validity of the mineral rights awarded under the state registration.

State registration of individual artisan mining is performed by local state administrations. The alluvial mineralized areas can be developed by individual artisan mining[15] (158). The procedure for organizing individual artisanal mining is determined by the Regulation approved by the Government.

 

Mining Taxes and Mandatory Fees   

As a rule, the mining industry in the Kyrgyz Republic is subject to general tax regime implying the following taxes and reporting requirements for local and foreign companies operating in the Kyrgyz Republic through their permanent establishments:

o          profit tax (10%);

o          income tax (10%);

o          VAT (general rate of 12%, for certain operations 0% or 20%);

o          excise tax (varies depending on the type of excisable goods, their price or physical volume);

o          sales tax (from 1% to 3%);

o          income tax applicable to taxpayers engaged in extraction and sale of gold-containing ore, gold-containing concentrate, gold allow, and refined gold (from 1% to 20% depending on world prices per one troy ounce).

Kyrgyz law requires mineral right holders to pay taxes, charges and fees such as the license retention fee, local infrastructure development and maintenance fee.[16]

 

Prospects for Development 

In 2014, it is planned to launch enterprises at the following gold deposits: Bozymchak (Ala-Buka district, Jalal-Abad region),[17] (160) Kumbel (Naryn district of Naryn region), Nasonovskoe (Panfilov district, Chui regiont), Taldybulak Levoberezhny,[18] (161) and to expand gold production by launching Southwest and Sary-Tor sections of Kumtor deposit.

Starting from February 2014, the State Agency for Geology and Mineral Resources will hold auctions for 4 gold and coal deposits[19] (162) , Sary-Tash limestone deposit[20] (163)  which will be organized and conducted in accordance with the requirements of the new Law on Mineral Resources of 2012. During the period from 2014 to 2017, it is planned to launch a number of gold deposits, etc.[21]

 

Current legislative reforms

The Kyrgyz Republic strives to create a favourable investment climate for all mineral right holders which is the goal of the newly enacted Law on Mineral Resources. As part of the efforts to improve the investment climate, a number of regulatory acts have been drafted to optimize the legal framework for mineral resources and to ensure the introduction of appropriate implementation mechanisms for the new law on mineral resources.    

The Ministry of Economy and Antimonopoly Policy has developed a medium- and long-term development strategy for the mining industry and the Action Plan for its implementation. The main aim of this strategy is to achieve sustainable development of the mining industry with the maximum use of the mineral potential. It is planned to approve the medium- and long-term development strategy and the action plan for its implementation in January 2014. [22]

 

TELECOMMUNICATIONS

 

State Regulation

The Ministry of Transport and Communications of the Kyrgyz Republic is responsible for development of the public policy in the area of communications.[1]

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Licensable Activities

The following activities in the field of telecommunications are business activities subject to licensing:[23]

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Licensing

In order to obtain or renew a license, an applicant needs to file with the State Agency for Communications an application with a set of requisite documents.[24].

 

License fee

The state license processing fee is 300 KGS (about 6.45 US dollars as of April 2012).

There is a license fee for issuance, re-issuance of the license and issuance of the duplicate copy of the license, which amount was not specified as of December 2013.

Other fees are not charged from the applicants and licensees.

 

Permits and consents

In addition to a license, for activities in the area of electric communications the following permits and approvals are required. 

- Permits for import of radio electronic means and high frequency devices, other technical means emitting radio frequency radiation or being sources of high frequency electromagnetic waves;[1]

- Allocation/assignment of numeration (range of numbers, intercity and international codes);

- Allocation/assignment of denominations, radio frequency waves;

- Frequency assignment;[2]

- Certificates of compliance for communications equipment and communications facilities.   

 

Permit for Import of Devices 

Radio electronic devices, high frequency devices, and other technical devices producing radio frequency radiation or electromagnetic waves may be imported into the territory of the Kyrgyz Republic under the permit for import issued by the National Agency.[3]

However, according to the decision of the State Commission for Radio Frequencies an import permit is required for radio electronic means and high frequency devices functioning in the frequency range from 3 kHz to 3000 GHz, regardless of its power and purpose. [4]

Generally, the procedure for issuance of import authorization by the State Agency for Communication takes 1 to 2 days, and the authorization is valid for 1 month. 

 

Certification and registration of devices

According to the principal legislation on telecommunications, the following are subject to mandatory certification:[5]

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Fees, charges, duties and payments

Permits for import of equipment and private acquisition are issued for a fee which amount was not specified as of December 2013.

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Prospects for Development 

There are 46 operators licensed to provide telecom services, 20 operators licensed to provide international and national long distance communication services, and 21 operators licensed to provide IP technologies-based services.[30] However, to date, there are 122 settlements in the country where no fixed-line telephone services are provided.

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MICROFINANCE

Over the entire period of its formation and development the Kyrgyz microfinance sector has achieved significant results. Kyrgyzstan was first among Central Asian countries to enact the laws “On Microfinance Institutions in the Kyrgyz Republic” (2002) and “On Credit Unions” (1999).  

