Public Private Partnerships (PPPs) in Action

INTRODUCTION

Public Private Partnerships (PPPs) are in general defined to be a form of collaboration between the public sector (i.e. the government, local authorities, etc.) and the private sector (i.e. private companies etc.) aiming at providing various works and services required by the public through partnerships with one or more sectors of private economy.

THE NECESSITY FOR REGULATION

The European Union, while regulating a number of issues relating to the public sector, did not provide any specific legislation in reference to PPPs. Before Law 3389/2005 each concession agreement in Greece relating to the provision of works and services, had to be individually granted by the Parliament. Each agreement was to be decided upon on an ad hoc basis. As such, two problems arose from this procedure. Firstly, the whole process was time consuming, and secondly there were no defined set of rules. Parliament decided when and why approval was to be granted. Following the implementation of Law 3389/2005 the aforementioned requirement was abolished. Therefore, the new law filled the legal gap and as such a more accessible and comprehensive legislative regime was enforced.

BENEFITS OF LAW 3389/2005 ON PPPs

The new Greek law described the manner under which PPP’s were to be awarded and governed, thus providing a concise legal framework that had not been present in the past. According to the Special Secretariat for PPPs “via the implementation of PPPs, the public sector intends to make use of the most modern means for providing services to clients, enhancing existing framework of public procurement. With the implementation of PPPs, a new boost will be given to the development of the economy, prompt efficient delivery of necessary infrastructure will be guaranteed, while more public funds will be made available.”

The Law established two new state bodies (the Interministerial PPP Committee and the Special Secretariat for PPPs) which are both of administrative nature. Therefore, a complete legislative and administrative framework exists so as to regulate PPPs in Greece.

The Law also provides practical benefits for the public sector. Firstly, the public sector can rely on said projects being financed by private entities. Due to the fiscal restrictions, PPPs cover the need of the public sector for private finance. The State prefers the option of PPPs as it does not itself want to be involved in the undertaking of said projects due to the fact that any loan taken out by the public sector would be included in the public- deficit.

Secondly, the public is alleviated from a large portion of the risk relating to various issues surrounding the partnership, since from the conclusion of the agreement until the conclusion of the project a great portion of all possible risks involved is allocated to the private entity. As such, the private sector undertakes a big part of the risk of the whole project. Usually the Constructor covers all the risks related to the construction and the operation of the project in relation to technical problems.

Moreover the Constructor may undertake the risk of the preparation of the project in relation to the time-frame, the financing risk, the operative- technical risk, the risk of the potential demand- availability of the project and the risk of paying off the loan.

Greek Law 3389/2005 establishes a special administrative license status and a special compulsory expropriation status in relation to the areas where the project will be constructed.

Finally, another important issue is that the payment of the agreed price of the project may be accomplished by the collection, on behalf of the Constructor, of certain use/charges from the final users of the project. Furthermore, the State can pay off the agreed price by paying rent to the private Constructor. This occurs in cases where the State assigns to the Constructor the construction of the project and the Constructor then rents out the specific construction to the State.

RELATIONSHIP WITH EU PUBLIC PROCUREMENT DIRECTIVES

The European Union legislated, in 2005, on the issue of Public Procurement in the form of EU Directive 2004/17 (on coordinating the procurement procedures of entities operating in water, energy, transport and postal services) and EU Directive 2004/18 (on coordination of procedures for the award of public work contracts, public supply contracts and public services contracts). Law 3389/2005 has adopted procedures similar to those of the Directives in relation to the awarding of the public works and services. All three documents provide for open, restricted and negotiated procedures (with the former and latter also providing for a competitive dialogue procedure). In each case, a publication of a call for tenders is published which sets out the needs and requirements of the specific project.

RECENT EXAMPLES OF PROJECTS WHICH ARE TO BE IMPLEMENTED UNDER THE LAW 3389/2005

Recent examples of PPP’s which are to be implemented under the provisions of law 3389/2005 in Greece are:

  1. Construction of underground parking stations
  2. Construction of schools in Peloponnesus, Crete, North and South Aegean
  3. Construction of buildings for the Police Administration
  4. Construction of halls of residence for the students of ''Dimokritio University of Thrace''
  5. Construction of a drainage system in the municipality of Rafina in Athens
  6. Technical Management of the ''Army Academy of Evelpidon''
  7. Prototype Center for flight simulation
  8. Creation of an Administration Center in the Prefecture of Achaia
  9. Construction of a children's General Hospital in Thessalonica
  10. Construction and preservation of seven fire brigade stations
  11. Construction of two court buildings in Athens
  12. Management of the building infrastructure of the Greek Police Station
  13. Construction of administrative park in Alexandropoulis

CRITICISM OF THE IMPLEMENTATION OF LAW 3389/2005 IN GREECE

Although Greece has taken advantage of Law 3389/2005 by making use of the PPP procedure in works covering a wide range of areas including educational institutions, the health and transportation sector, as well as administrative institutions, it must be underlined that so far no PPP project has been completed.

CONCLUSION

PPPs have a lot to offer the national economy in so far as they constitute a new model of public- private collaboration. This allows for a balance between the public and private sector allowing all parties to have an equal portion of the Public-Private Partnership pie.

Rokas (Athens)

© 2009 IKRP

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