Opposites attract

The Public-Private Partnership may be a way of using the funds the EU is going to provide for further development of Poland's infrastructure. But a cautionary note is necessary because partnerships involve co-operating and sharing responsibilities. "I have confidence in Polish administrators," says Uwe Krüger of Hochtief, though Michał Skorupski EC Harris plays this enthusiasm down somewhat. "They still have a lot to learn" he says

When, as he was taking up his post, Deputy Prime Minister Marek Pol announced that Polish infrastructure would develop along the lines of the Public-Private Partnership, he did not know then that the PPP would thrive to the extent it has. It has since been raved about by the press and analysts have proclaimed it an excellent way to put infrastructure funds to use. The Polish government plans to invest PLN 36 bn, PLN 7 bn of which is funded by the Fundusz Spójności and ISPA. Let us hope that the optimism surrounding PPP and its possibilities are not being exaggerated.

How to take it
Already operable in countries such as the UK and Germany, the first step for a PPP is the establishment of a special purpose company to develop the infrastructure under consideration. Such undertakings appeal to both sides. A public partner gets involved because he acquires the important infrastructure, (from a public point of view), and does not need to worry about it for at least a dozen or so years. A private partner, on the other hand, secures himself a regular income, that is from the utilisation of a project, for many years. In return the latter accepts responsibility linked to such utilisation.

This is your bit, partner!
Not every coordination of private and public funds operates under the banner of PPP, however. A Public-Private Partnership exists only when the public party nails down the problem and together with the private partner works on solving it, while the former establishes the venture's terms, standards and functions. The responsibilities of the private partner, selected during licencing proceedings, are to finance and utilise an enterprise so that it meets the requirements of the public party.
Why should the public party be limited to merely setting investment goals? "Administrators aren't fluent in design or investment processes," says Michał Skorupski, who dealt with the practical side of PPP in Manchester, where he was involved in the construction of a high-speed tram line. "They should simply be able to define their objectives, make sure it is achieved and that the partner fulfils all his obligations during the licence period."

These are my proposals
The best way to illustrate the difference between the definition of a goal and the method of realising it, is by looking at the much-debated example of the construction of the Warsaw-Ursynów motorway. If the project was to be carried out on a PPP basis, the Warsaw authorities would probably stipulate the following: we want a road which will allow for the flow of thousands of vehicles during rush hour, low noise and pollution levels, entrance and exits in specific places and emergency telephones every 500m.
The private party would then have to prepare optional solutions, and their possible answer might be as follows: we can build a tunnel for the road but it will cost several hundred million złoty, or alternatively we can build it in a shallow ditch and it will come to PLN 200 mln. In the former case we want a subsidy and to receive payments for the next 30 years; in the latter for 15 years.
"I think that the purest form of PPP would be a situation where the authorities would say to a private investor: we want to ensure that a certain number of people are provided with transport. A private investor could offer anything, from a fast tram to trains and buses and this is when you can choose the most rational solution," suggests Michał Skorupski, who incidentally doesn't conceal his opposition to the construction of a metro system in Warsaw.

When are we starting?
The plans for using PPP for the purpose of the Polish economy are far and wide and include pipelines, the Wrocław ring road and the A1 motorway from Gdańsk to Łódź. Hochtief are planning to build a refinery and the details of the scheme are being negotiated. Are there any PPP projects to speak of at the moment? "There is of course the A2 highway, which doesn't seem to be very successful yet. The reason for this is in my opinion, is that too many parties have different interests as concessionaries," says Skorupski.
In order for the programme to be fully-launched, the taxation law issue must be settled. There is also a lot of room for improvement, certainly as far as State-commissioned infrastructure investments are concerned.

What about the administrators?
PPP is all about co-operation but private investors invest their own money in these projects and make a commitment for several years. Are Polish administrators worthy partners? Uwe Krüger is positive that people at the highest administrative levels are enthusiastic about PPP. Both Professor Bogusław Liberadzki, Head of the Sejm's Infrastructure Commission and Deputy Prime Minister Marek Pol, place a lot of faith in it. "I think politicians in Poland are more open to PPP than in Germany," says Hochtief's President, who acknowledges that government middle management and local and regional administration are key players. "Even if they lack certain qualifications, these people are willing to work and are enthusiastic about the changes they are effecting." But Michał Skorupski is frank with an another opinion: "I think our administrators still have a lot to learn."