Current issues of the subsoil use legislation in the Republic of Kazakhstan
Kurmangazy TalzhanovManaging Partner in the Kazakhstani offices
This information only provided as a general guide and should not be used as a specialized legal opinion.
The Law on Subsoil and Subsoil Use dated 24 June 2010 (The Subsoil Use Law) regulates one of the most important areas of social relations in modern Kazakhstan. The Law on Subsoil is targeted to protect interests of the country and to achieve rational and comprehensive study and use of subsoil. Concise, effective and objective regulation of this area is very crucial for Kazakhstan as never before, and will be an enormous contribution (a “pledge” or a “guarantee”), into the long term and permanent investment into the areas of oil and gas and mining industry, taking into account the global economic disturbances. This will lead to the stable economic development of our country for many years ahead. Economic activity within these fields will also inevitably assist to the development of other areas related to subsoil use (in particular to small, medium and major entrepreneurship).
The aim of the government is to assure the investment attractiveness of our country not only on the legislative level but also in law enforcement practice (i.e. in real life). If this aim is fulfilled the investors will be more willing to invest into our country and conduct their business activities here.
All representatives of the governmental authorities as well as business representatives are aware of this perspective. It is now necessary to understand the issues in question.
Within the four -year period from the adoption of the Subsoil Use Law there were numerous statements made by the representatives of the government from the high tribunes within the framework of international forums such as KIOGE, KAZENERGY, Minex and others. The underlying topic of the discussion was the need to enhance and simplify the legislation on subsoil and the need to increase investment attraction in such a way as to enable any investors and companies (large, medium, small parties) to work in Kazakhstan comfortably and confidently.
The Subsoil Use Law dated 24 June 2010 until the present day has faced 7 amendments. They were related to the following issues:
- Competence of the government of the Republic of Kazakhstan;
- Competence of an authorized body in the area of governmental support in relation to industrial innovative activities;
- Granting of the right on subsoil;
- Definitions of the current law;
- Competence of an authorized authority on the research and exploration of subsoil;
- Competence of an authorized body in the area of environmental protection;
- Mineral processing;
- Competence of local executive bodies of regions, cities of republican status, importance, capital of the country; and
- Preparation of the draft contract on subsoil.
Apart from this there was an adoption of several governmental programs and conceptions, which can also be related to the subsoil use. For instance, the Concept of legal policy of the RK from 2010 to 2020, the Concept of the Geological Sector Development of the RK until 2030, Concept of development of fuel - energy complex of the RK until 2030 and other industry related programs.
Additionally, at present moment the Parliament considers a draft legislation aiming to simplify the procedures of obtaining the right on subsoil use (according to the principle of “first came – first obtained”). At the present time the Code on subsoil is also being discussed.
However, the main question arises why should we do it if the role of the government as a party, providing the rights on subsoil use, and the role of the subsoil user are not clearly defined yet, and the whole concept of the legislative framework on subsoil use in Kazakhstan needs substantial improvement; if the representatives of the governmental bodies themselves do not clearly realize that they need to operate more effectively themselves in order to create an investment flow that would benefit our country.
In the modern legal literature and legal practice various authors (leading scholars and practicing lawyers of our country) discuss such problems. For instance, Suleimenov M.K, Illyassova K.M, Elyubayev Zh. S., Chentsova O.I, Shtopol S.A, Yereshev D. and other scholars and practitioners indicate the defects of the legislative framework on the subsoil use. Therefore, there are indeed several serious concerns and problems, which will be considered below.
 From the point of long term economic policy, it would be inappropriate to rely solely on the country’s resources. Also, Kazakhstan needs to develop consumer goods industry, food processing industry and heavy industry.
 Approved by the Decree of the President of the Republic of Kazakhstan #858 dated August 24, 2009.
 Approved by the Decree of the President of the Republic of Kazakhstan #1042 dated August 13, 2012.
 Approved by the Decree of the President of the Republic of Kazakhstan # 724 dated June 28, 2014.
 Shtopol S.A “Some issues on the legislation in the area of subsoil use” http://www.kursiv.kz/examination/details/Blogs/Nekotorye_voprosy_zakonoproekta_v_sfere_nedropolzovaniya/
For additional information please see the attached file.