FACTSHEET: SUSTAINABLE PUBLIC PROCUREMENT
Kazakhstan
Introduction
This Factsheet outlines the current progress in advancing Sustainable Public Procurement (SusPP) in Kazakhstan based on a desk review. It applies an analytical framework of six Pillars (or "building blocks") of SusPP systems.
The Framework is designed to make clear that countries do not need to follow a linear step-by-step path to build effective SusPP systems. Rather it is important to examine local contexts and prioritize the Pillars with the most potential in the country. No matter where a country starts, a balanced approach to implementation calls for progress on all Pillars to some degree.
This Factsheet is organized as follows:
- "Country overview" section with an maturity rating and graphic, key achievements and remaining gaps, and timeline of key events.
- "Detailed Findings by Pillar" section that summarizes the research findings from the desk review for each Pillar theme.
- "ADB Focus" explores opportunities for ADB teams to open discussions with country counterparts and add value to the work of partners.
The Factsheet is intended to be a living document that will be revised and improved as new information is uncovered and advances are made. It is designed to support the ADB training programs on SusPP.
Country Overview
Public procurement in Kazakhstan accounts for 6.6% of GDP and 43% of government expenditures. The Government of Kazakhstan enacted its first Public Procurement Law (PPL) in 1997. Since, the GoK has continued efforts to develop public procurement and comply with international standards. The current PPL was adopted in 2015 and major amendments were adopted on December 26, 2018, which have been effective since January 1, 2019. Currently, additional updates are awaiting Cabinet approval. Expenditure by state-owned enterprises (quasi-public sector) amount to 30-40% of GDP and are regulated through a separate procurement law for the Samruk-Kazyna Sovereign Wealth Fund.
Kazakhstan is an upper-middle income country and the richest country in Central Asia, but its economy remains highly dependent on fluctuations in the oil and commodity markets. The energy sector is responsible for 78% of Kazakhstan’s emissions, while agriculture and industrial processes account for much smaller shares at only 7% and 9% respectively. Frequent hot weather and severe droughts threaten the availability of water, increasing problems for the main sectors of agriculture and mining.
A recent MAPS assessment concluded that the “rules and institutions of Kazakhstan’s public procurement have reached a level of maturity” where more innovative procurement approaches could be leveraged, including environmentally sustainable procurement. Doing so can help the country shift to a more inclusive and greener development trajectory.
>> Snapshot of Sustainable Procurement Maturity Level
Maturity Level:
Early Stage
Key Achievements
- Recent strong political will to implement SusPP
- Strong commitment to green economy development pathway
- Upper-middle income country with good potential to adopt SPP
Potential pathways forward
- Need for procurement law reform to formally recognize SusPP
- Updated Environment Code is still awaiting adoption.
- No central procuring body to coordinate sustainable purchases
- Few tools available to help procurers buy green
- Low awareness amongst procuring authorities on SusPP
>> Timeline of Implementation of Sustainable Procurement Activities
2012
2013
2014
2015
2016
2018
2021
2022
2023
Kazakhstan National Development Strategy 2050 adopted
Concept for Development of the Fuel and Energy Sector until 2030 adopted
Concept for the Transition towards a Green Economy 2013-2030 adopted
Law on Public Procurement adopted
National NGOs launched eco-labelling programs (not formally endorsed by government)
Becomes signatory to the WTO Agreement on Government Procurement
Law on Public Procurement amended
Central Procurement Authority created
Strategic Development Plan 2025 adopted
Commitment to be a carbon-neutral country by 2060
Trainings on Green Public Procurement (GPP) organized
GPP mentioned in State of the Nation Address
Reform of Law on Public Procurement underway
State of Play & Forward Looking Analysis
of SusPP in Public Procurement System
Pillar 1: Government Vision & Awareness of SusPP
Governments that establish a clear policy vision on SusPP can accelerate the shift from procurement as an adminstrative to strategic function, making clear how SusPP can deliver on important national social and environmental goals.
On September 1, 2022, President Tokayev stressed the importance of reforming the country’s procurement law to prioritize quality over minimum price, in the State of the Nation Address. Following the Address, meetings were held with the Vice Minister of Finance and the Economy to build buy-in for the inclusion of green criteria in public procurement and commit to procurement law reform to be completed by the end of 2023.
The country has shown political will and vision to lead the way on decarbonization, starting in 2012 with its National Development Strategy 2050. The NDS calls for the public sector to act as the “champion for change” and sets out “Green economy and environmental protection” as one of seven systemic reforms. The Strategic Development Plan 2025 (adopted in 2018) prioritizes a 25% reduction in the energy intensity of GDP by 2025 and an increase to 6% in the share of renewables in the energy mix. A Green Economy Council has been appointed to develop the Green Economy Concept as a driver for new economic growth and improving the quality of life of Kazakhstanis. In December 2022, the country approved its SDG 2023 Action Plan and submitted its 2nd Nationally Determined Contribution.
