Session 7 Regulating PPPs Laws related to PPPs Alternative regulatory arrangements EU PPP related regulations PPP institutional models PPPUE/Capacity 2015 Public-Private Partnership training

PPPUE/Capacity 2015 PPP training January 26, 2006 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

PPPUE/Capacity 2015 PPP training January 26, 2006 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

PPPUE/Capacity 2015 PPP training January 26, 2006 European Union1/2 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

PPPUE/Capacity 2015 PPP training January 26, 2006 European Union2/2 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

PPPUE/Capacity 2015 PPP training January 26, 2006 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)

PPPUE/Capacity 2015 PPP training January 26, 2006 Important changes expected PPP Green Paper lex/en/com/gpr/2004/com2004_0327en01. pdfhttp://europa.eu.int/eur- lex/en/com/gpr/2004/com2004_0327en01. pdf Report on Public Consultation on the mentioned PPP Green Paper (May 2005) publicprocurement/docs/ppp/ppp- report_en.pdf

PPPUE/Capacity 2015 PPP training January 26, 2006 PPP institutional models on the degree of centralization of PPP institutions in the overall state structure 1. Highly centralized (Canada) – SuperBuild Corporation and Ministries 2. 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

PPPUE/Capacity 2015 PPP training January 26, 2006 PPP institutional development in EU Member states (Adapted from PwC Report 2004, WB Report 2004)

PPPUE/Capacity 2015 PPP training January 26, 2006 Legend

PPPUE/Capacity 2015 PPP training January 26, 2006 PPP institutional development in EU New Member states (Adapted from PwC Report 2004, WB Report 2004)

PPPUE/Capacity 2015 PPP training January 26, 2006 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.

PPPUE/Capacity 2015 PPP training January 26, 2006 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 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.

PPPUE/Capacity 2015 PPP training January 26, 2006 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 non- competitive procedures.

PPPUE/Capacity 2015 PPP training January 26, 2006 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

PPPUE/Capacity 2015 PPP training January 26, 2006 Western Balkans3/3 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