 

Microfinance Institutions

First microfinance institutions (MFIs) in the Kyrgyz Republic were established with the support of international donors. Thus, FINCA Microfinance Company was one of the first to start its operation in 1995. Today, Kyrgyzstan’s microfinance sector has a great diversity of participants engaged in microfinance. According to the National Bank of the Kyrgyz Republic, as of October 31, 2013, the microfinance sector consists of 4 microfinance companies (MFC), 212 microcredit companies (MCC), 65 microcredit agencies (MCA), and 155 credit unions (CU), of which 12 CUs may take deposits from their participants[31] .

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[1] Governmental Resolution, “On Fundamentals of Electric and Thermal Power Tariff Policy for 1998-2000″, dated the 27th April, 1998, No. 222.

[2] http://www.energo-es.kg/projects/investment_projects/

[3] The Grant Agreement between the Government of the USA and the Government of the Kyrgyz Republic dated 22nd November, 2005, ratified by Edict UP № 65of the President of the Kyrgyz Republic dated 13th February, 2006.

[4] Resolution No. 187 of the Government of the Kyrgyz Republic dated 6th April, 2000

[5] Law No. 283 of the Kyrgyz Republic “On Renewable Energy Sources” dated 31st December, 2008 (as last amended on 10th October, 2011).

[6]  Resolution No. 84 of the Government of the Kyrgyz Republic dated 14th March, 2008, State Property Privatization Program for 2008-2012 approved by Government Resolution No. 518 of 17th September, 2008 (as last amended 29th July, 2011).

[7]   http://www.geology.kg/mestorozhdeniya.html

[8]  The Law of the Kyrgyz Republic “On Mineral Resources” dated 9th August 2012.

[9]  The Law of the Kyrgyz Republic “On Coal” dated 3rd February 1999 (with the latest amendments as of 18th June, 2005), Law of the Kyrgyz Republic “On Oil and Gas” dated 8th June 1998 (with the latest amendments as of 29th May, 2009).

[10] The Regulation on the procedure of mineral rights  licensing approved by Resolution No. 228 of the Government of the Kyrgyz Republic dated 4th April , 2012 (as last amended 18th June, 2012).

[11] The Law of the Kyrgyz Republic “On Concessions and Concession Enterprises in the Kyrgyz Republic” dated 6th March, 1992 (with the latest amendments as of 17th October, 2008).

[12] The Law of the Kyrgyz Republic “On Foreign Investments in the Republic of Kyrgyzstan” dated 28th June, 1991 (the Law was repealed according to the Law No. 66 of the Kyrgyz Republic of 24th September, 1997, with the exception of Part 1, Article 20, and Article 23) and Law of the Kyrgyz Republic “On Investments in the Kyrgyz Republic” dated 27th March, 2003 (with the latest amendments as of 22nd October, 2009).

[13] To make the effective legislation consistent with the Law on Subsoil, the Ministry of Economy has developed the draft Law on Production Sharing Agreements,

[14] The Law of the Kyrgyz Republic “On Mineral Production Sharing Agreements ” dated 10th April, 2002.

[15]  Article 39 of the Law on Mineral Resources of August 9, 2012.

[16] Articles 19-2 and 19-3 of the Law of the Kyrgyz Republic "On non-tax payments" of April 14, 1994 N 1480-XII (as amended by the Law of August 9, 2012 N 162; Law of July 17, 2013 N 149 ).

[17]  http://bit.ly/1cSTC0E

[19] http://bit.ly/JsSIjF

[21] Resolution of the Government of the Kyrgyz Republic "On approval of the draft program of the Kyrgyz Republic for the transition to sustainable development for 2013-2017 years" from April 30, 2013 N 218; implementation plan for the transition of the Kyrgyz Republic to Sustainable Development for 2013-2017 (http:// www.gov.kg/?page_id=23888).

[22]  http://www.24.kg/economics/166340-gosgeologiya-namerena-provesti-aukcion-na.html

[23]  Points 11 and 13 of Article 15 of the Law of the Kyrgyz Republic “On licenses and permits system in the Kyrgyz Republic”, # 195, dated as of 19th October, 2013.

[24]  Chapter 36 of the Regulation on Licensing of Certain Activities (as last amended 1st July, 2013) approved by Resolution No. 260 of the Government of the Kyrgyz Republic dated 31st May, 2001 (with the latest amendments as of 1st July, 2013).

[25]  Point 30 of Article 17 of the Law of the Kyrgyz Republic “On licenses and permits system in the Kyrgyz Republic”.

[26]  Point 31 of Article 17 of the Law of the Kyrgyz Republic “On licenses and permits system in the Kyrgyz Republic”.

[27]  Article 22 of the Law of the Kyrgyz Republic: “On Electric and Postal Communication”.

[28] Point 3 of the Regulation on procedure for development, production, designing, construction (installation), purchase (sale), operation in the Kyrgyz Republic and import from foreign countries of radio electronic means and high frequency devices, approved by decision of the State Commission for Radio Frequencies of the Kyrgyz Republic dated 21st October, 1997 (Minutes No. 2).

[29]  Article 9 of the Law of the Kyrgyz Republic: “On Electric and Postal Communication”.

[30] Page 40 of the Report of the State Agency for Communications under the Government of the Kyrgyz Republic for 2012. General information on telecommunications sphere on the official website of the Ministry of transport and communications of the Kyrgyz Republic. http://mtс.gov.kg

[31]  http://www.nbkr.kg/index1.jsp?item=1467&lang=RUS