Public Private Partnership (PPP)
updated: 06. 05. 2010
Public Private Partnership (PPP) – is a form of cooperation between the public and private sector. Its objective is to finance construction (reconstruction), operation and maintenance of the infrastructure to provide public services. In PPPs public sector entities are partners and clients of the private sector buying services. In general private partner finances, builds and operates the infrastructure and as a counter value is granted by right to provide services paid either by end-users (concession) or by public partner. Sharing of construction and operation risks between the private and public partner and a long contractual period are a essential features of PPP.
As PPP projects are rather large projects and have significant impact on public budget, in addition to regulation of PPP projects preparation Ministry of Finance has the role to assist public authorities in preparation of PPP projects according to the best market practice. Best market practice is incorporated into guidance issued by the Ministry of Finance. Thus in relation to PPPs Ministry of Finance carries out following functions:
* regulative function
* methodological, supportive and supervisory function
* function of knowledge and communication centre
Within the regulative function the Ministry of Finance (in cooperation with the Slovak Statistical Office) issues opinions on the drafts of PPP contracts (only work concessions). In these opinions Ministry evaluates impacts of PPP contracts on the debt of public sector and secures correct recording of these impacts on the public sector deficit and debt in compliance with the methodology ESA 95 valid for EU countries. Within the organizational structure of the Ministry of Finance these competences are performed by the Section of Budgetary Policy and the Section of State Accounts Reporting.
The methodological, supportive and supervisory functions (and in future function of knowledge and communication centre) are carried out through the Technical Assistance Scheme for PPP.
The scheme is financed within the Operational Program Technical Assistance and is managed by the Section of Strategy (Ministry of Finance). Within the methodological, supportive and supervisory functions the Ministry of Finance carries out following activities:
* methodological guidance for contracting authorities – i.e. the Ministry of Finance issues and provides methodological documents for public sector
* arrangement of advisory services for phase of PPP project preparation – arrangement of procurement and financing of advisory services for the contracting authorities of selected PPP projects to elaborate feasibility study (i.e. provision of consultation and financial support)
* supervision of compliance with methodology issued by the Ministry of Finance – the representatives of the Ministry of Finance will take part in the steering committees of the PPP projects implemented by the central government bodies and PPP projects of contracting authorities receiving consultation and financial support
Within the administration of the Technical Assistance Scheme the Ministry of Finance will also perform the function of knowledge and communication centre. Funds from the scheme will be used activities such as workshops and seminars to improve the knowledge and understanding of the public sector in PPPs and to support the transfer of experience among PPP stakeholders and development of PPP in Slovakia.
PPPs are also supported by PPP Association which on the contrary to Ministry of Finance acts on private sector side. The association affiliates construction companies, financial institutions, law firms, financial advisors, etc. engaged in PPPs. When carrying out its tasks, PPP the Association cooperates with the public sector.
On the 16th of September 2008 Ministry of Finance became one of the founder members of The European PPP Expertise Centre (EPEC). EPEC is a joint activity of EIB, European Union Member states and Candidate states and of the European Commission. EPEC represents international communication platform mainly form government institutions applying PPP policy. . It allows the working groups from EU Member and Candidate countries to exchange experience and best practice in implementing PPP policy and to evaluate and analyze PPP process on the expert level.