session 7 regulating ppps laws related to ppps alternative regulatory arrangements eu ppp related...

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 trainingJanuary 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.


Alternative regulatory arrangements1. 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


Alternative regulatory arrangements2. 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


European Union 1/2

There is no uniform PPP definition for the EU, nor a wide policy

Common characteristicsUtilization not only private sector ability to raise

finances but also its management and experienceRisks are allocated to the party better equipped to

manage themNeed to combine the EU funding and private

finance


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


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)


Important changes expected

PPP Green Paper http://europa.eu.int/eur-lex/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/ppp-report_en.pdf


PPP institutional models on the degree of centralization of PPP institutions in the overall state structure1. Highly centralized (Canada) – SuperBuild

Corporation and Ministries2. Highly decentralized (France, Portugal) –

PPPs – individual government departments and local authorities responsibility, although informal coordination IS taking place


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


PPP institutional development in EU Member states (Adapted from PwC Report 2004, WB Report 2004)

Country PPP Unit PPP LawRelative PPP experience (water and wastewater sector)

Austria ▲▲▲ - ☺Belgium ▲ □ □ ☺☺Denmark ▲▲ - -Finland - □ ☺France ▲ □ □ -Germany ▲▲ □ □ ☺☺☺☺Greece ▲ □ □ -Ireland ▲▲▲ □ □ □ ☺☺☺☺Italy ▲▲ □ ☺☺Luxembourg - - -Netherlands ▲▲▲ - ☺☺☺Norway (not EU) ▲ - -Portugal ▲▲ □ □ ☺☺☺Spain - □ □ ☺☺☺Sweden - - -UK ▲▲▲ - ☺☺☺☺☺


Legend▲

Need for PPP unit identified and some actions taken (or only a regional unit available)

▲▲ PPP unit in progress (or existing but in purely consultative capacity)

▲▲▲ PPP unit existing (actively involved in PPP promotion)□ Legislation being proposed

□ □Comprehensive legislation being drafted/some sector specific legislation in place

□ □ □ Comprehensive 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


PPP institutional development in EU New Member states (Adapted from PwC Report 2004, WB Report 2004)

CountryPPP Unit

PPP Law

Relative PPP experience (water and wastewater sector)

Cyprus - - ☺☺Czech Republic ▲▲ □ □ ☺☺☺Estonia ▲ - -Hungary ▲▲ □ ☺☺☺Latvia ▲▲ □ -Lithuania - - -Malta ▲ - -Poland ▲▲ □ □ ☺☺☺Slovakia - - ☺Slovenia - - ☺☺☺

Bulgaria ▲ □ ☺☺☺Romania ▲ □ □ ☺☺☺Turkey - □ □ □ ☺☺☺

Applicant countries


EU Accession countries 1/2 High degree of public services

decentralizationcreates 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.


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.


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.


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


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

session 7 regulating ppps laws related to ppps alternative regulatory arrangements eu ppp related...

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