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In Belarus, a new institute of interaction between business and the state - public-private partnership has appeared

12 January 2016

REVERA informs that on 01.01.2016 the Law of the Republic of Belarus as of 30.12.2015 No. 345-З “On Public-Private Partnership” (hereinafter - the PPP Law) was published on the National Legal Internet Portal of the Republic of Belarus. With the adoption of the PPP Law in Belarus, a new institute previously unknown to the national Law -  public-private partnership (hereinafter - PPP) has appeared.

1. The term PPP

The PPP (public-private partnership) traditionally means legally executed for a specified term mutually beneficial cooperation of governmental bodies (organizations), (a public partner) and subjects of entrepreneurial activities (a private partner) in respect of the objects that are in the field of direct public interest and control, or services provided by the state on the basis of a specially concluded agreement.

PPP is an alternative to privatization of state-owned objects. PPP allows you to attract private capital for construction (including reconstruction) of objects owned by the state. In this case the objects are still in state ownership.

The main advantage of the PPP for a private partner is the opportunity to participate in projects the realization of which without the participation of the public partner would be impossible or significantly impeded.

The traditional projects for PPP are the ones connected with construction and joint operation of auto-roads, power plants and other energy facilities, airports.

The public partner when participating in PPP projects also receives a number of advantages:

- the ability to implement projects that otherwise would have remained unrealized, for example, due to the lack of funding;

- access to technologies controlled by private partners;

- transfer of some risks associated with the implementation of PPP projects to the private partner.

A long-term (typically more than 10 years) and sustained interaction between the public and private partners gives a special importance to the PPP as a form of attracting investments.

At present several projects with signs of PPP projects are already being implemented in the Republic of Belarus, as an example, a project on creation of an electronic toll collection system for toll roads in the Republic of Belarus. However, until now the implementation of these projects was carried out without general for all regulation and did not have a systematic character.

2. Sphere of application of the PPP

The PPP Law provides for that the PPP may be exercised in respect of infrastructure in the fields of traffic and transport activities, public utilities and public services, energy and other spheres, leaving the specified list open.

It should be noted that the National Infrastructure Plan of the Republic of Belarus has been developed in Belarus for 2016-2030 (further - the NIP), which identifies 100 priority infrastructure projects for the Republic of Belarus with a total amount of investments in these projects is more than 3 billion U.S. dollars. From the list of TOP-100 projects, a number of projects is planned to be shortlisted in the future, which can be implemented on the PPP principles.

Currently 7 pilot PPP projects have been selected:

- reconstruction of the road M-10: the border of the Russian Federation (Selishche) - Gomel - Kobrin, km 109.9 - km 184.5;

- construction of highway in the city of Gomel 41.35 km long, taking into account the construction of the bridge across the river Sozh and five overpasses;

- construction of Beshenkovichi hydroelectric power plant (33 MW, 130 million kWh) on the Western Dvina river in Vitebsk region;

- construction of a waste processing plant in Bobruisk city;

- reconstruction of group of buildings of Health Institution “City Clinical Hospital No.3 of Grodno” under “Grodno Regional Clinical Oncology Center”;

- construction of kindergartens in regions of Minsk region;

- capital repair with the restoration of facades and reconstruction into a hotel complex of facilities located in the western part of the Kobrin Fortification of the Brest Fortress.

Please note also that the PPP Law Act does not involve the implementation of the PPP projects on the provision of public services by private partners.

3. The PPP subjects

The PPP Law stipulates that public partners in the PPP projects may be:

a) The Republic of Belarus, on behalf of which a state body or another public organization authorized by the President of the Republic of Belarus, the Republican state administration body authorized by the Council of Ministers of the Republic of Belarus or another state organization subordinated to the Council of Ministers of the Republic of Belarus;

b) administrative territorial unit, on behalf of which acts the local executive and regulatory body (executive committee).

A private PPP partner can be:

to) a legal entity (except for state unitary enterprises, state establishments and public organizations, as well as business entities, more than 50 percent of the shares (stakes in the authorized capital) of which belongs to the Republic of Belarus or its administrative and territorial unit);

b) a foreign organization that is not a legal entity;

c) an individual entrepreneur.

4. Stages of the PPP  projects implementation

The PPP Law stipulates 4 stages of the PPP projects implementation:

1) preparation of proposals for the implementation of the PPP project;

2) taking a decision on the implementation of the PPP project;

3) conduct of a tender on selection of the private partner for the conclusion of the PPP agreement;

4) conclusion and execution of the PPP agreement.

The PPP Law provides for the right to submit proposals for the implementation of the PPP projects to public bodies and other public organizations, as well as to potential private partners.

Three subjects will be entitled to take decisions on the implementation of the PPP projects after consideration and evaluation of proposals for their implementation:

1) The President of the Republic of Belarus;

2) The Council of Ministers of the Republic of Belarus;

3) local Councils.

Selection of the private partner for the conclusion of the PPP agreement will be carried out, as a general rule, on a competitive basis. In this case, the PPP Law stipulates that the competition will consist of two stages - preliminary selection of participants and choice of the participant who has won the competition.

Selection of the private partner without competition can take place in the following cases:

- if it’s needed to carry out activities in relation to the infrastructure facility in connection with the force majeure circumstances or other exceptional circumstances that result in the inability to conduct  the competition;

- in cases related to ensuring the defense capability and national security of the Republic of Belarus.

The PPP agreement is subject to the conclusion between the winner of the competition or the only participant of the competition, whose bid meets the conditions of the competition, and (or) a person selected without conducting the competition, and the authorized state body or organization in the PPP field.

The subject of the agreement on the PPP partnership is the implementation of design, construction and (or) reconstruction, restoration, repair, modernization and technical maintenance, and (or) operation in respect of the infrastructure facility.

Comment

We believe that the PPP will allow to expand opportunities of financing of infrastructure projects in the Republic of Belarus by attracting funds from private investors, as well as to increase economic effectiveness of implementation of infrastructure projects for investors. Moreover, it should be noted that some norms of the PPP Law are of the reference nature and the final terms of implementation of the PPP projects in Belarus will be possible to get assessed only after the adoption by the Council of Ministers of the Republic of Belarus of the corresponding normative legal act on the conditions of implementation of the PPP projects, which must be drawn up and adopted before the entry into force of the PPP Law (02.07.2016).
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