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Lubomir Filipov: The PPP bill is the best offered so far, but there are many things that need to be clarified

A new PPP agency is a good option for countries that have developed PPP market, or at least the potential for such

3E news
26-06-2011 03:43:49
The new PPP bill is quite different from recent propositions and is the best offered so far, said Lubomir Filipov, expert on public-private partnerships. According to him one of the main problems that the law must resolve is to give a clear definition of what public-private partnership means and when a deal is called PPP.



"Another problem is the legal and financial structuring of such projects. The law should clearly outline when and why various forms of PPP exist - starting with the contract, structured as a PPP, or concession, or the right to build", Filipov said.



"However, in the new bill there are many things that must be cleared. One of the main shortcomings of the law is that it sees almost all public-private partnerships as concessions or procedures relating to granting of concession rights", the expert said. According to him the PPP Act must clearly indicate in which cases is active the Concessions Act, in which: the Public Procurement Act (PPA) and in which other legal forms.



"The main dividing line for this must be the payment mechanism - ie whether public resources are used to pay for services or payments will come from end users", Filipov said. According to him such identification can be found in the current bill but the text should be further clarified. Another major drawback is that this draft law leads to amendments to the Concessions Act, but not the PPA, although such are necessary.



For example, one of the main obstacles in the PPA to the creation of such public-private partnerships is that the duration of the contract is limited to four years. "Another thing I noticed is that under the new law the public partner would have more rights than the private one associated with contract termination or imposition of additional requirements.



This would lead to lack of interest from the private sector", Filipov said. According to Filipov a newly created PPP Agency is a good option for countries that have developed PPP market, or at least the potential for such. "Before making such decision in Bulgaria it is necessary to have an expert analysis of the PPP market potential in Bulgaria, what type of projects would be realized, and what cash flows the projects would generate and their overall effect on the economy", Filipov said.

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