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Project Name: Development of production of horticultural crops using drop irrigation technology in southern regions of the country («NurAgro» Agro Firm» LLC)

 

I.                   Project background:

 

1.      Project value,

in million USD

2.   Project location

3.   Project documentation (design documentation, operating documentation, design estimate documentation, feasibility study, working program)

Yes/No, level of readiness

 

4 865 mln KZT

Kerbulak village, Shengeldinskiy massif, Kapshagay city, Almatinskaya region

Feasibility study for drop irrigation of lands, working project: drop irrigation of lands on area of 150ha; working project: reconstruction of II level distribution pipelines for drop irrigation of lands; Feasibility study "Construction of industrial-purpose facilities: tomato processing plant with capacity of 600 t/day, hotbed greenhouse for 2.5 ha and fruit storage for 5 thousand tons», Design Estimate Documentation of tomato processing plan was and there is conclusion of Republic State Enterprise "Gosekspertiza" No.18-0958/13 dated 28/12/2013. At the same time, design company "Global Agro" LLC provided this conclusion only on 12/05/2014. The same day it was forwarded to Ministry of Agriculture of the Republic of Kazakhstan for approval by Program Administrator.  As for today, DED materials forwarded to Ministry of Agriculture of the Republic of Kazakhstan for approval were agreed by all structural subdivisions of Ministry of Agriculture of the Republic of Kazakhstan.  At the same time, until today, DED is not approved due to failure to meet terms for submission of DED materials for approval by Program Administrator of Ministry of Agriculture of the Republic of Kazakhstan (according to Construction Standards of RK, terms for approval of DED by Program Administrator in recommendatory part is three months after receipt of conclusion of State Expertise).

 

II.                Project Description

 

4.    Project Description

Establishment and further maintenance of Food Belt System around Almaty city to ensure social and economic welfare of residents of Almaty city and Almaty Region.

The project is aimed to form the basis of fruit and vegetable cluster, provide residents of the country with qualitative domestic organic food products

5.    Finished product (annual amount, tons etc.)

Estimated productive capacity of the enterprise:

21,000 tons of finished products per year, including

- onions – 18,000 tons;

- apples – 3,000 tons

6.    Source of raw materials (underground resources)

None

7.    Sales outlet (the Customs Union, PRC, etc.)

Domestic

8.    Project implementation period (Road Map)

2010 – 2011

9.    Expected year of commencement of construction

2010

10.              Expected date of project commissioning

 2011

11.              Availability of land plots

A land plot with the area of 1,140 ha was purchased; apples orchard was set out (planting was performed in 2010) with the total area of 100 ha, 4.9 ha for pumping station.

12.              Availability of transport infrastructure (railway, road transport)

Distance to Almaty-Taldykurgan highway is 30-35 km; distance to Kapshagay city is 50 km, and distance to Almaty city is 125 km

13.              Utility connection access (power, water, sewage etc.)

Temporary main pipeline was reconstructed and was water separator tank constructed.

To ensure irrigation of filed with area of 1,440 ha reconstruction and construction of "First and second stages pumping stations with basin with capacity of 25,000 m3" hydro land reclaiming systems were performed (Customer: Committee of Water Resources of Ministry of Agriculture of the Republic of Kazakhstan),  however, due to lowering of water level in Kapshagayskoye water storage, the testing of completed construction was not performed and the facility was not put into operation

14.              Availability of facilities (please, indicate area and parameters of facilities)

Vegetable storage facility of "ExpAgro" LLC with administrative building is located on one of the land plots of Agro Firm: the building is single-storey with are of 227.2 m2, and consists of 12 rooms; plan size: 21,2х12 m, height is 3.70 m

15.              Opportunities for Kazakhstan companies to establish minimum registered capital (30% of total project value) for fundraising

For implementation of the project 2,456 mln KZT were allocated from Republic Budget (development of DED for tomato processing plant, purchase of equipment for propagating frame, drop irrigation system, reconstruction of distribution pipeline). Balance of undrawn funds from Republic Budget at the amount of 1,979 mln KZT are allocated on current accounts of second-tier banks and Treasure House according to Budget Program 043.

16.              Availability of necessary budget funds or necessity for budget financing

Balance of undrawn funds of Republic Budget at the amount of 1,979 mln KZT are allocated on current accounts of second-tier banks and Treasure House. It is necessary to attract additional investments for 2016 at the amount of 600 mln KZT.

17.              Total amount of new jobs

91 jobs

18.              Total amount of jobs for the construction period

33 jobs

19.              Labor force quota

None

20.              Investment preferences

Partial exemption from tax duties (-70 % of amount of tax levies).

21.              Other measures of state support

1.       subsidization of cost of services for water supply to agricultural goods producers for drop irrigation for 1 cubic meter of water at the value of 80%.

2.       subsidies for reimbursement of payments for purchase of herbicides, biological agents (entomophages) and biological products intended for treatment of agricultural crops in order to protect plants for 1 liter (kg) of herbicides purchased:

 1) in case of purchase of domestic herbicides, the subsides are paid at the value up to 50% of the cost of herbicides purchased;

  2) in case of purchase of foreign-manufactured herbicides, the subsides are paid at the value up to 30% of the cost of herbicides purchased.

