Construction and operation of Regional Multi-profile Hospital for 300 beds in Kyzylorda city PPP DEVELOPMENT CENTER Main information and description of the Project Construction and operation of Regional Multi-profile Hospital Project description and objectives Information Description Industry: The project envisages the construction and operation of a multi-profile clinical Healthcare hospital providing a full cycle of medical care, as well as providing retraining of doctors on the basis of modern achievements of medical science. Project objectives: • Creation of multi-profile The new multi-profile hospital will consist of a hospital with 300 beds. The hospital: construction of this project is justified by the current demand for inpatient – quality and availability of medical services and high morbidity in the Kyzylorda region. medical care on the basis The following activities will be carried out in the hospital: of modern advanced Medical service, including: technologies. • State guaranteed benefits package • Creation of a base for • Medical services within the Mandatory Social Health Insurance improving the availability • Paid medical services. of medical care, including Non-medical service, including: highly specialized • Lease of premises • Catering services medical care for residents • Services for other organisations of Kazakhstan The contract period is 20 years, including 3 years of construction. PPP DEVELOPMENT CENTER Construction and operation of Regional Multi-profile Hospital STRUCTURE OF MULTIPROFILE Kyzylorda city HOSPITAL FOR 300 Regional hospital BEDS WITH oncological center POLYCLINIC FOR 100 VISITS PER SHIFT 71 Neironal 40 rehabilitation Chemotherapy Neurology 30 30 30 Theraphy Radiation therapy 30 30 28 25 20 Surgery 16 Surgery Traumatology Regional cancer center 130 Palliative care City hospital Gynecology beds 220 beds © 2017 PPPТОО «Делойт DEVELOPMENT ТСФ» CENTER Бизнес-план 4 Construction and operation of Regional Multi-profile Hospital Project description and objectives 1 3 2 PPP DEVELOPMENT CENTER Construction and operation of Regional Multi-profile Hospital Reasons for the construction of the hospital High demand of medical service Low survival rate of people with cancer diagnosis High demand of hospital beds Both on City hospital and Regional cancer center bed capacity 2.8 m2 per bed, instead of 9.5 m2, less than 3 Infrastructure need times by the required standards Deterioration of existing facilities above 90%. Development of preventative medicine High level of mordibity In accordance with the Law of the Over the past 5 years, the Republic of Kazakhstan "On social incidence of cancer has increased protection of citizens affected by the ecological disaster in the Aral sea by 15. region" Kyzylorda region recognized as the zone of ecological disaster. PPP DEVELOPMENT CENTER Construction and operation of Regional Multi-profile Hospital Investment plan Capital expenditures for construction hospital, thousand USD Name Total Capital expenditures Facility 45,134 Medical equipment 40,114 Non-medical equipment 5,000 Total investment costs 90 248 Structure of capital expenditures 50% 47% 3% 3960 млн тенге Construction Medical equipment Non-medical equipment PPP DEVELOPMENT CENTER Construction and operation of Regional Multi-profile Hospital Investment plan Timeline of project implementation 2023 2045 2020 2020 … • Compensation of capital expenditures (CAPEX)will be returned within 10 years 90,248 thousand after completion of construction works • Management fee will be paid during the USD Whole period of contract Capital expenditures Fulfilment Fulfilment of initial the conditions Design and Operation period • construction period Signing Signing PPP contract 17 years. • 11 26 months The The term of the canContract be extended months • Total length of contract – 20 years PPP DEVELOPMENT CENTER Construction and operation of Regional Multi-profile Hospital Main participants of Project I. Investment period II. Operation period Private partner Public partner (Health Private partner • The conclusion of the PPP agreement Department of • Design and construction of the Kyzylorda • Transfer of the PPP Facility to the state Facility; region) property; • Compliance with construction • Acceptance of the Object • Acceptance of the right to use and own the PPP requirements and standards; into state ownership; • The introduction of advanced • Transfer to a Private partner Object; methods of construction; the right to use and own the • Technical operation (equipment of medical • project financing. object of concession for equipment and infrastructure); • Ensuring the execution of the Project financing Private partner has the right to technical operation; involve the General contractor • Verification of financial and