Law on PPPs: Will We Have It Soon?

At the end of July, before summer recess, the State Duma approved of the latest amendments to the law on concession agreements in the third reading. However, the much-discussed bill on the public-private partnership (PPP) will hardly be passed in the nearest time. In spring Igor Shuvalov instructed the Ministry of Economic Development to gear up preparation for the second reading. The amended and supplemented version was ready as early as the first summer month, it was listed in the discussion agenda for the beginning of July. But it has not been discussed yet. With account for the fact that the reading has been postponed for a long time (the first reading of the bill took place in May of 2013 and has not advanced since), one can conclude that there are simply no influential people or companies with great interest therein.

Today most public-private partnership projects are implemented within the framework of concession legislation, which has been developing permanently well during recent nine years, among other reasons, due to presence of stakeholders. First of all, it is SC “Avtodor”. While initially the document was primarily focused on transport infrastructure, nowadays it becomes more flexible and rather successfully covers such spheres as utilities, power industry or social infrastructure.

It should be noted that such active development of Federal Law 115 (“On Concession Agreements”) impedes adoption of the law on PPP to an increasing degree. Many civil servants have “got used” to the concession form and gradually start to understand it in details, there are certain implementation practices and, as it was mentioned earlier, the spheres of use of concessions expand.

Nevertheless, the bill on PPP has its advantages: for example, no restrictions about the list of objects; no standard forms, that, in case with concessions, made it more complicated rather than easier; possibility of drawing trilateral agreements, where the third party is the creditor (a trilateral agreement makes investment of crediting organizations less risky and gives the right of replacing the private partner should the latter not fulfil his obligations), as well as the possibility of registering the private investor’s property rights to infrastructure objects.

Be as it may, the federal law on PPP is necessary so that such advantages could be enjoyed by all market participants, not only those in some developed subjects of Russia, where favourable conditions for the public-private partnership were created after thorough analysis of the regional law. Since the existing regional laws “On participation…” are still rather cautious and have a framework nature.