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LAW OF TURKMENISTAN

of October 1, 1993 No. 859-XII

About foreign concessions

(as amended on 04-11-2017)

This Law determines organizational, economic and legal conditions of creation and activities of foreign concessions in Turkmenistan.

Section 1. General provisions

Article 1. Concept of foreign concession

Concession is permission of the state to foreign legal entities and physical persons on implementation of certain type of economic activity in the territory of Turkmenistan.

Concession provides urgent, paid delivery by the state in operation to foreign legal entity or physical person to the concessionary on the basis of the agreement of the parcels of land, natural resources, the companies and other property.

Article 2. Legislative regulation of foreign concessions

1. The legal relationship arising from concessionary agreements are regulated by this law and other legal acts of Turkmenistan.

2. The legislation of Turkmenistan establishes the territories, objects of state-owned property, types of the companies, property which transfer to concession is limited or it is not allowed.

3. If other rules are established by the international treaty signed by Turkmenistan, than those which to contain in this law, then rules of the international treaty are applied.

Article 3. Basic principles of concessionary activities

Concessionary activities in Turkmenistan are performed on the following principles:

- assistance to the decision by Turkmenistan of economic tasks, to attraction of foreign investments, progressive structural transformations in economy and to implementation of the latest technologies;

- rational use of natural resources, ensuring ecological and sanitary and hygienic safety;

- ensuring production, conforming to the normative requirements established in Turkmenistan;

- participations in the solution of social tasks of the territories on which concessionary activities are performed;

- rendering to bodies of authority and management Turkmenistan assistance to concessionaries in realization of the tasks provided by the agreement on concession provision.

Article 4. Concession provision conditions

1. Concession is provided on competitive basis. Conditions and procedure for carrying out tenders it is determined by the Cabinet of Ministers of Turkmenistan. By transfer of objects to concession publicity is provided.

2. Concession has contractual, urgent and paid character.

3. Concessionary projects and programs, technical and economic and their financial use are subject to obligatory state examination, including regarding observance of ecological and sanitary and hygienic requirements.

Participants of the concessionary agreement have the right to carry out at discretion expertize in additional amount.

Article 5. Objects of concessionary activities

1. The right to investigation, development, production or operation of natural resources, to other economic activity is provided to the concessionary in all spheres and types of activity which are not prohibited by the legislation of Turkmenistan.

Objects of concessionary activities are:

- the parcels of land and the territories with the natural resources which are on them;

- water areas and natural resources which are in them;

- certain fields of natural resources;

- the industrial facilities intended for investigation, development, production or operation of natural resources;

- other objects.

2. The concessionary activities which are causing damage to the rights and interests of citizens protected by the law and the states, and also not meeting the requirements of ecological, sanitary and hygienic, radiation and pozharovzryvny safety are forbidden.

Article 6. Subjects of concessionary activities

1. Subjects of the concessionary agreement (agreement) are: the state of Turkmenistan on behalf of authorized bodies of the power and management and foreign legal entities and physical persons, and also directly foreign states (concessionaries).

2. The concessionary - the prime contractor according to the concession treaty - has the right to attract subcontractors to performance of works. Agreements with subcontractors shall not contradict conditions of the concession treaty.

Section 2. Creation and activities of the concessionary companies

Article 7. Procedure for provision of concession

1. The Cabinet of Ministers of Turkmenistan approves the priority directions of concessionary activities for industries, the territories and groups.

2. The request for provision of concession with application of documents about professional readiness, technological and technical capabilities of the applicant and his guarantors confirmed with bank and also technic and economy reasons and results of state examination with the petition of executive body of the welayat in the territory of which there is subject to concession, goes to body for state-owned property.

3. The body for state-owned property after verification of the submitted documents and competitive selection of requests signs the concession treaty.

4. By the Cabinet of Ministers of Turkmenistan it is determined objects, concession treaties according to which shall affirm this supreme executive and administrative organ.

5. Concession treaties in ten-day time after signing and approval are registered executive body in the location of subject to concession.

The body which performed registration in ten-day time reports about the fact of registration of the concessionary company in tax authority and in authorized body for inclusion in the State register.

6. The concession treaty becomes effective from the moment of receipt of the certificate on state registration, re-registration of the Unified state register of enterprises and organizations issued by the holder.

Article 8. Contents of the concession treaty

In the concession treaty is reflected:

- subjects of the agreement;

- objects and purposes of concession;

- territory borders within which concession is provided;

- the list and cost of the property transferred to concession;

- rights and obligations of the Parties;

- conditions of payments;

- procedure for realization of finished goods in the internal and external markets;

- import procedure of raw materials, materials, components;

- customs conditions;

- procedure for insurance;

- duration of the agreement, procedure for its change, prolongation, termination;

- requirements for protection and recovery of the environment, condition on preserving and protection of monuments of history, culture, natural landscapes, animal and flora;

- obligations of the concessionary on transfer to the body which provided concession, the new information revealed in the course of concessionary activities including results of exploration works;

- terms of employment of labor power;

- procedure for the dispute resolution, responsibility of the parties for agreement breach;

- the minimum size of the capital invested in case;

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