Банкеръ Weekly


Public-Private Partnership Comes Into Fashion

All kinds of corruption schemes and promotion of personal interests have always marred business relations between the state and private sector in the country. The next year, the situation is about to change, and at that - radically. The reason is that long-awaited law on public-private partnership will finally start working effectively. The regulation, which underwent several crashes in parliamentary committees due to ineffective legal texts, was approved on second reading this summer, but so far there have been no implementing regulations and in fact it was a hollow document. The rulers become able to describe the procedure on how to make alliances between business and the state at the beginning of December, and last week the public discussion was also over.

How many and what objects will be created under the scheme for public-private partnership (PPP) will be seen on 30 June 2013. Until then, the Council of Ministers is to prepare the national public-private partnership framework, and the Minister of Finance endash an Action Plan for 2014-2020. Specific appropriations required to implement PPP will be recorded with the State Budget Act, the responsibility for effective and efficient spending of the money being to the Minister of Finance.

In partnership with businesses, however, public institutions will be able to finance, construct, manage and maintain only parking garages, public transportation facilities, surveillance and security systems, street lighting, landscape areas, parks and gardens, as well as objects of social infrastructure for healthcare, education, culture, sports, tourism, social welfare as well as places of detention. Public-private partnership can not be applied to ports, airports, railway stations, travel facilities and other transport infrastructure. Out of the list are also the sectors of generation, transmission and distribution of electricity as well as heat generation, collection, transportation and treatment of waste, and irrigation.

According to the rules for law implementation any person can offer a public partnership project for the forming of a PPP. For this to happen, however, a prior justification is required as well as financial and economic analysis, and in case of new construction, feasibility study or development project may be needed. Thus, if the terms get changed, no annexes will be concluded, which most radically change the nature of the contract and a solution will be sought after in the reasoning principles to restore economic balance. A state or municipal institution will have a three-month period to notify for its decision to refuse or proceed with the inclusion of a project in the Operational Plan or in the programme for implementation of the Municipal Development Plan. PPP contracts themselves can be for a period of 5 to 35 years. Curiously enough, even if a company decides not to sign the contract, it will receive remuneration when public partner uses its feasibility study and investment projects.

In all other cases, the private company with which the public sector will work will be determined through an open or restricted procedure, competitive dialogue or a negotiation procedure with a notice under the Public Procurement Act. As much criticism there could be against the latter method of selection, however the truth is that public auctions are still the most transparent of our procedures and any other approach would be more unacceptable.

By June 30 next year, Finance Minister Simeon Dyankov will have to organize the creation and maintenance of a public register of PPP, the access to which will be free of charge.

To do a project for PPP, however it needs to be included in the state, respectively municipal budget. Given this requirement, it is clear that the actual realization of the first projects under this scheme can be launched as early as 2014.


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