conditions; and financial organization economic activities of a • Ensuring the safety of the PPP Object; Private partner without • The provision of medical services under the PPP contract interference in its activities; SGBP and MSHI; • Monitoring compliance with • Provision of paid medical services; the terms of the Contract by • Ensuring the return of the PPP Object at the the Private partner; end of the Contract. Public partner (Health • claim for compensation from Department of Kyzylorda region) a Private partner for deterioration of the property transferred to operation; •The conclusion of the PPP • Reimbursement of the agreement; Private partner. •Provision of land for free use for • Provision of medical construction; personnel. •Monitoring of Project implementation. PPP DEVELOPMENT CENTER Construction and operation of Regional Multi-profile Hospital The payment mechanism of the Project Payments for medical services are made by patients in favor of a Private partner State support measures Private partner incomes Remuneration for the provision of CAPEX quality characteristics Additional income Hospital construction, supply and Taxes: maintenance services: • Wealth tax Medical service: • Construction of the hospital • Tax and deductions on the wage fund • SGBP • Equipment • Profit tax • MSHI • Improvement of the surrounding area • VAT • Paid services Remuneration: Acquisition of income: Other commercial • For senior debt accrued during the • Return on equity activities not prohibited investment period • Maintenance costs of assets and other by the legislation of the • On a joint-stock loan accrued during the costs Republic of Kazakhstan. investment period • Maintenance • Bank guarantee during construction • Building system upgrades • Insurance during construction Maintenance • The costs of the Private partner • building Maintenance • Wage fund during construction Insurance during operation PPP DEVELOPMENT CENTER Investment climate in Kazakhstan State support of investments Cost recovery to the Private partner The sources of cost recovery of public-private partnership and income generation by the subjects of public- private partnership are: 1) realization of goods, works and services in the process of operation of the public-private partnership object; 2) subsidies from the state in cases established by the legislation of the Republic of Kazakhstan; 3) compensation of investment costs for the public-private partnership project; 4) remuneration for the management of the public-private partnership object that is in state ownership, as well as rent for the use of the public-private partnership object. State support of Private partner activity Participation of state bodies in the form of state support measures in accordance with the legislation of the Republic of Kazakhstan is carried out including through: 1) guarantees of the state on infrastructure bonds; 2) state guarantees on loans attracted for financing of public-private partnership projects; 3) transfer of exclusive rights to intellectual property owned by the state; 4) guarantees of the state's consumption of a certain amount of goods, works and services produced during the implementation of the public-private partnership project. PPP DEVELOPMENT CENTER Industry overview Health network Main indicators in the health sector comparatively with the average level in Kazakhstan 1,3 times 1,6 times 1,0 year Total mortality Birth rate The average life expectancy (the (Region-5,54; RK-7,15) (Region-24,39; RK-21,65) lowest in the RK) (within 5 years: -6,6%) (within 5 years: -9,7%) (Region-72,6; RK-72,95) (within 5 years: +1,2 years) 1,4 times 1,2 times 1,4 times Mortality from diseases of the Mortality from diseases of the Cancer mortality circulatory system respiratory system (Region-61,68; RK-83,90) (Region-79,55; RK-92,2) (Region-123,5; RK-174,83) (within 5 years: -27,8%) (within 5 years: -4,8%) (within 5 years: +3,3%) 1,9 times 1,4 times 1,1 times Deaths from injuries and Incidence of cancer Mortality from tuberculosis poisoning (Region-142,8; RK-197,9) (Region-3,2; RK-3,0) (Region-35,73; RK-69,38) (within 5 year: +2,8 times) (within 5 years: -43,8%) (within 5 years: -50,3%) PPP DEVELOPMENT CENTER Demographic indicators Number and structure of population Number and gender structure of the population Kyzylorda city 234 736 118368 116368 Kyzylorda region 390 857 389 378 839 300 Republic of Kazakhstan 9 306 600 18 034 366 8 727 766 Age structure of the population 10% 7% 15% 23% 23% 28% 65% 21 67% 63% Republic of Kazakhstan Kyzylorda region Kyzylorda city Source: Statistics committee of the RK 0-14 15-64 65+ PPP DEVELOPMENT CENTER Health indicators of the population of Kazakhstan Number of diseases Morbidity of the population for the first time established diagnosis