The editorial board of FBRK continues its series of articles analysing the largest government procurements of 2024 in the regions of Kazakhstan.
Today our focus is on Shymkent, where, in our opinion, the most expensive contracts were in the areas of housing construction, sports, energy and the acquisition of administrative property.
SOCIAL HOUSING: 22 BILLION TENGE
In 2024, the Shymkent City Construction Department entered into a number of major contracts for the purchase of social housing with a total value of over 22 billion tenge.
The leader in terms of funding was MK-TIME Group LLP, which secured a contract worth 8 billion tenge. The company undertook to provide over 500 apartments for socially vulnerable citizens and working youth in the Karatau district of Shymkent.
In second place is Altyn Construction LLP with four contracts totalling 7.95 billion tenge. According to the agreements, the company will provide two- and three-room apartments ranging from 20 to 60 m² in the same Karatau district, both for working youth and for socially vulnerable segments of the population.
Integra Construction KZ LLP received two contracts worth 4.97 billion tenge. The funds are allocated for the purchase of 20 apartments for working youth: 10 two-room (1.06 billion tenge) and 10 three-room (3.91 billion tenge).
Completing the list of major deals is a contract with A.R.T.-Kurylys LLP valued at 1.4 billion tenge for the purchase of 60 three-room apartments with an area of 70-72 m² in the Turan microdistrict for socially vulnerable categories of citizens.
All contracts include performance security amounting to 3% of the transaction value and a 7-year warranty on the housing's operation. Insurance companies have been engaged for additional protection of state interests.
It is important to note that all procurements were carried out using the "single source from failed procurements" method, which raises questions about the transparency and effectiveness of competitive procedures in the city's construction sector.
FOOTBALL INVESTMENTS: 5.6 BILLION TENGE
The Department of Physical Culture and Sports of Shymkent City concluded a series of contracts with Ordabasy Professional Football Club JSC for a total amount of 5.6 billion tenge. The subject of the deals was services for training football teams and ensuring their participation in local, republican and international competitions in 2024.
The contracts provide for comprehensive funding: from preparing the main squad for participation in the Kazakhstan Premier League and European cups to the development of youth and women's football. Particular attention is paid to creating professional infrastructure involving coaches with UEFA licenses.
As with the housing contracts, all procurements were carried out using the "single source from failed procurements" method, indicating a lack of competition in this service segment in the region.
CITY ENERGY SUPPLY: 1.76 BILLION TENGE
The Department of Energy and Infrastructure Development of Shymkent City entered into an agreement with Energopotok LLP for energy supply services worth 1.76 billion tenge. The contract covers the provision of electricity supply, thermal energy and hot water for municipal needs until the end of 2024.
Funding comes from the local budget under the "Street Lighting of Populated Areas" programme. The agreement stipulates a clear payment procedure: monthly payments by the 15th of the following month and priority for debt repayment.
In the absence of termination notices, the contract is automatically renewed, ensuring the continuity of energy supply to the city's infrastructure. However, at the time of publication (March 2025), data on payments for this transaction is absent from the government procurement portal, raising questions about its implementation.
ADMINISTRATIVE BUILDING: 1.73 BILLION TENGE
The Department of Finance of Shymkent City entered into an agreement with KazStroyCapital LTD LLP for the purchase of an administrative office building worth 1.73 billion tenge. A feature of the deal is that the supplier company acts as a commission agent for the individuals who are the actual owners of the building.
Technical requirements for the property include a minimum area of 3,400 m², at least 50 offices and a spacious car park. The agreement provides for a warranty guarantee in the amount of 51.9 million tenge without advance payments.
The interaction scheme, where KazStroyCapital LTD LLP acts as an intermediary between the real owners of the building and the state customer, may be related to the need to comply with public procurement procedures, but it also raises questions about the feasibility of such a scheme and its economic justification.
STABILISATION FOOD FUND: 1.095 BILLION TENGE
The Department of Agriculture and Veterinary Medicine of Shymkent City concluded a contract with Shymkent Social-Entrepreneurial Corporation (SEC) JSC for services to form a Stabilisation Fund for food products worth 1.095 billion tenge.
According to official documentation, the funds were to be directed towards issuing loans to entrepreneurs to curb prices on socially significant food products. The stated mechanism assumes that the operator's overheads will be covered by the difference between the fixed and market prices, as well as a commission of up to 1% on loans.
Under the contract terms, decisions on issuing loans were to be made by a special commission, which theoretically is intended to ensure transparency of the process and targeted use of funds.
However, at the time of publication, the editorial board does not have data on the actual effectiveness of this mechanism or the real results of using the allocated funds.
In the near future, the FBRK editorial board plans to review the financial statements of SEC Shymkent and present an analysis of the stabilisation fund's work in a separate article.
CONCLUSIONS
An analysis of the largest government procurements in Shymkent city demonstrates a significant volume of funds directed towards social needs, primarily providing housing for vulnerable categories of citizens.
However, the predominance of the "single source from failed procurements" method is a cause for concern, which may indicate insufficient competition and potential risks of inefficient use of budget funds.
The significant funding for the Ordabasy football club deserves particular attention, indicating the priority of sports development in the city authorities' policy. At the same time, information transparency regarding some contracts, particularly in the energy supply sector, requires improvement.
Recall that we previously wrote about the largest government procurements in Astana. You can read in detail about the capital's most expensive contracts via the link.
The FBRK editorial board will continue monitoring the situation in the field of government procurement and will present an analysis of the expenditure of other regions of Kazakhstan in upcoming articles.
To be continued...