EURO-ECO 2010 Hanover 2 - 3 Dezember 2010	Environmental, Engineering - Economic and Legal Aspects for Sustainable Living
	European Academy of Natural Sciences, Hanover European Scientific Society, Hanover University of Bremen, Bremen

Home

Abstracts EURO-ECO 2010

Contact

Disclaimer

From our point of view, public–private partnership describes a government service or private business venture which is funded and operated through a partnership of government and one or more private-sector companies.

Public-private partnership is a norm of a civilized market. Indeed, cooperation between the state as a major market participant and private-sector companies as a flexible innovative structure exists in all the market areas. Since the late 1980s onward, the institute of public-private partnership has been developing very fast. Public-private partnership has become widespread abroad, particularly

– in Western Europe. In March 2005 the Council of Europe officially recommended that European countries should apply its mechanisms for infrastructure changes more extensively. This mechanism application enabled successful completion of such projects as the construction of the Channel Tunnel under the English Channel, Sydney Harbour Tunnel, Confederation Bridge in Canada, national airports in Hamburg and Warsaw, Central Part in New-York, several lines of the London underground.

In recent years there have been a significant number of attempts made to create models of public-private partnership - first and foremost, in those spheres where not only substantial investment is to be made but also organizational experience connected with the flexibility of commercial structures is required.

This flexibility is indispensable for infrastructure sectors provided that the cooperation between the state and business has been already established. Yet, this condition turns out to be insufficient. Risks of cooperation between a public-sector authority and private party are still too high and affect partnership. First of all, it concerns property relations: it is unclear which actions public-private partners should undertake when substantial investments have been made into the project closed due to the circumstances beyond their control.

The existing legal framework adopted in Russia to enhance the development of public-private partnership appears to be insufficient. Discrepancies in the laws on the guarantees to carry out national projects provided by both the state and private-sector companies have not been overcome yet. For example, concessions - well-established forms of partnership - can be regarded as a form of indirect privatization. Thus, we are discussing amendments to the system of property relations. Such rights as the right to control asset usage, right to income, right to management, right to change capital costs of objects of the agreement and right to assign different types of rights to others have remained problematic.

Lawyers and consultants involved in the PPP projects develop rather a negative attitude towards partnership given the existing system of projects’ approval and execution. At the same time, high-priority national projects require mutual efforts of the society. For instance, high-priority national project «Education» needs an efficiency assessment of work performed by educational establishments concerning staff training for modern economy. Another project - «Affordable housing» - is in urgent need to have mortgage lending increased and building construction developed. The projects to do with the Housing and Public Utility are frequently cancelled since private business privatizes objects of housing and public sphere either directly or indirectly.

Moreover, according to the tradition of Western Europe an enterprise (joint stock company or limited liability company), which is privatized on the paper only is not considered to be a partnership, for there is no cooperation to create added value.

Thus, large and medium-sized projects carried out in the sphere of public-private partnership need to gradually acquire essential features of classical schemes concerning project financing, transfer the majority of commercial risks on a major investor, assume risks regarding building and exploitation by a single object, in our case – by the region, development of regional legislation in the sphere of cooperation with the private business sector.