The state has a wide range of instruments for influencing the economy. One of these is public-private partnerships. What is it like? In what cases do they turn to him? Can I give examples of implemented PPP projects?
general information
To get started, let's deal with terminology. PPP is one of many ways to develop public infrastructure, which is based on long-term interaction between business and the state. At the same time, the private party takes part not only in the design, financing and construction of the facility, but also in its subsequent operation, the provision of services based on the established base, maintenance and reconstruction.
What are your goals? The main thing the state wants to achieve is to stimulate the attraction of investments by individuals and structures in the production of consumer goods, services, and work. This approach is applied when it is necessary to provide a certain public law education at the expense of a specific budget, as well as reduce the participation of power structures in a particular sector of the economy. The latter is carried out exclusively in cases where a business can effectively fulfill its responsibilities.
From a legal point of view, PPP is a form of relationship between a specific public legal entity (for example, the Russian Federation, a separate constituent entity of the Russian Federation, a specific municipal formation) and private individuals. They are built on a concession agreement (COP) or public-private partnership (PPP), which are concluded between the participants. By their nature, they are civil documents.
Legislative framework
So, we have already figured out what PPP is. This is a good start, but for a closer look you need to know a lot of details on which this mechanism is based. The legislative definition for it is contained in federal law No. 224-FZ of 07/13/2015. Article 3 defines PPP. This has already been reviewed previously. More interesting are the concepts of PPP and CS. From the point of view of legislation, these are independent legal institutions.
Thus, the consideration, conclusion and implementation of agreements is governed by various federal laws. But at the same time, CS is one of the models (forms) of PPP. In order to conclude an agreement, a decision of an authorized public body that represents the interests of a particular public law entity is necessary. It should clearly and unequivocally announce the start of a specific project.
To conclude the Constitutional Court or the PPP, the law provides for the bidding process in the form of a tender in which participants fight for the right to conclude an agreement. Although there are some cases when it is concluded without it. The PPP mechanism is a popular and rapidly developing form of interaction between private investors and the state, which involves the distribution of risks between them.
About models and legislative issues
As previously mentioned, the PPP and the Constitutional Court are independent legal institutions. The difference between them is this:
- The concession agreement (CC) is governed by federal law No. 115-FZ of July 21, 2005.It provides the right of the state (municipality) to the property of the object of the agreement.
- The Public-Private Partnership Agreement (SGBP) is governed by federal law No. 224-FZ of July 13, 2015. In this case, it is provided that the object of the agreement is privately owned. But only if compliance with the requirements of the law.
These are the forms of PPP provided. Which of them will be used depends on the goals pursued. What are the common properties of PPP forms? In short, these are:
- The long-term nature of the partnership. It is necessary for the return of private investment, as well as the complexity of this project. As an example: the duration of the PPP cannot be less than three years.
- The distribution of risks and responsibilities due to the involvement of a private partner not only in the creation of the facility, but also in its subsequent operation and maintenance. This is a prerequisite for the formation of structured relations between the parties within the project. Also at the preparation stage, the search for the optimal position is the most difficult.
- Full or partial financing of the created object of public infrastructure by a private partner. This is the main difference between PPP and government orders. At the same time, a public partner or a grantor may compensate for a certain part of the costs that were allocated to the object of the agreement.
About private benefits
What does an investor who chooses a public-private partnership get? PPP implementation mechanisms are enshrined in a long-term agreement. A private trader can also receive land, forest, water without bidding (but only for the implementation of the agreed goals). Another nice point is the possibility of co-financing the project by the public side or receiving additional guarantees (for example, minimum profitability).
Due to the rather wide opportunities for work, additional ways to increase revenue are often used. This is the provision of additional paid services, and the use of optimal solutions that can reduce costs at the stages of both the creation and use of the facility. This model also allows you to gain a foothold in areas that are traditionally considered state-owned. In addition, part of the risks is transferred to the public partner. This allows you to look more confidently at the implementation of the project and its subsequent operation.
About state benefits
So we answered the question about what attracts private business in PPPs. And what is the benefit for the state? Here is a short list of the main advantages that the development of PPP brings:
- The ability to attract private investors to finance and create infrastructure projects in conditions where there is no necessary amount of budget funds. This method allows you to not increase the debt burden within the current period.
- The ability to combine in one project the various stages of creation (design, construction, use).
- It is not an object that is acquired, but a service through payments that are tied to volume and quality. This contributes to the development of competition.
- The ability to use the resources and competencies of the private sector to provide socially significant services, as well as to improve their quality.
- Decreased state presence in the economy.
The most important and promising here is the first point. It should be recognized that the state does not have enough money to fully fulfill all its obligations. Therefore, the PPP mechanism allows you to minimize all the negative aspects and make life more comfortable for both citizens and those who are obliged to take care of us.
