Court Orders Water Structure Returned to State Ownership After Illegal Privatization

The court has declared several purchase and sale agreements involving key water infrastructure illegal and ordered the private company “Water Resources-Marketing” to return the facilities to state ownership, Orda.kz reports, citing the city Akimat.

The ruling followed court proceedings that uncovered violations during the privatization of the municipal water utility:

According to Kazakhstan’s Law on Privatization, state enterprises can only be sold as single property complexes;
A 1996 government decree prohibits the division of strategically important facilities essential to urban life.

The court ruled that the protocols on four water intakes – Akbay-Qarasu, Badam-Sairam, Qyzylsay and Tassay – as well as on the enterprise ‘Unikanservis’, which became the owner of the treatment facilities and the motor transport workshop, which became part of ‘TransViK’, are unlawful.

Authorities had previously reported multiple violations in the company’s management, including:

• Misuse of funds: Tariffs were used to build a pressure collector for a private hydroelectric power station rather than for city needs
  
• Diversion of resources: Funds, including an EBRD loan, were spent on constructing a reinforced concrete product plant unrelated to the utility’s core operations
  
• Charges for non-existent services: Residents were billed for pipeline maintenance that never took place — totaling nearly 60 million tenge annually
  
• Data manipulation: The company allegedly inflated network wear-and-tear figures by over 10% to secure additional investment funds

Once the court’s decision takes effect, local authorities plan to conduct an audit and develop a utility modernization program.

A similar case occurred in August of last year, when a private company in the Turkestan Region returned a water utility to the state in a deal valued at 13 billion tenge.

Original Author: Raushan Korzhumbekova