Kazakhstan air companies to buy aircrafts at manufacturer's cost

Kazakhstan air companies will be able to purchase new airplanes almost at the manufacturer’s cost, Tengrinews.kz reports citing the press-service of Kazakhstan Ministry of Transport and Communications. In November 2012 Kazakhstan entered the Cape Town Convention that provides countries with financial benefits for purchase of modern aircrafts. The benefits include reduction of export credit rates, application of minimum premium rates, reset of risk-based rates, application of margin benchmark to all official financing support for export credits for civil aircraft pursuan the Explanations Sector of the Organization for Economic Co-operation and Development (OECD). Kazakhstan was included into the list after it ratified the Convention on International Interest in Mobile Equipment and the Aircraft Protocol of this Convention. The draft law on ratification of the Cape Town Convention was initiated by Kazakhstan Ministry of Transport and Communications and was adopted in July 2012. Now Kazakhstan contracts for procurement of mobile aircraft equipment will be registered in the international registrar and will be secured by an international warranty. This warranty will simplify financing of the costly aviation projects and will lower the risks on leasing and loan operations. Besides, Kazakhstan air companies will now be able to buy equipment directly from the manufacturers. The Convention on International Interests in Mobile Equipment and its Aircraft Protocol (the Cape Town Convention) is a treaty designed to facilitate asset-based financing and leasing of aviation equipment, expand financing opportunities, and reduce costs – thereby providing substantial economic benefits. It does so by reducing a creditor's risk and by enhancing legal predictability in these transactions, including in the case of a debtor's insolvency or other default. The Cape Town Convention entered into force in 2006.