Creditworthiness of Kazakhstan’s renewables offtaker (Financial Settlement Centre of Renewable Energy LLP) has been a hot topic since the inception of the feed-in tariff scheme.  For financial institutions (IFIs and Kazakh banks) and investors, the offtaker’s limited financial capability is one of the key indicators for entering the market as well as calculating the tariff.  The 3% reserve fund introduced by the government in 2016 as a form of financial backup has not cooled off the debates.

On 4 June 2021, the Rules on provision of state financial support to the financial and accounting center on support of renewable sources of energy (the Rules) became effective.  The Rules introduce grounds and procedure for obtaining financial support from the state budget by the offtaker.

The state will only provide financial support when all of the below conditions are met:

1. The actual debt overdue to renewable generators equals at least three-months maximum of the offtaker’s obligations for the previous year;
2. Lack of funds in the offtaker’s reserve fund to cover debt to renewable generators;
3. Failure by the offtaker to enforce the court decision on collection of debt owed by a conventional producer(s) within 6 months from the initiation of enforcement proceedings.

The introduction of the Rules is certainly another step to address the issue of the offtaker’s short-term cash shortage.  However, the conditions for providing the state support are quite burdensome and time consuming to meet.  As a result, financial institutions and investors should expect a delay before the offtaker will obtain the state funds and make payments to generators.