Unhappy Public-Private Partnership. Problems Business Faces

One cannot say that the institution of public-private partnership (PPP) is still perceived in Russia as a novelty, but it is too early to speak of its maturity. Nevertheless, state and business interact rather actively, every year more and more agreements are made that are based on PPP principles. By now as many as 50 projects have already been implemented, four times as many are being implemented and other 60 are being planned.

However, it is rather difficult to discuss problems that arise in the process of interaction of public and private organizations in Russia within framework of PPP projects, since one of the parties participating in the given process (the state) hasn’t still identified and defined directly such a form of cooperation on the legal level. Though, it is only a part of a more extensive phenomenon, impeding development of the public-private partnership, namely — imperfection of the process regulatory framework and a low adjustment level of the state and business interaction mechanism.

It is evident that due to a variety of PPP end projects and industries within the framework of which they are implemented, creation of a universal statutory instrument, which unifies the given format of cooperation, is considered to be unreasonable by some participants. For example, in June of 2014 about 200 projects by more than 20 directions of activities were being implemented. The largest share belonged to utilities — every fourth agreement was made in the given sphere.

Diagram 1. Structure of implemented Russian PPP projects by sectors as of June 2014, %

Source: PPP INFO

Certainly, this or that way legal regulation in the sphere of PPP is carried out; the problem is that it is ineffective and poses high risks for representatives of private companies. Businessmen believe that fruitful cooperation with the state is impossible until there is a uniform system of procedures and guarantees of PPP throughout the whole project: starting from selection principles and ending with performance indicators. Besides, it requires developing industry standards, which would take into account the specific features of interaction of the given format depending on activity spheres.

In all fairness, it should be mentioned that a law is under consideration which is intended for regulation of interrelationships within the framework of PPP, however, it has been developed for the second year and, on top of that, does not fully meet business requirements. By the way, insufficient involvement of private companies in the law-making process is perceived by many industry participants as one of significant problems on the way to development of public-private partnership institution.