RF Government Resolution No. 449 of April 15, 2017 “On Amendments to Certain Acts of the Russian Federation Government”

This Resolution makes changes to the basic principles of pricing for heating and water supply, and wastewater disposal.

For example, specifics are established in accounting for rent under a lease agreement of immovable property transferred by the public partner under a concession agreement to the private partner as "other expenses" when regulating rates using the method of economically justified expenses, and specifics of accounting for certain expenses of the private partner's (including for cadastral inventory and state registration of the public partner's ownership title) when regulating rates using the method of ensuring a return on invested capital.

The updated accounting procedure applies to legal relationships arising out of concession agreements concluded after January 1, 2017.

According to the Resolution, taxpayers have the right to apply a depreciation multiplier in relation to depreciable fixed assets included in depreciation groups one to seven which were manufactured under the terms of a special investment contract.

The Resolution enters into force on January 1, 2018.

RF Government Order No. 794-r of April 26, 2017 “On Approval of the List of Documents Confirming the Fact and/or Circumstances of the Public Partner Acquiring Title to Unregistered Immovable Property”

The Order sets out the list of documents confirming the fact or circumstances of a public partner acquiring title to unregistered public utility real estate.

We remind readers that the existence of documents confirming the fact and/or circumstances of how the public partner acquired ownership title to unregistered public utility real estate is one of the necessary conditions for the public partner to transfer those facilities to the private partner when there is no information about them in the EGRN technically and functionally related to the facility covered by the concession agreement in heating supply, hot water supply, cold water supply and/or wastewater disposal.

RF Government Resolution No. 558 of May 11, 2017 “On the Specifics of Holding a Joint Tender for the Right to Enter into a Concession Agreement for Heating Supply Facilities, Centralized Hot Water Supply, Cold Water Supply and/or Wastewater Disposal Systems, and Separate Facilities of Those Systems”

The Resolution defines the specifics of holding a joint tender for the right to enter into a concession agreement for public utility infrastructure that is or will be owned by a municipality and/or RF constituent entity.

However, we remind readers that although the tender is a joint one, separate concession agreements are concluded with each public partner, not a single concession agreement for all such public utility infrastructure with the winner of the tender.

RF Government Resolution No. 563 of May 12, 2017 “On the Procedure and on the Grounds for Concluding Contracts for the Simultaneous Performance of Work for the Design, Construction and Commissioning of Capital Structures, and on Amendments to Certain Acts of the RF Government”

The Rules for concluding contracts for the simultaneous performance of work for the design, construction and commissioning of capital structures entered into force on July 1, 2017.

It was established, in particular, that a contract may be concluded if technology and pricing audit of the basis for investment in the creation of that facility have been done for the facility for which the contract will be concluded. The audit regulations and requirements to the makeup and content of investment justification were approved.

That said, the contractor cannot require an increase in the contract price, and the customer cannot require a decrease, including when it is not possible to envision the full scope of work or expenses when the contract is concluded.

RF Government Resolution No. 570 of May 15, 2017 “On Establishing the Types and Scope of Work for the Construction and Reconstruction of a Capital Structure which the Contractor Shall Perform Itself without Engaging Other Persons to Perform its Obligations under State and/or Municipal Contracts, and on Amendments to the Rules for Determining the Amount of the Fine Charged for Improper Performance by the Customer and Supplier (Contractor, Provider) of the Obligations Stipulated by the Contract (Except for Delay in Performance of Obligations by the Customer, Supplier (Contractor, Provider)) and the Amount of Penalty Charged for Each Day of Delay in Performance by the Supplier (Contractor, Provider) of the Obligation Stipulated by the Contract”

A new article was introduced to Federal Law No. 44-FZ in July 2016 concerning the specifics of entering into and performing a contract for design and/or survey works and contracts for the construction and reconstruction of capital structures. Among other things, this article included the provision that the RF Government may determine the types and scope of work for the construction and reconstruction of capital structures which the contractor must perform itself without engaging other persons to perform its obligations under the contract.

The RF Government exercised this right: this Resolution determines the list of work which the contractor under a state (municipal) contract must perform itself. The list includes 34 types of work (including site works, earthworks, pile driving, foundation work, constructing load-bearing structures, etc.).

It was established that the cost of work performed by the contractor itself must be at least 15% (and as of July 1, 2018, at least 25%) of the contract price. That said, the contractor may choose the types and scope of work suitable for it to perform from the types of scope set forth in the procurement documentation.

In addition, the Resolution introduces liability in the form of a fine of 5% of the cost of the works for the contractor's improper performance of these obligations.

Thus, the Resolution substantially limits the possibility of unfair manipulation by contractors under state/municipal contracts, but it imposes certain limits on the ability to structure projects, including in lifecycle contracts.

RF Government Resolution No. 623 of May 24, 2017 “On the Procedure for Forming and Maintaining the List of Investment Projects the Implementation of Which Entitles Industrial Entities to Receive Financial Support before 2025 in the Form of Tax Incentives in Accordance with the Laws on Taxes and Levies”

This list includes investment projects implemented under a special investment contract concluded on behalf of the RF under an industrial policy law. The Ministry of Industry and Trade of Russia includes the information on the project in the list within three business days of execution of the special investment contract.