PPP Research Center

 Romanian Public-Private Partnership Law Review

No. 7 / 2013

TABLE OF CONTENTS: 

Termination of public-private partnership contract for the private partner’s default. The possibility to pay compensations to the private partner.
by Monica Amalia Rațiu, PhD, Lecturer, Faculty of Law, University of Bucharest

The incidence of budget discipline norms on the public-private partnership
by Simona Gherghina, Ph.D., Lecturer, Faculty of Law, University of Bucharest

Highlighting the public-private partnership in the national accounts
by Ion Ghizdeanu, PhD, Professor, President of the National Commission of Prognosis, Researcher, NIER, Romanian Academy

Financing large scale public projects – what is new in the Romanian PPP Law
by Ruxandra Chiriță Director - Deals PricewaterhouseCoopers Romania

Road O&M performance-based contracts vs. concession/PPP contracts
by Andreea Răducu, Dr.Eng. Director of the Department for Economic Studies and Documentations of European Funding Search Corporation

 

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Termination of public-private partnership contract for the private partner’s default. The possibility to pay compensations to the private partner

Monica Amalia Rațiu, PhD
Lecturer
Faculty of Law
University of Bucharest

Abstract:

In the procedure for drafting and adopting the new Public-Private Partnership Law, the clauses regarding the principle of compensating the private partner, even in case of termination of the contract for the private partner’s default, has aroused heated debate. The final version of the law adopted by the Romanian Senate maintained the principle that, in case of termination of contract due to default by the private investor, payment of a compensation is envisaged according to a mechanism to be detailed in the norms implementing the law, by reference to certain economic and legal reference points. Given the attention the subject has received and emerging controversies, it may be useful to have a brief overview of the way the issue of the existence of a compensation paid to the private partner even in case of early termination due to private partner’s default as highlighted in the doctrine and good practices. Although it may seem reasonable at first glance, that in such situations the public partner to take over the developed asset in its current state and to penalize the private partner in the most drastic manner, due to reaching a serious non-performance of the contract, in the doctrine and guidelines for best practice, things are nuanced.

Keywords: public-private partnership, termination of the public-private partnership contract for the private partner’s default, compensation, damages.

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The incidence of budget discipline norms on the public-private partnership

Simona Gherghina, PhD
Lecturer
Faculty of Law
University of Bucharest

Abstract:

The inclusion in the general regulations, which are applicable to the administration of public funds, of some imperative and restrictive rules, which are meant to limit and monitor the public expenditures within the prolonged crisis affecting public budgets, is capable of having a significant effect over the entering into and implementation of public-private partnership contracts. As private financing ways of public investments, publicprivate partnership contracts are defined, within the new regulation, as contracts whereby at least half of the project revenues are generated from payments made by the public partner. In these conditions, the application of the general restrictions meant to ensure budgetary discipline, may have, aside from the positive effects upon the administration of public funds, a negative effect upon the utilization of the public-private partnership. The actual method of avoiding such a negative effect, which may discourage the use of the public-private partnership, consists in the establishment of explicit exceptions from the application of such restrictions.

Keywords: public-private partnership, public investments, financing, public funds.


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Highlighting the public-private partnership in the national accounts

Ion Ghizdeanu, PhD
Professor
President of the National Commission of Prognosis
Researcher, NIER, Romanian Academy

 Abstract:

National accounts, as a statistical tool for overall financial and economic activity of an economy, has constantly evolved trying to better capture the phenomenological complexity of national economic processes. Through successive refinements, the System of National Accounts (SNA) has become a universal statistical system. Its review falls to the UN Statistical Commission. Specific is that, since 1970, the European Union, through Eurostat, has built its own system of national accounts, derived from the universal one. At this time, international statistics and European statistics are implementing a new version of the national accounts system, „The System of National Accounts - edition 2008 (SNA 2008)” and “The European System of Accounts - edition 2010 (ESA 2010)”, respectively. The previous European version, ESA 1995, based on the 1993 version of the System of National Accounts developed by the UN Statistical Commission, represented the version that developed the component of financial accounts as well as the patrimony accounts one. However, complex investment processes such as the public-private partnership have not been treated in a manner which satisfies the requirements of the new European economic governance. The solution is brought by the new European System of Accounts (ESA 2010). Therefore, this article aims to present, on the one hand, the treatment of the public-private partnership in the ESA 2010, and on the other hand, the Eurostat requirements of statistical treatment of the publicprivate partnership regulated previous to the version of the ESA 2010, but which are still relevant, because they supplement the provisions of the ESA 2010.

Keywords: principles for PPP’s statistical regime; The public-private partnership - differences between the ESA 95 and the ESA 2010, categories of transactions for PPPs, macroeconomic approach of highlighting PPPs.

 

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Financing large scale public projects – what is new in the Romanian PPP Law

Ruxandra Chiriță, Director - Deals
PricewaterhouseCoopers Romania

 Abstract:

At the beginning of 2013, the Romanian Government initiated a process aiming for the adoption of a new law concerning the public-private partnership (PPP), to replace the previous Law governing PPPs, no. 178/2010, which has been widely criticised for various deficiencies, with the main one being that it did not allow the financing of PPP projects in a manner acceptable for investors and financiers. The draft Law has been discussed and debated publicly and with international financial institutions, the European PPP Expertise Centre (EPEC), the European Commission, and, during the redaction of this current article, the law is being debated in the Parliament. The law proposal regulates the possibility of using public funds in investment financing, while the public partner has several options in order to contribute to the financing process. The involvement of the public partner is subject to stateaid rules as well as the regulations for the use of public funds and the restrictions for budget deficit and public debt. Concerning the financing of the operation phase, the revenues of the project company can derive both from the tariffs collected from the end-users of the public good or service, as well as from payments made by the public partner as the main beneficiary of the services delivered by the project company. The formal commitment of the public partner is also specified, its obligations being included in the relevant public budgets. The approval of the PPP law in Parliament will be the first important step in establishing Romania as a participant in the PPP project market, which is becoming more and more sophisticated in terms of finance mechanisms, once new types of investors and financiers have entered this market.

Keywords: public-private partnership, PPP, EU funds, investment funds, Marguerite Fund, European Investment Bank, EIB, European Bank for Reconstruction and Development, EBRD, availability payments, EPEC.

 

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Road O&M performance-based contracts vs. concession/PPP contracts

Andreea Răducu, Dr.Eng.
Director of the Department for Economic Studies
and Documentations of European Funding
Search Corporation

Abstract:

Roads maintenance operations have evolved progressively. Historically, road managers have migrated from using their own personnel to outsourcing this activity based on performance-based maintenance contracts. Many countries are now moving to performance-based maintenance contracts; this approach has developed rapidly over the past ten years in the road business. The report below presents the characteristics of this type of contracts, as well as some of the technical benefits of building roads based on the PPP system.

Keywords: performance-based contracts, performance criteria, performance indicators, levels of service, concessions, public-private partnership.

 

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