Changes to public-private partnerships come into force on 20 and 27 February 2009.

A new PPP Act is designed to set a legal framework for rapidly developing PPP projects. It replaces the 2005 Act which was intended to stimulate PPP investment but instead did the opposite by making PPPs so complicated that some turned to other methods of procuring PPPs, especially in the roads sector.

The new PPP Act is expected to improve the situation as it:

  • removes the need for a detailed and expensive analysis, which should significantly reduce project costs
  • sets out the main assessment criteria for the public and the private partner to assess whether services offer value for money when implementing a PPP
  • sets out a short list of essential issues that a PPP agreement should cover to ensure that the key risks are properly allocated between the partners
  • allows the private partner to be a domestic or foreign business
  • specifies who the public partner may be (basically, a public finance sector unit or its associate or a specially-created entity which is owned or controlled by the public finance sector unit or its associate)
  • allows PPP agreements to require that the project is implemented by a particular type of company whose sole purpose and business is specified in the PPP agreement and which is jointly established by the public and private partner under the Polish Commercial Companies Code
  • enables awards to the private partner to be made under the new Concession Act if its remuneration consists of the right to derive benefits from the PPP project (or consists primarily of this right with some payment), with all other awards made under the 2004 Public Procurement Act.

The new Concession Act is intended to support the PPP framework specified in the new PPP Act but also provides an alternative legal basis for implementing a PPP transaction. Its key provisions are:

  • concessions can be given for construction works and services
  • concession agreements are subject to time limits - generally 30 years for construction works and 15 years for services
  • remuneration for completing construction works must consist of the right to derive benefits from the PPP project (or primarily this right with some payment)
  • concessions for construction works must transfer most of the economic risk connected with the project to the private entity
  • payments made by the contracting authority should not enable the private entity to recover all its costs of operating the concession
  • the concession agreement between the contracting authority and private entity is required to deal with specific issues including: the subject of the concession, the construction period, the concession period, remuneration, risk allocation and the grounds and procedure for termination
  • allowing concession awards to take account of factors (in addition to the bidder's own qualities) such as: the concession period, the completion date for construction, the bidder's contribution to financing the concession facilities, the amount paid by third parties for use of the facilities, environmental aspects, technical value and quality of the facilities.

Law: The Public Private Partnership Act of 19 December 2008; the Act on Concessions for Construction Works and Services of 9 January 2009; Polish Public Procurement Act of 29 January 2004

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

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The original publication date for this article was 13/02/2009.