About Organization
How are PPP projects arranged? To answer this question, let's look at organizational issues.The main attention is paid to the process of preparing and conducting a public procedure, during which a private partner is selected, a contract is concluded with him, which defines the activities, responsibilities and rights of the parties to achieve the agreed goals, and also ensures the monitoring of the fulfillment of obligations undertaken. State contracts in the form of documents can be executed in several forms:
- Shareholder agreement.
- Service agreement.
- Lease of public property with the assumption by private participants of obligations to improve it.
- Investment contract for the creation of an object.
- Concession agreement.
- Turnkey installment contract.
In fact, government contracts are divided into two models (this was previously discussed). But they are based on various legislative documents. The list just listed is a form of contract that it takes in practice. This is not a significant, but extremely important difference.
About examples
So, we have already considered the concept, forms, possible applications and PPP models. This theory is enough to have a base that allows you to understand real situations. To better familiarize yourself with all the mechanisms, examples of PPPs at both the regional and federal levels will be considered. And the first in line is the Kamchatka Territory.
In 2010, an agreement on interaction and cooperation was signed there, which made it possible to attract funds from various sources to finance promising investment projects. As an addition to the damage of the Kamchatka Territory itself, a regulatory document “On Public-Private Partnership” was adopted. PPP was envisaged in the form of concession agreements in the energy sector. Moreover, projects are created on the principles of state (or municipal) and private partnerships. On the territory of the Kamchatka Territory, property is temporarily transferred for the purpose of reconstruction and subsequent modernization.
Another interesting point that was not mentioned earlier is the concession fee. What is its essence? In cases where this mechanism is provided, the state (or local authority) may pay a certain amount to the partner. This is necessary in cases of projects with low investment attractiveness. An example is social objects.
What about examples at the federal level?
Can you talk about something here? Yes, there are a number of events that were the result of PPPs. What interests private business in this case? For example, we can cite several high-profile cases related to the transport sector. First of all, we should recall the construction of the western high-speed diameter in St. Petersburg, as well as the route from the city to Moscow. But perhaps the most famous in the country was the Plato truck collection system, which caused strikes throughout the country for quite some time.
In total, as of March 2017, there were 1,340 registered projects built under the public-private partnership scheme. Of these, 426 were withdrawn to the operational phase (that is, successfully implemented). Where are they created? What areas of PPP allows you to patch up? The bulk of them falls on utilities. 901 projects were registered here. Then comes the energy sector, but it boasts only 133 agreements. Another 81 projects are in the field of transport. All other agreements reached relate to the field of social infrastructure.
But simply quantitative figures do not give a complete picture. So let's talk about cost. How much money did PPP projects receive? More precisely, private investments, because state money is our funds collected as taxes. In this case, about 700 billion rubles were raised. At the same time, 440 of them are aimed at regional projects.
About criticism
Almost always you can find people who are dissatisfied with any innovation. PPP in Russia also lends itself to criticism. And this is done not only by ordinary citizens, but also by many high-ranking civil servants. So, you can quote the head of the FAS Igor Artemyev, who on March 1, 2017 told reporters that a number of public-private partnership projects are an imitation of a concession. As an argument, he said that in them all expenses are offset by the budget. And private companies do not invest their money. In addition, the deputy head of the FAS Rachik Petrosyan announced this. According to him, public-private partnerships are used as a mechanism to circumvent public procurement. And as a similar abuse, an example was given of the construction of the Sterlitamak-Magnitogorsk road.
At the same time, these words are received with hostility by other senior government officials. For example, Stanislav Voskresensky, deputy minister of economic development, said that such statements pose a threat to the operation of the entire PPP mechanism.
Development opportunities
Of course, the mechanism of public-private partnership deserves attention. It allows you to concentrate on creating the necessary projects for which the state does not have money for a given time. Thanks to PPP, you can also control the level of debts and successfully implement a strategy to reduce them. But, alas, there is a place for many negative aspects.
For example, if an agreement was reached that work on a project is financed both from the budget and from private funds, then after some time it may turn out that in fact all the money received was sent, say, offshore. It is necessary to work to ensure that this does not happen.
The issue of corruption is also quite acute. For example, after deciding to implement the Plato system, there were many unsatisfied people who believed that this was the result of the close friendship of the Rotenbergs with the President of the Russian Federation. But the fact that they are talking about it means something. Of course, there are drawbacks, but so far they will fight this, improving the mechanism itself, things will gradually improve. It should not be considered that absolutely everything is terrible. After all, there are people like Igor Artemyev who speak out against all the shortcomings. And there are law enforcement agencies fighting crime.