1. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU Introducing a New Concessions System – Latvian Experience Introducing a New Concessions System – Latvian Experience Regional Workshop on Concessions/Public-Private Partnerships Tirana, 11 – 12 December 2007 Eriks Mezalis Public and Private Law Consulting, Law Firm Partner Head of Public Procurement and PPP Department Vilandes Street 3, Riga, Latvia E-mail: Eriks.Mezalis@pplc.lv Web: www.pplc.lv

2. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU Geographical situation of Latvia l Location – Eastern Europe l Territory – 64,6 000 square kilometers l Population – 2,5 000 000 inhabitants l Capital – Riga (800 000 inhabitants) l Borders with Lithuania, Estonia, Russia, Belarus l Baltic See border – 1840 km

3. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU

4. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU Political and Economical situation l Joined EU in 01.05.2004. l Permanent right – wing government l Strong political will to introduce PPP l High demand for different public services and works l High budget constraints

5. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU PPP history in Latvia l 1995 – 2000 – “unrecognized PPP’s” The operation of e – system of Register of Enterprises Operation of canteens in schools, hospitals and universities across Latvia Waste treatment services in municipalities l Contracts awarded by Public Procurement Contracts Law l No separate legislation regarding Concessions

6. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU Legislative development l 20.11.2000 – Concessions Law Lack of regulation of many necessary aspects Consequences: –legal uncertainty; –low courage to step into concessions agreements; –low interest from investors.

7. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU Legislative development (continued) l 2002. – 2005. – A number of policy documents regarding PPP and concessions l 01.05.2006. (New) Public Procurement Law l Concessions and long term public contracts still without appropriate regulation

8. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU The PPP institutional system and new PPP law

9. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU Institutional system of PPP l Ministry of Economics – responsible for PPP and Concessions policy l Investment and Development Agency – responsible for implementation of PPP policy, assistance to the public partners, gathering the best praxis l Procurement Monitoring Bureau – responsible for procurement issues l No unit directly responsible for PPP accounting

10. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU What do we want to achieve with PPP law? l Legal certainty for both public and private partners l Regulation that promotes: the justice value for money principle in public spending flexibility l The impulse to improve the institutional system of PPP

11. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU PPP law – the concept and structure l Definition of PPP l Concessions contracts definition as in EU Procurement Directives l Procurement contracts definition as in EU Procurement Directives l No “business slang” – DBFO, BOT e.t.c.

12. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU PPP law – the subjects l State, municipalities and derived public entities l Bodies governed by public law (according to EU Procurement Directives) l Public utilities

13. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU PPP law – reaching value for money l Obligation for public partners to do value for money calculation and choose right option of cooperation l Elaborating the system of risk evaluation

14. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU PPP law – contract award procedures l For subjects that are not public utilities: open and restricted procedure competitive dialogue and negotiated procedure – if appropriate l For subjects that are public utilities: open, restricted and negotiate procedure with prior publication negotiated procedure without prior publication and competitive dialogue – if appropriate

15. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU PPP law – concluding the PPP contract l The regulation of review procedures need for following EU “Remedies directive” l The components of PPP contract l The regulation of Step – in process the interests of lenders potential conflict with EU law

16. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU Key points l PPP legal and financial regulation functions within the legal system of state and is its integral part l The attention to PPP institutional system also should be paid: PPP policy making control advice giving examining the appeals

17. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU Key points (continued) l In the process of adopting the PPP law, the interests of all involved parties should be carefully considered l Communication with society is highly important

18. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU Key points (continued) l Experience form other countries should be used, still critically applying it to local situation l Each person involved in drafting the law should leave its corporative interests (if any) a little behind and look to the whole picture

19. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU Thank you for your attention!