22.              Current project status

 

On DED for tomato processing plant there is conclusion of Republic State Enterprise "Gosekspertiza" No.18-0958/13 dated 28/12/2013. At the same time, design company "Global Agro" LLC provided this conclusion only on 12/05/2014. The same day it was forwarded to Ministry of Agriculture of the Republic of Kazakhstan for approval by Program Administrator.  As for today, DED materials forwarded to Ministry of Agriculture of the Republic of Kazakhstan for approval were agreed by all structural subdivisions of Ministry of Agriculture of the Republic of Kazakhstan.  At the same time, until today, DED is not approved due to failure to meet terms for submission of DED materials for approval by Program Administrator of Ministry of Agriculture of the Republic of Kazakhstan (according to Construction Standards of RK, terms for approval of DED by Program Administrator in recommendatory part is three months after receipt of conclusion of State Expertise).

23.              Project implementation period. Action plan (further plan of actions on the project:

a) approval of Feasibility Study

b) commencement of construction

c) completion of construction

d) pre-commissioning

e) commissioning

f) output and sale of first products)

 

From 2011 till present.

To ensure irrigation of crop fields with area of 1,440 ha reconstruction and construction of "First and second stages pumping stations with basin with capacity of 25,000 m3" hydro land reclaiming systems were performed (Customer: Committee of Water Resources of Ministry of Agriculture of the Republic of Kazakhstan),  however, due to lowering of water level in Kapshagayskoye water storage, the testing of completed construction was not performed and the facility was not put into operation. Currently in accordance with Minutes of meeting with Chairman of Board of Directors of NC Food Contract Corporation JSC dated 05/06/2015, transfer of  rights for land plots necessary for further completion and commissioning of main pipeline to в Republic State Enterprise "Kazvohoz" is under consideration. Currently water reserves for irrigation is enough only for an area of 170 ha, therefore, it is planned to sow onions on area of 70 ha and to keep orchard on area of 100 ha.

24.              Social and economic impact of project implementation

Social significance of the project is included in the fact that tomato processing plant meets demand for tomato products for production of which own raw materials are used, which enables sale of products at lower price. Project implementation will create 95 new jobs including 40 permanent jobs and 55 seasonal jobs.

 

 

III.             Project participants:

 

 

On behalf of the Republic of Kazakhstan

25. Company name:

"ExpAgro" LLC and "Gylym Agro Innovation" LLC

26. Project participation form (JV's share in the capital, loan (credit), EPC (contractor)

"ExpAgro" LLC: 99.99961526%

"Gylym Agro Innovatsiya" LLC: 0.00038474%

27. Corporate profile

1.                 Decision of Board of Directors of NC Food Contract Corporation JSC (hereinafter referred to as Corporation) dated October 22, 2004 established "Expert Agrarian Company" LLC (hereinafter referred to as "ExpAgro" LLC), the subsidiary enterprise of Corporation, which is its sole founder with 100% of shares in the registered capital. At the instruction of Corporation, since 2007 the company has implemented investment projects in the field of development of Agrarian Business: "Development of production of horticultural crops using drop irrigation in the southern regions of the country (South-Kazakhstan Region and Almatinslaya Region)". Company's activities are aimed to provide Kazakhstan' people with qualitative domestic organic food products and development of Kazakhstan's processing industry

2.     

3.    In January 2012 "NAK" LLC purchased "Gylym Agro Innovation" LLC engaged in production, storage and sales  of agricultural products.

28. CEO's contacts

Berik Tulyupergenovich TAKABAYEV, the director of "ExpAgro" LLC

Office phone: 8/7172/57-51-50

Turar Abdubakyuly YERLAN, the director of "Gylym Agro Innovation" LLC,

Office phone:  8/7272/ 54-97-97

29. Contact person on the project

Aliya Orynbassarovna KUSATAYEVA, Head of Project Monitoring Department of "ExxpAgro" LLC, Aliya-tleubekova@mail.ru

 

IV.              Proposals on project implementation

 

30.  Financing scheme (investments to capital or loans)

31.     Process scheme (terms for delivery of equipment, technology transfer etc.)

32.    Other proposals (if any)

33.    Necessity in additional investments

Terms for sales of share of "ExpAgro" LLC in the registered capital of Agro Firm:

1)   1.   provision of grace period for purchase of share up to 2 years with instalment payment plant for at least 10 years;

2)   initial guarantee deposit at the amount of at least 5% of value of sales within 10 days after signing contract for sales, remaining 5% will be paid within 12 months days after signing contract for sales; 

3)   provision of bank guarantee at the amount of annual contribution, therewith guarantee amount must cover the total amount of annual contributions.

4)   payment of fee for grace period at the amount of 7% of total value of unpaid portion.

None

Currently within the framework of executing Instruction of the Head of the state on transfer of non-strategic state property facilities to competitive environment, and Protocol Resolution of Board of Directors of NC Food Contract Corporation JSC dated 13/03/2015, "Rassell Bedford BC Partners" LLC International Advisory Firm conducted independent assessment of shares in Agro Firm.  According to Report no.АФ-1735/1 of the assessment firm dated 18/12/2015, market price for share of "ExpAggro" LLC in the registered capital of Agro Firm was 3,286,612,000 (three billion two hundred eighty six million six hundred and twelve thousand) KZT.

On 13/01/2016 pursuant to paragraph 2 Clause 80 of Civil Code of RK (members of a limited liability company enjoy prerogative right to buy shares or a part thereof before third parties) applied to "Gylym Agro Innovation" LLC, the second participant of Agro Firm with proposal to buy a share in the registered capital of Agro Firm according to prerogative right.  

Funds available are insufficient for continuation of the project. It is necessary to attract additional investments at the amount of 600 mln KZT.