With support from the EU-funded Switch-Asia program, Kazakhstan has adopted several policies and standards related to Sustainable Consumption and Production, including: Extended Producer Responsibility in the waste
management sector, a Green Public Procurement (GPP) policy that includes criteria on products made with secondary/recycled materials; a policy on Private-Public Partnerships (PPP) focusing on water and waste, as well as a national green buildings standard.
In October 2021, President Kassym-Jomart Tokayev officially presented the Doctrine for Carbon Neutrality by 2060 developed with GIZ support. The doctrine provides a set of key measures to reduce emissions and decarbonize the economy, such as the “abandonment of new coal-fired generation projects and the phasing out of coal combustion (2021-2025), the implementation of a program to plant 2 billion trees (2025), a doubling of the share of renewable energy sources in electricity generation (2030), 100% sorting of municipal solid waste (2040), sustainable agriculture on 75% of arable land (2045), 100% electrification of personal passenger transport (2045), the use of green hydrogen only and a total ban on coal-fired production from 2050 onwards.”
Prioritization and market readiness reports have been completed with support from UNEP. However, the country has not yet adopted any policy document on sustainable public procurement. Public support appears to be present as indicated by a 2020 UNDP survey that found that 80% of residents are willing to personally contribute to improving the environmental situation in Kazakhstan through conscious consumption, waste sorting and other measures.
Nur-Sultan has ambitions to be a “smart city” and joined the Making Cities Resilient 2030 Initiative (in 2022). It promotes the use of recycled plastic in the construction of public spaces.
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Pillar 2: Legal & Regulatory Framework
Procurement law reform can be key to clear obstacles to implementation by establishing "value for money", not "lowest price", as a core procurement objective, and authorizing procurement approaches suited to SusPP.
Kazakhstan has a dual public procurement system: the Public Procurement Law (PPL) for the government procurement conducted by the general public administration and the Samruk-Kazyna’s Procurement Regulations for procurement conducted by the Sovereign Wealth Fund and State-Owned Enterprises.
The PPL for general government procurement comprises:
- The “Law on government procurement” dated 4 December 2015, No. 434-V ЗРК(Public Procurement Law, PPL).
- The “Rules for the Implementation of Government Procurement”, as approved by the Decree of the Minister of Finance of Kazakhstan No. 648, dated 11 December 2015.
- “The list of goods works and services whose procurement is conducted through Single Organiser”, as approved by Decree of the Minister of Finance of Kazakhstan No. 1127 dated 29 December 2018.
The procurement framework provides for some use of non-price criteria in the evaluation of bids, including quality and the cost of operation and maintenance, but does not specifically recognize SusPP concepts.
Procurement processes may consider some limited environmental and economic aspects (e.g. certified system of quality management; a document confirming voluntary certification of goods made of secondary raw materials obtained from waste products on the territory of the Republic of Kazakhstan; a certified system of management of the environmental management).
The framework is in line with the procurement-related agreements in the Treaty on the Eurasian Economic Union. Kazakhstan became an observer in the WTO Committee on Government Procurement (GPA) in October 2016 with plans for full accession. The PPL applies to government organizations and enterprises with more than 50% state ownership. Separate rules apply to state-owned enterprises, the Sovereign Wealth Fund Samruk-Kazyna and National Bank of the Republic of Kazakhstan.
On 26 December 2018, the Parliament of Kazakhstan adopted legislative amendments that constitute a substantial reform of the public procurement system (Law from 26 December 2018 № 202-VІ ЗРК). The procurement reform aims to further centralize procurement across the country, including by introducing a Central Procurement Body and framework agreements. A new clause now requires contracting authorities to prefer goods that were produced using recycled material from waste originating in Kazakhstan. The PPL also allows procurers to apply a price discount to bids that offer “environmental certificates that certify the compliance with environmentally friendly products standards - however this is rarely used. A proposed amendment to the procurement rules for the Samruk-Kazyna envisages the potential to apply a pre-qualification criterion named “Ecology, Safety and Protection of Labour” - however it is not taken into account in other stages of the procurement cycle (e.g., contract award).
The 2019 MAPS assessment recommended procurement law reform, initially focusing on incorporating life cycle costing and non-price dimensions in the evaluation criteria, with the ultimate goal of developing a sustainable procurement policy with time.
