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Definition, origin and evolution

PPP - definition, origin and evolution

 

The Public-Private Partnership (PPP) is collaboration between the public and private sectors, aimed at the implementation of projects or provision of services traditionally provided by the public sector. This cooperation is based on the assumption that each party is able to implement its own tasks that were entrusted thereto, more efficiently than the other party. In this way, the parties complement each other, dealing under PPP, right with that part of the common task they perform best. With the division of tasks, responsibilities and risks, under PPP, the most cost-effective way to create the infrastructure and delivery of public service are achieved. Under PPP, each party draws its own benefit, proportionate to its interest.

Since a long time, PPP has been a form of public tasks implementation widely used in the countries of Western Europe. The intersectoral cooperation was developing in the Old World, as early as the early modern period. In recent years, PPP has become increasingly popular in Poland. The legal framework for such cooperation in Europe and Poland has continued to evolve over the past several years. The aim of all those entities involved in institutional development and practical implementation of PPP was to make PPP equivalent to the traditional methods of financing and implementation of public tasks.

 

 

The origin and development of PPP in Europe

 

The PPP sources might be found in the concession contracts. The history researchers show that as early as 1438, the French nobleman Luis de Bernam was granted a river concession to charge the fees for goods transported on the Rhine. Another well-known literature example of the concession of this type was the one that had been granted in 1792 in France to the brothers Perrier for water distribution in Paris. Soon the French legal practice formed the so-called public works concession (concession de travaux publics). The broad participation of private capital in public investments has found widespread use in the period since the turn of the seventeenth and eighteenth centuries to the end of the nineteenth century, when construction of infrastructure facilities (water channels, roads, railways) in Europe and later in America, China and Japan was funded by private sources under concession contracts.

 

After the period of expanded government intervention in the infrastructure sector during the period from the late nineteenth century to the 1970s of the twentieth century the transformation of the infrastructure into market oriented economy became very popular in the 1980's and 1990's. In 1992 the UK began to implement Private Finance Initiative (PFI) a comprehensive program of the government, which was to cover the state-owned enterprises. Under PFI, the public sector became a purchaser of services provided by an entrepreneur, while the latter provided the necessary fixed assets for their implementation. One of the leading models of the infrastructure management and development under PFI have become contracts that were involving the transfer to a private party of the obligation to carry out the infrastructure project or the provision of public services together with the simultaneous transfer of specific risk onto that entrepreneur. In return, the investor would obtain a temporary (usually 15-30 years) right to use the facility or service, with the possibility of charging fees to external users or simultaneous payments from the budget of a public entity. The largest projects carried out under this scheme were the Channel Tunnel, the Second Severn Crossing and the Channel Tunnel Rail Link. Under the PFI scheme the task in the areas such as roads, subways, prisons, national defense, health care, housing for the administration and computerization are successfully implemented. In France, a popular model for establishing cooperation between public entities and private partners has, in the 1990's, become the delegation de service public institution. This model is characterized by raising revenues from fees of users (possible to be achieved, after all, payments charged to a public body) of the infrastructure managed and maintained by the concessionaire (depending on the model of law - also construction infrastructure). Concessions and PPP integrated gradually into the legal systems of other European Union countries. The most of the duplicated ones were the British and the French models. The contracts of this type for construction and infrastructure management in countries such as Germany, Italy, Spain, Portugal, the Netherlands, Scandinavian countries, Ireland, Greece, Czech Republic, Bulgaria, Romania, Hungary reached hundreds of millions of Euros, but often also concern small, local projects.

 

 

The origin and development of PPP in Poland

 

The origin of public-private cooperation in the infrastructure sector within the territory of Poland dates back to the times of partitions of Poland. The most important railway lines were built under the concessions. After regaining independence, the Polish authorities tried to draw local government and private capital to the development of local lines. They based on the Law of 14.10.1921 on awarding concessions to private railways, defining relations of the State Treasury with the future owners. Another opportunity of intersectoral realization of the public projects appeared in Poland after 1989. The first piece of legislation that regulated the legal relations of that type was the Act of 27 October 1994 on toll motorways and National Road Fund, under which A1, A2 and A4 toll motorways are built and operated, or just operated: In 2004, under the Public Procurement Law of 29 January 2004 the institution of public works concessions was introduced to the Polish legal system. The first Polish law piece of legislation fully dedicated to PPP institution was the Act of 28 July 2005 on public-private partnership. The Polish legislator's intention was that the Act would regulate the PPP agreements between the public and private sectors and set an appropriate standard of functioning of such cooperation for the effective implementation of public tasks. Unfortunately, over more than three years of application of the Act on PPP of 28 July 2005 no public-private partnership agreement was concluded under provisions thereof.

 

Therefore, in effect of legislative works undertaken, by the end of February 2009, the Law of 19 December 2008 on public-private partnership, [1]and the Act of 9 January 2009 on concessions for public works or services entered into force,[2]whose purpose was to create a transparent, flexible and effective legal framework of the intersectoral cooperation.

 

During 3 years of application of the new PPP legal framework about 30 PPP contracts and concessions were implemented.

 

 


[1] Journal of Laws of 2009, No 19, item 100 as amended.

[2] Journal of Laws of 2009, No 19, item 101 as amended.

 

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