1. I. Zapatrina, Chairman of the Board of Ukrainian Public-Private Partnership Development Support Center, doctor of economic sciences Experience and perspectives of implementation of state-private partnership (SPP) projects in housing and communal sector

2. И. В. Запатрина, Председатель Правления Украинского центра содействия развитию публично - частного партнерства, докт. экон. наук Опыт и перспективы реализации проектов государственно-частного партнерства в жилищно-коммунальном хозяйстве State-private partnership in the world, 2010

3. SPP: objective, instruments, principles Objective – satisfaction of interests of the society, implementation of projects of social importance, increasing of the efficiency of public management system Instruments of achieving the objective – attraction of financial resources, intellectual potential, experience, competence and technologies of private sector by the public sector. Principles: Trust, observance of obligations Diversification of risks Consolidation of finances, competence, intellectual potential, technologies

4. Current opportunities on implementation of infrastructure projects Infrastructure project Budget Credits of IFI SPP -Budget load -Limited number of projects - Uncertainty in stable, rhythmical financing - Absence of stimulus of efficient project management - Long period of preparation and signing of agreements - Budget guaranties - insufficient qualification of local personnel (projects preparation, negotiations, projects implementation) - Decreasing of the budget load and tariffs -Increasing of number of investment projects to be implemented - Attraction of new technologies, experience and knowledge - Employment increasing

5. What SPP could bring? 1) Attraction of financial resources, experience, technologies 2) Optimization of budget expenditures for infrastructure 3) Renewal of infrastructure, decreasing of logistics expenditures of business (34% in cost – Peruу, 10% - USA) 4) Increasing of availability, quality and reliability of services 5) Employment increasing, internal market development 6) Speed up of economic growth Direct effect Indirect effectTotal Power generation capacity per worker 0,070,020,09 Effect on GDP growth of a 1% increase in infrastructure assets (percent) Source: J.L.Guasch Granting and Renegotiating Infrastructure Concession, WBI Development Studies, 2004 7) Assistance in economic reforms

6. Barriers for implementation of infrastructure SPP projects at the example of Latin America 1. Regulatory risks and their influence on the capital cost : Increasing of capital attraction costs by 2-6% in certain countries ; Increasing of capital attraction costs by 5% Tariffs increasing by 20% Источник: J.L.Guasch Granting and Renegotiating Infrastructure Concession, WBI Development Studies, 2004

7. Barriers for implementation of infrastructure SPP projects at the example of Latin America 2. Law qualification of public sector TotalEnergyTransportWater and sanitation Renegotiated contracts, % 309,754,774,4 Average time to renegotiate since award, years 2,23,11,6 1000 contracts, 1980-2000 Source: J.L.Guasch Granting and Renegotiating Infrastructure Concession, WBI Development Studies, 2004

8. Readiness of public sector to SPP SectorBoth Government and operator GovernmentOperator All sectors132661 Water and sanitation 102466 Transport162757 Initiators of renegotiations Renegotiation outcome% of renegotiated contracts Delays on investment obligation targets6969 Reduction of investment obligations62 Tariff increases6262 Some of the renegotiation outcomes Source: J.L.Guasch Granting and Renegotiating Infrastructure Concession, WBI Development Studies, 2004

9. Incidence of renegotiated concessions Feature% of renegotiation Lowest tariff60 Investment requirements70 Performance indicators18 Regulatory body in existence17 Regulatory body not in existence61 Regulatory framework embedded in law17 Regulatory framework embedded in resolution28 Regulatory framework embedded in contract40 Source: J.L.Guasch Granting and Renegotiating Infrastructure Concession, WBI Development Studies, 2004

10. Barriers for implementation of infrastructure SPP projects at the example of Latin America 1. Political instability ( change of priorities, review of economic course ) 2. Underdevelopment of institutional environment and low quality of institutes 3. Unreadiness of public authority to adequate reaction on aggressive private operators 4. Speeding up of GPP initiation process and their contractual mounting 5. Negative attitude of population to the private sector 6. Too high expectations related to SPP

11. Lessons for Ukraine 1. Creation of conditions for SPP ( reforms, system modernization of legislation, strict observance of laws and agreements ) 2. Development of institutional environment ( quality of institutes, science, self-regulated organizations ) 3. To hurry slowly ( to start with small pilot projects – housing and communal sector, untraditional energy sector ) 4. Formation of trust, understanding and mutual responsibility in relations « society – state – private business »

12. Concept of GPP development in housing and communal sector Tasks: 1. Creation of conditions for GPP development in housing and communal sector (modernization of legislation, development of state regulation system, justification and ability to forecast the tariffs). 2. Development of new models and mechanisms o private sector attraction to housing and communal sector. 3. Determination of ways and directions of budget support as an element of SPP stimulation in housing and communal sector and the criteria of providing such support. 4. Widening of positive experience of GPPP mechanisms application in housing and communal sector. 5. Determination of stages, principles and peculiarities of introduction of GPPP mechanisms in housing and communal sector of Ukraine.

13. Risks in implementation of SPP projects in housing and communal sector 1. Imperfect legislation (taxation, tariffs, controlling bodies, non- transparency, etc.) 2. Lack of proper institutional infrastructure (preparation, selection, monitoring of GPP projects) 3. Insufficient qualification of public authorities, loss of institutional memory 4. Political instability, lack of continuity 5. Lack of experience in implementation of GPPP projects 6. Negative attitude of the society to the private business 7. Overexpectations of municipalities and the state regarding private partners 8. Decentralization of water supply and sanitation sector and heat supply sector 9. High risks for officials related to decision making, non-adequate remuneration for the qualified activity

14. Encouraging factors 1. Interest of the state and municipalities to SPP because of lack of budget financing 2. The law on National regulation commission at the communal services market 3. Experience of formation of investment projects pool in the framework of the World Bank project (Ministry of housing and communal services) 4. Interest of IFI to crediting of energy saving projects (EIB, IBRD, EBRD, Swiss initiative, Fund of clear technologies) 5. Experience of regional companies establishment (Water of Donbass) 6. Concept documents (law on SPP, concept of state regulation, concept of SPP in housing and communal sector, program of reforming of housing and communal sector, draft laws in field of housing and communal services) 7. Existence of positive and negative examples of SPP 8. High potential on implementation of SPP projects (waste water treatment, replacement of pumps, accounting …), influence of situation in the country on ecological situation in the neighboring countries (general water resources)

15. 15 What could be expected by implementing SPPP projects in housing and communal sector? 1.Introduction of the best experience, new technologies 2.Attraction of financial resources (own and loaned) for modernization of infrastructure 3.Overcoming fragmentation of enterprises of heat and water supply, efficiency increasing 4.Avoiding populism regarding housing and communal sector. Formation of «lobbyists» of reforms 5.Increasing of general level of professionalism in infrastructure enterprises management due to operators competition 6.Quick and adequate reaction on economys demands, technological, social and ecological challenges

16. Key factors of SPP development in housing and communal sector 1.Qualification of public sector 2.Institutionalization of SPPP market 3.Systematic qualified work on legislation improvement 4.Establishment of national regulation commission and ensuring of professional regulation 5.Introduction of nondiscriminatory transparent procedures 6.Professinal and responsible dialogue with the society 7.Partnership with science

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