Pillar 3: Institutions & Capacity
Implementing SusPP requires assigning clear roles and responsibilities to agencies across government and actors across society, equipping them with the strategic knowledge and technical skills needed for success.
Institutions in charge of procurement
The Ministry of Finance (MOF) is the country's lead agency on public procuremeing, responsible for setting procurement policy. The Government Procurement Committee (GPC) of the MOF acts as a single organiser for central government entities and organisations, responsible for coordinating government procurements. The GPC automatically carries out the public procurement for three items: motor vehicles, civilian helicopters and constructions works for government buildings, as well as high value procurements.
The procurement system in Kazakhstan can be considered decentralized with different government organisations and state-owned enterprises managing specific procurement projects. To increase efficiency, the Government has established over 40 single organizers within ministries at the central, regional and district levels across government since 2014. Over 24,201 distinct contracting authorities are registered on the government e-procurement system.
Inter-ministerial coordination
Kazakhstan has a coordinating council on sustainable development that serves as an open platform for discussion across five main areas of SDGs – People, Planet, Prosperity, Peace, and Partnerships – involving all stakeholders, established with support from ADB and UNDP.
Other relevant institutions
- The International Green Technology Center was created soon after EXPO 2017. The Centre is working in the field of energy efficiency and climate change, while promoting the implementation of the green economy concept.
- The Association of Renewable Energy is responsible for implementing green energy technologies, organising annually the International Summit on Renewable Energy.
- The Green Finance Centre (GFC) at the Astana International Financial Centre has a mission to develop green financing in Kazakhstan and Central Asia. It provides a hub to grow green startups and companies. It also hosts the Central Asia Chapter of Green Investment Principles for the Belt and Road (GIP).
Capacity building
Several capacity building activities on SPP are underway. UNEP under the PAGE umbrella assist the Government of Kazakhstan in its work to reform the Public Procurement law, including capacity building exercises, help with legal drafting, and overall awareness raising on the SPP international norms and practices. An introductory workshop on SPP was held in December 2021 for officials of central and local executive government bodies, representatives of international organizations, businesses and civil society groups. Further trainings were planned in November 2022.
Pillar 4: Market Practices
Market dialogue throughout the procurement process helps procuring entities to choose realistic sustainability criteria and ensure suppliers succeed in delivering on sustainability commitments over the contract duration.
No evidence on dialogues between buyers and suppliers on the topic of market readiness to deliver environmentally friendly products and technologies was uncovered. UNEP hosted a webinar in November 2021 aimed at enhancing the capacity of Kazakh small and medium enterprises' (SMEs) capacity to access sustainable public procurement and broaden their markets. Meanwhile, UNDP has been supporting farmers to overcome the high costs of implementing green technologies. The project supports farmers in the installation of water saving units and solar panels and diversification into agritourism activities.
UNEP launched a pilot project, “Upscaling Resource Efficiency and Sustainable Public Procurement” in 2021 aimed at helping SMEs in Kazakhstan to shift to more resource-efficient business models. The program offers SMEs a self-assessment tool backed up by an SME Support Centre to obtain tailored advice on greening their operations and SPP opportunities.
A potential venue for market dialogue is the Digital Kazakhstan portal. It hosts an innovation ecosystem, focusing on entrepreneurship development and building relationships with and between businesses, government and the scientific society.
Pillar 5: Procurement Operations
Various tools and procurement approaches can be employed to help procurers more easily identify environmentally friendly goods and services and attract a competitive market response.
Pillar 6: Monitoring & Impact Measurement
Monitoring systems are essential to gather the information needed to keep SusPP implementation on course and communicate on the benefits achieved for the country.
An e-procurement portal is available to monitor the public procurements or related reporting administrators. However, no monitoring is currently in place to track sustainable public procurements.
Key Stakeholders
Driving the Sustainable Procurement Agenda
Resources
Projects Supported by ADB
To come
Other Initiatives supported by National/International Agencies
Resources
World Bank 2018. A New Growth Model for Building A Secure Middle Class - Kazakhstan Systematic Country Diagnostic.
UNECE 2019. Kazakhstan Environmental Performance Reviews - Third Review.
OECD 2019. Sustainable Infrastructure for Low-Carbon Development in Central Asia and the Caucasus - Trends in Kazakhstan’s sustainable infrastructure investments.
OECD 2019. Public Procurement in Kazakhstan: Reforming for Efficiency.
IEA 2020. Kazakhstan energy profile.
UNEP 2021. Evaluation of the Status of Sustainable Public Procurement and Legal Expert Assessment.
World Bank 2022. Kazakhstan Country Climate and Development Report.
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