Romanian Government

Thursday, 14 December

The public – private partnership law has been amended by the Government today

New regulations on the public –private partnership have been adopted today by the Government through an emergency ordinance designed to increase the involvement of the business environment in public infrastructure projects, concomitantly with protecting the interests of the public private partnership and ensuring the funding.

In addition to a series of clarifications regarding the scope of implementation and the differentiation of the public –private partnership contracts in relation to other types of contracts, such as: public procurement ones, the legislative document puts forward the following amendments:

With a view to protecting the public interest:

There are regulated the approval stages/ competences in the project assessment, from the angle of its classification in the public administration sector (on budget). In the case in which, prior to the contract signing, its analysis reveals that the project were to be classified on-budget, the central public administration projects could be implemented only after their approval by the Government, through Memorandum. In the case of projects of local interest, these are approved by the Commission in charge of sanctioning the public –private partnership contracts at local level. This committee will be later established through Executive Decision;

The value for money concept is being introduced, in line with the good practices at international level, and which reflects difference in cost estimate throughout project unfolding, adjusted to the risk value, if achieved through traditional method (public procurement)  and through public – private partnership. Thus, by promoting infrastructure projects in public –private partnership, we do not necessarily refer to the need to classify a project off budget or to promote certain accounting mechanism, but to risk transfer and lower cost, in the long run, for the Romanian state compared to traditional public procurement.

It is created the possibility for public partner to contribute to the financing of the achievement of investments with public financial resources in order to further  reduce the financial impact of payment obligations during the project operation period. The optimal contribution of public authority, if requested, will result from value for money related financial modeling(including senzitivity analyses).

For a cautious approach pertaining to project sustainability from the angle of budget impact and assessement of the public – private partner’s capacity to manage the risks related to project implementation.

The project evaluation mechanisms are established to avoid situations of deviation from the deficit and debt targets assumed by Romania through the fiscal-budgetary Strategy.

At the level of the Substantiation Study, an external evaluation of the public partner's capacity to manage PPP contract risk will be performed.

Measures to include in PPPs regime exclusively of well-prepared projects with economic efficiency and a central / local priority:

The net updated cost of project realization by the traditional method (public procurement) is to be used as a "affordability threshold" compared to the net updated cost of project implementation in the public private partnership regime;

A Strategic Program undertaken at Government level is envisaged to be developed, that will provide for categories of projects that can be developed under PPP.

Ensuring the project continuity by regulating the replacement of the private partner situations:

The regulation of some mechanisms to allow the replacement of the private partner in case of non-performance, without resuming the contract award procedures, therefore avoiding possible situations of reclassification of off-budget projects in projects on budget;

Protection of the public assets of project company.

The Emergency Ordinance adopted today amends Law no. 233/2016 on public-private partnership.