"Take Or Pay" In PPA In Kazakhstan: For Or Against?

General information

“Take or pay” is a mid-twentieth-century mechanism for building contracts for the supply of goods. It was conceived of as a contractual structure in which the buyer had to purchase (take) the goods in a certain quantity at a certain time and to pay for the goods (pay), regardless of the buyer's actual ability to take delivery of the goods.

Overall, “take or pay” is commercially attractive for the supplier. This legal relationship mechanism guarantees a stable return that does not depend on the goods delivered. However, it may also be commercially attractive to the buyer: (1) guaranteed delivery over a period of time; and (2) reduced risk of changes in the value of the goods supplied, i.e. the value may be fixed for the duration of the contract and not be linked to market values.