PPPUE/Capacity 2015 Public-Private Partnership training

Session 7 Regulating PPPs

 

 

Laws related to PPPs Alternative regulatory arrangements EU PPP related regulations PPP institutional models

Laws related to PPPs

        

The Constitution of the country; legislative division of responsibility for service among national, regional and local governments; contract law; employment law; public sector borrowing rules; access and right of usage rules; related natural resource, e.g. water resources management law; health and safety laws and regulations and environmental laws and regulations; and social policy matters, such as the provision of subsidies.
PPPUE/Capacity 2015 PPP training

January 26, 2006

Alternative regulatory arrangements

1. Setting up a single national regulator covering an entire sector with responsibility for a number of private sector providers  PROS:
ensuring universality and consistency of standards; comparisons between providers; and extensive customer involvement, in order to show how well utilities are meeting targets and the service levels that can be achieved.


CONS: can be relatively inflexible and cumbersome for the one-off PPP contracts that are used frequently in the ECIS region

January 26, 2006

PPPUE/Capacity 2015 PPP training

Alternative regulatory arrangements

2. Creating separate regulators on a contract-by-contract basis  E.g. national legislation covers service standards or customer protection, the contract will define the obligations of each partner and the regulatory mechanisms.  CROS: relatively easy to implement
can be tailored to specific circumstances and is therefore more easily able to accommodate local needs and priorities.


CONS:
it can result in greater focus on interpreting and applying contract terms rather than pursuing the wider regulatory principles; the smaller scale of local regulatory operations can result in institutional constraints and insufficient attention being directed to secondary issues, such as protecting vulnerable groups or the poor; Impossible for regulator to benchmark with similar utilities performance

January 26, 2006

PPPUE/Capacity 2015 PPP training

European Union


1/2

There is no uniform PPP definition for the EU, nor a wide policy  Common characteristics
Utilization not only private sector ability to raise finances but also its management and experience Risks are allocated to the party better equipped to manage them Need to combine the EU funding and private finance
January 26, 2006 PPPUE/Capacity 2015 PPP training

European Union


2/2

Changes in legislation and institutional support on the level of each member state  PPPs are established as one of the tools which are available to the government  Still poor level of understanding of PPPs among public sector officials

January 26, 2006

PPPUE/Capacity 2015 PPP training

In EU countries PPP initiatives start w/:



changes in legislation to facilitate the development of PPPs (Italy) the establishment of public sector advisory groups (UK) and the set up of dedicated teams inside key ministries or departments (Holland, IT, UK)

January 26, 2006

PPPUE/Capacity 2015 PPP training

Important changes expected

PPP Green Paper http://europa.eu.int/eurlex/en/com/gpr/2004/com2004_0327en01. pdf  Report on Public Consultation on the mentioned PPP Green Paper (May 2005) http://europa.eu.int/comm/internal_market/ publicprocurement/docs/ppp/pppreport_en.pdf

January 26, 2006 PPPUE/Capacity 2015 PPP training

PPP institutional models on the degree of centralization of PPP institutions in the overall state structure
1. 2.

Highly centralized (Canada) SuperBuild Corporation and Ministries Highly decentralized (France, Portugal) PPPs individual government departments and local authorities responsibility, although informal coordination IS taking place
PPPUE/Capacity 2015 PPP training

January 26, 2006

PPP institutional models

3. Mixed centralized and decentralized (Ireland, UK, Italy, Netherlands)
central body, which coordinates and develops policies (usually is located in finance ministries) with individual spending departments having PPP Units, which are mainly focused on project development and procurement
January 26, 2006 PPPUE/Capacity 2015 PPP training

PPP institutional development in EU Member states (Adapted from PwC Report 2004, WB Report 2004)
Country Austria Belgium Denmark Finland France Germany Greece Ireland Italy Luxembourg Netherlands Norway (not EU) Portugal Spain Sweden UK
January 26, 2006

PPP Unit PPP Law -

Relative PPP experience (water and wastewater sector) -

PPPUE/Capacity 2015 PPP training

Legend
Need f t dent f ed nd egional nit available) PPP nit in e t ns t en nly ogress or existing but in urely onsultative apacity)

PPP unit existing actively involved in PPP promotion) egislation being proposed omprehensive legislation being drafted/some sector specific legislation in place omprehensive legislation in place Discussions ongoing Projects in procurement Many procured projects, some projects closed Substantial number of closed projects Substantial number of closed projects, number of them in operation
January 26, 2006 PPPUE/Capacity 2015 PPP training

PPP institutional development in EU New Member states

WB Report 2004)

(Adapted from PwC Report 2004,

Countr Cyprus Czech epublic Estonia Hungary Latvia Lithuania Malta Poland lovakia lovenia Applicant countries Bulgaria Romania Turkey January 26, 2006

tive nit nd

experience tewater ector)

ter

PPPUE/Capacity 2015 PPP training

EU Accession countries 1/2



High degree of public services decentralization

creates challenges with unclear distribution of competencies between the municipalities leading towards conflicts between local and regional tiers

Turkey enjoys the best legal PPP framework among the accession countries.
It started fin 1994 and went through the Constitution amendments and structural reforms of the key public sectors.

January 26, 2006

PPPUE/Capacity 2015 PPP training

EU Accession countries 2/2



Romania has developed legislation to entrust private sector with public assets management through concession, asset management, public - private partnership and rental.
Specific PPP law defines five types of contracts (BOT, DBO, BOR, LDO, ROT).




Bulgaria has the weakest PPP legislation, yet more advanced then other countries in the region.
National Strategy for Bulgaria's regional development for 2005-2015

Some PPP forms between municipalities and private companies:

contracting establishment of joint venture or shareholding companies concession of municipal property or the rights to build and/or use.

January 26, 2006

PPPUE/Capacity 2015 PPP training

Western Balkans
 

1/3

Clear publicly available policy promoting or restricting PPP is absent This impedes the effective application of the existing enabling legislation, such as Concession Law and Public Procurement Law. Public Procurement Law is being drafted and implemented in recent years in all western Balkan countries. Yet, it has issues:
lack of implementability for transparency and non-discrimination policies; objectivity of the procurement processes; and in general presence of too many possibilities to shift to noncompetitive procedures.

January 26, 2006

PPPUE/Capacity 2015 PPP training

Western Balkans: Challenges



2/3

The lack of a seamless, transparent, and predictable legal and regulatory framework
very complex and challenging fragmented and in many ways inconsistent

 

The lack of consistent and transparent regulations and administrative procedures The lack of effective, efficient, and adequately funded administrative and judicial systems
administration, law enforcement, and the judiciary are marked by a lack of impartiality, accountability, and transparency court proceedings are very lengthy, unpredictable and costly rife political interference in court decisions

January 26, 2006

PPPUE/Capacity 2015 PPP training

Western Balkans


3/3

most local infrastructure rehabilitation and construction is carried out under contracts to local/intern. construction companies  solid waste collection, maintenance of green areasm management of public lightning are delivered by private providers (under competitive bidding procedures)  most big and medium size cities are privatizing service delivery; some assets of those services remain state-owned  private sector involvement legislation is being developed with the help of EU funds
January 26, 2006 PPPUE/Capacity 2015 PPP training