Public-private partnerships

Public-private partnerships is the institutional and practical expression of the central idea: the involvement of the private sector in the provision of infrastructure and services which were previously the exclusive domain of public authorities, such as health, education, penal and other social services, and so on.

PPPs are not a form of privatisation. The state keeps all its power and authority it wants over the deliverables under a PPP. Goals of public interest and social services remain still under the public authority, but why not a private finance solution for such public goals and social services? PPPs are a means to achieve social goals set by the public authority and are organised by the same mobilisation of market forces.

Politically still debatable, although not as fanatically as some time ago, the idea behind the PPPs (and the PPPs legislation and practice) seems to be generally accepted. The differentiations among various EU countries may be differences in emphasis or in the methodology, but not a real questioning of the PPPs. Almost every single country of the EU, either governed by the socialists or the conservatives, has introduced (or reshaped previously existing) relevant legislation some time in the last five or six years. So we can find PPP Acts, Decrees, Task forces etc in Spain, in Portugal, in France, in the Netherlands, in Czech Republic, in Germany, in Ireland, relatively recently (2005) in Greece and elsewhere. So the PPPs are a stable institution; market forces can count on them. In some cases, several important private players have even reoriented their business structures to meet the needs of PPPs.

Cooperating across borders
Not defined at community level, yet under European community law, the term refers to the forms of cooperation between public authorities and the world of business which aim to ensure the funding, construction, renovation management or maintenance of an infrastructure or the provision of a service. The PPPs are not a form to escape from European law; it is a method to exploit European law in a way better for both the public and the private sector, and more expedient for the satisfaction of the social needs.The Greek legal and institutional regime on PPPs, basically law 3389/2005 on Public Private Partnerships and Directives 2004/17/EC and 2004/18/EC, goes along the general governing matter at European level.

The public authority, in the Greek case an interministerial committee deciding on the basis of proposals by ministries and other entities of public law – such as local administration bodies, universities, public hospitals etc – sets a task of public interest, such as to build and operate a hospital or a port facility, or to build and make available to the public an educational institution, or to install and operate a waste management facility and so on, expected to be fulfilled by a PPP and opens the competitive procedure for the award of the PPP.

It is true that the initiative for a PPP comes from the public sector, but ideas for such initiatives may come from private operators as well. So if private operators are ready to finance and accomplish a task under conditions of a PPP, why shouldn’t they indicate it to the relevant public authority.

The private operator has to secure the financing of the public task, to produce the technical skills necessary for the accomplishment of the task, to proceed to the project management of the whole operation leading to the completion of the task. The idea is that there will be only one operator to adopt, combine and fulfill all these roles. It would not suffice to have, say, a bank for the money, and then a constructor for the construction, and then a consultant to consult, and also a manager to manage the project etc.An SPV – a Special Purpose Vehicle – is the form required by the Greek legislation for a private operator to enter into a PPP. It is called Special Purpose Company. Its constitution, as outlined in law 3389/2005, is designed to secure that the company will have the powers to undertake all the necessary for a PPP functions and combination of functions.

Both parties, private and public, are expected to set in their contract their mutual obligations, including the modalities of payment of the private operator (which may include the transfer of the cost to the – essentially private – users or the direct payment by the public authority to the private operator for the availability of the project). In essence the public operator sets or guarantees the institutional prerequisites for the task (such as licenses, regulations, tax regime), while private operator guarantees – undertaking the risk – the completion of the task.

Active mobility
Greek authorities seem to put a lot of emphasis on PPPs. Ministers and other high ranking officials, do not lose any occasion to underline that they take PPPs very seriously. Almost twice a year several dozens of PPP projects are opened by decision of the interministerial committee. The Special Secretariat for PPPs, an institution devoted to the implementation of PPPs projects, has been established and proves an active mobility. Greek PPP projects have started to rise international interest.

For us, PPPs are not only a Greek matter. In a working day on PPPs organised by our Sofia office early this year by Minister Granchareva have clearly highlighted the institution in relation to Education and Health as major governmental priorities, while Minister Vassiliev has expressly mentioned 66 local administration buildings and the construction or modernisation and operation of border crossing points at external borders of the EU in Bulgaria. Our office in Bucharest is actually discussing a proposal to participate in the implementation of a PPP project regarding to a major construction work.

The lesson learned? In the European environment and legal space, legal services for PPPs form a harmonised market, where flexibility, ability to cooperate and professional excellence will make the difference.