Industry news

(Indexation of auction prices for RES projects)

In order to attract investments to renewable energy sources (hereinafter RES) sector, the Government of the Republic of Kazakhstan amended the current formula for indexation of auction prices; which takes into account the change in the exchange rate of the national currency to convertible currencies by 70%, and the consumer price index (CPI) by 30%.

This change will increase the investment attractiveness of the RES sector, and will also allow investors to attract cheaper loan financing in foreign currency.

A footnote from the Rules for the Determination of Fixed Tariffs and Limit Auction Prices:

"For projects that have credit obligations in foreign currency, auction prices are indexed once a year on October 1, taking into account inflation and changes in the exchange rate of the national currency to convertible currencies according to the formula below:

Т_t+1- indexed auction price, calculated by the above formula, rounded up to whole tiyns in the direction of decrease;

T_t – auction price, taking into account the previous indexation, if such an indexation was previously conducted;

CPI_t –the consumer price index accumulated for twelve months preceding October 1 of the year of indexation, determined according to the data of the authorized body in the field of state statistics;

USD_t+1- current exchange rate of tenge to US dollar as of October 1 of the year of indexation, determined according to the data of the National Bank of the Republic of Kazakhstan;

USD_t- the average tenge to dollar exchange rate calculated for the period of twelve months preceding the date of the indexation, determined by the data of the National Bank of the Republic of Kazakhstan."