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The Basic Policy Issues of Public Private Partnerships (PPPs) by Alexandros Lykourezos Lykourezos Law Offices World Bank Conference Athens, December 19 th , 2006. Public Private Partnerships (PPPs) Definition:

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Public private partnerships ppps definition

The Basic Policy Issues ofPublic Private Partnerships (PPPs)by Alexandros LykourezosLykourezos Law OfficesWorld Bank ConferenceAthens, December 19th, 2006


Public private partnerships ppps definition

Public Private Partnerships (PPPs)

Definition:

“any joint venture between a public body and a private company, typically involving the joint ownership of a special purpose vehicle (SPV) established under company law, to work in collaboration on a variety of projects”


Public private partnerships ppps definition

The basic features of PPPs:

  • New Market for provision of Construction & Services

  • The financial aspect of PPPs

    Public Works  Financial Instrument

  • Off-Balance Sheet – EUROSTAT 11 Feb. 2004

  • Allocation of Risks

    Construction – Demand – Availability Risk

  • Bankability

    Secondary Market – Securitisation

  • Insurance

  • Value for Money – Public Sector Comparator

    Incentive for Quality


Public private partnerships ppps definition

International Interest in PPP 1999

Interested in PPP

Source: IFSL


Public private partnerships ppps definition

International Interest in PPP 2006

Interested in PPP

Source: IFSL


Public private partnerships ppps definition

The ongoing discussions on PPPs in Europe:

  • European Commission “Green Paper” on PPPs

  • PPP Alliance Programme - UNECE


Public private partnerships ppps definition

European Commission “Green Paper” on PPPs (2004)

  • Wide debate by Governments and Stakeholders in the Private Sector

  • Apparent need for concise legal framework

  • Emphasis on the procurement aspect

  • Next steps: Concessions legislation and shared better practice information


Public private partnerships ppps definition

PPP Alliance Programme

United Nations Economic Commission for Europe

  • UN Global Compact & Millennium Summit (2000): Declaration to use PPPs as a means to address critical challenges of poverty and social deprivation

  • Fourth Alliance Meeting (2005): Governance in PPPs for Infrastructure Development

  • Emphasis on Shared Better Practice

  • Critical importance of carefully choosing a PPP approach


Public private partnerships ppps definition

Policy Issues of PPPs:

  • Proper Legal Framework

  • Appropriate Institutional Framework

  • Transparent Procurement Framework

  • Attractive Market Framework

  • Globalization


Public private partnerships ppps definition

Proper Legal Framework:

  • Clarity and Stability

  • Adherence to International Convention and European Union Law

  • Safeguard a Level Playing Field

  • “Commercialization” - “Soft Law”

    ATTENTION TO ALL STAKEHOLDERS:

    USE THE LAW WELL!!!


Public private partnerships ppps definition

Appropriate Institutional Framework:

  • The Government

  • The “PPP Taskforce”

  • Stakeholder Associations

  • End-User Concerns

  • Important: Choosing the proper approach


Public private partnerships ppps definition

Attractive Market Framework:

  • Primary Market Concerns

    Open Market / Good PPP Contract

  • Secondary Market Concerns

    Bakability / Insurance

  • Risk Allocation

    Real Risk / Financial Risk / Risk Management


Public private partnerships ppps definition

Globalization – The next step?

  • The “Mature Market Test”

  • The “Lessons Learned Test”

  • The “Uniform Practice Test”

  • The “PPP Mutual Fund Challenge”


Public private partnerships ppps definition

Greek Law 3389/2005 on PPPs:

  • Abolishes requirement of Parliament ratification

  • Adopts new EU Directives on Public Procurement

  • Regulates award and contractual scheme of PPPs

  • Provides flexibility and allows shared better practice

  • Enhances bankability (step-in clauses and securitisation)

  • Complies with EUROSTAT regulations


Public private partnerships ppps definition

Practical layout - Award of a PPP contract

(Greek Law 3389/2005):


Public private partnerships ppps definition

Greek PPP projects in the pipeline:

  • Multi-schools projects: 27 Schools in Attica and 31 Schools in Macedonia

    (€ 266 mil. + 20%)

  • Prisons projects: 3 prisons facilities in Salonika, Volos and Corinthos

    (€ 198 mil. + 20%)

  • University of Peloponnisos

    (€ 84 mil. + 20%)

  • Courthouse projects: 2 courthouse facilities in Heraklion and Patras

    (€ 100 mil. + 20%)

  • Police facilities project in Attica

    (€ 36 mil. + 20%)

  • Fire department facilities projects: 7 facilities in Salonika, Alexandroupolis, Veria, Lefkada, Giannitsa, Mesolongi & Gargaliani

    (€ 31,5 mil. + 20%)

  • International Conference Center in Athens (Paleo Faliro)

    (€ 54 mil. + 20%)

  • Municipalities (Article 224 of the New Municipalities Code)


Public private partnerships ppps definition

A quick case study:

“Athens International Airport”

  • A concession contract (with a PPP approach)

  • EU funding: Cohesion Fund 11%, EIB loan 47%

  • Greek State contribution 19%

  • Commercial debt 17%

  • Equity 6%

  • SPV: Athens International Airport S.A (55% Greek State, 45% Private Consortium)

  • Construction delays: 3 months in advance

    Source: Patrick Boeuf, EIB, 2004


Public private partnerships ppps definition

“Athens International Airport” – Duration of Project Implementation

Source: Patrick Boeuf, EIB, 2004

(Time in months elapsed in each phase)

Total (10 years)


Public private partnerships ppps definition

Why is the Government using PPPs:

  • Expand of Public Works - Private finance, off balance sheet

  • Value for money – Risk transfer – Performance-related reward

  • Commercial interest - Investments

  • Innovation, Efficiency, Quality

  • New approach to “Privatization”


Public private partnerships ppps definition

The keys to a successful PPP:

  • Political support (focus on the public service)

  • Proper and complete legislation harmonized with international practice and expertise

  • Full and complete legal, financial and technical advice to the public bodies

  • A good PPP contract

  • A level playing field

  • Collaboration


Email allykourezos@lykourezos gr website www lykourezoslawoffices gr

Email: [email protected]: www.lykourezoslawoffices.gr

Thank you for your kind attention!


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