Partners in law

  ‘Eurobuild Poland’ spoke to Bartosz Korbus, president of the Public-Private Partnership Institute about the implications

Ewa Andrzejewska, ‘Eurobuild Poland’: It was only a few weeks ago that ordinances, without which the Public-Private Partnership Act (PPP) would be dead in the water, came into force, though it has been on the books since 5th October 2005. Does this mean the first projects will get off the ground at last after years of humming and hawing?

These ordinances are most important since without them the Act’s regulations cannot be implemented. But what is also important is that without them, pre-implementation risk analyses would be impossible. Before a public office decides to announce a tender it must have a good idea about the costs of a given venture when executed by traditional methods, that is, if the public office carried out the entire project itself, e.g. building a swimming pool and then running the necessary maintenance services and even selling admission tickets. A public partner must also be able to review alternative execution methods, i.e. employing a private partner and identifying the best PPP model for the given undertaking. Such an analysis is imperative prior to entering into talks with a private partner.

This concerns only the ordinance setting out the necessary conditions for a given venture.

Indeed, but there is also another ordinance which stipulates that the risk is divided by employing EU methods and also by recommending how the risk should be estimated. And there is a third, less important, ordinance which defines local governments’ accounting duties. In this case the legislator has clearly moved towards securing the public debt and protecting the budget deficit from excessive liabilities on the part of the public authorities in relation to a private partner. The effectiveness of such undertakings is, unfortunately, measured by the amount of public expenditure.

The green light has been given to PPPs as regards legal aspects, but are public partners ready to start operatiing within the PPP framework?

  given location can only determine if the success of a venture requiring a large population is feasible in a specific region. I have in mind projects which are self-financed on market principles with the income from services rendered over a specific period. In a word, the larger the population, the smaller the risk of an investment proving unsuccessful.

 You’re right. You must remember that this Act offers the possibility of ensuring a private partner 100-pct earnings from the council budget without the local citizens having to pay anything. The sole condition is that the investment has to be executed more effectively than by the traditional model when the public partner performs it by itself.

Which boroughs are currently working on such projects and what are they?

On the other hand, a large number of companies are interested in constructing water supply systems, particularly where PPP projects can be merged with financing by EU funds. EU money still cannot be used but I feel the law will be amended especially as regards new operational programmes.

Entrepreneurs are impatiently poised, ready for the first tenders. When can these be expected?

 There are many sectors of the local economy which are the subject of public contracts: gas, water, sewage disposal and treatment, transport and construction. But contracts concluded with PPPs are complex to the extent that there is something for everyone. Every company that wants to sell its products or services is warmly welcomed, but the most interested should be so-called operators, that is companies that not only develop swimming pools but also manage their technical operations and, afterwards, charge for admission for a considerable number of years to recover their original outlay on the investment. In this way, they take on part of the economic risk. The thing is that the Polish market is poorly equipped to cope with such projects, which means partners will have to be found outside Poland. However, I am convinced that all business people, without exception, should be interested in PPPs, even companies which – for example – sell lighting systems. They can become a members of a consortium of firms and supplement what other partners have to offer. As a result, such a consortium can present a more comprehensive offer than firms going it alone.

Much was being said a few weeks ago about what the transport minister had to say on withdrawing the licence granted to the Gdańsk Transport Company to build a section of a motorway, claiming it would be cheaper if it were done by public means. Could a private partner of a PPP count on greater political security than at present?