Introduction
The «Public-private partnership» (hereinafter – the «PPP») is normally understood as forms of interaction and cooperation between a state and business to solve social problems on mutually beneficial terms. A significant event in the development of the PPP was the creation of an appropriate model in the UK – Private financing initiative (PFI), which was a private company to raise funds to finance the construction of public facilities. In Belarus the PPP is still in its infancy stage and in the process the development of appropriate instruments and institutions, while in countries with developed market economies the PPP has existed for a long time as an element of the economic system. The PPP is a complex phenomenon, which has an economic and political sense.
According to the rating assessment of conformity of the legislation in public-private partnership (concession) of the UNCITRAL Guide legislation and international practice, to the enactment rating of Belarus was 31% in 2015. However, at the time of consideration of the draft Act, it was 81.5%, and the review by the Economic Commission for Europe draft Act has received a high rating.
The aim of the article is to review the existing PPP system in Belarus.
Legal Framework of PPP in Belarus.
The need for a legal act governing PPP is due to several reasons. First, the complexity of social and economic life obstructs to a certain extent the implementation of socially important state institutions function; on the other hand, owners of private capital are looking for new sites for investment. Belarus is no exception to this rule. Like in many other countries, the infrastructure deficit and budget resources deficit are also relevant for Belarus. As a way out of this situation, the Belarusian government has considered significant PPPs experience of the Western and Eastern Europe.
According to reports of international experts, the PPP combines the best features of both private sector (its resources, management techniques, skills and technologies) and public sector (including the public interests), and in the process of implementation of joint projects it creates synergies as a result of joint cooperation.
The main features of PPP include the following:
- Parties of the PPP are represented by the state institutions and private business;
- Cooperation has a long-term nature;
- Interaction between the parties is secured by legal instruments;
- Interaction of the parties is equitable;
- PPPs have clearly pronounced social orientation;
- Objects of PPPs are under the jurisdiction of the state;
- In the process of implementation of projects based on PPP important social problems are being solved;
- The objectives of PPPs are of public and social importance; and
- Financial risks and costs, as well as the results achieved by the parties are in the proportions as defined in advance and set out in the agreement between the parties. Most often, the responsibility for risk (for all or most of) lays on the receiving party, the owner of private capital.
In order to attract investments in Belarus an Act of December 30, 2015 № 345-Z «On Public-Private Partnership» (hereinafter – the «Law») adopted. According to the preamble, the normative legal act establishes the legal conditions of PPPs, regulates public relations that develope in the process of conclusion, execution and termination of agreements on the PPP.
Due to the fact that PPPs have for the most part a distinct social orientation and are aimed primarily at solving social problems (transport, public services, social services, health care etc.), the main distinguishing feature of the PPP is that is serves an alternative to privatization of the important objects of state property. This kind of partnership, by way of attracting private capital, allows you to keep the ownership of the assets of the state (the state control is also preserved).
The main goals of PPP in Belarus are following: creation of the necessary conditions for effective interaction of participants of the PPPs in order to ensure sustainable socio-economic development; improving living standards; rational and efficient use of assets, including land owned by the state; development of innovative technologies, high-tech industries; increased and improved technical level of production, technological processes; the development of infrastructure facilities; rational and efficient use of local and national budgets; improving the quality of goods (work and/or services); providing and encouraging employment growth.
Measures and tasks which are subject to the terms of the PPP should lead to an acceleration of the implementation of new social projects by attracting the public sector financial and other resources of business entities and application of innovative technologies; promotion of entrepreneurial initiative in socially important sectors of the economy; encouragement of investment in the economy of the country; ensuring the effectiveness of the use of property owned by the state; and promotion of the effective use of the resources of public and private partners to meet the social needs of society.
The Law defines forms of PPPs, and the terms of the agreement to be concluded between the government and the private partner. Forms of public-private partnership include: i) conclusion of the concession agreement (a written agreement, whereby one party undertakes to provide the other party for a certain period a right to possession and use of the object of the concession or the right to exercise the activity for a fee or free of charge), (ii) the investment agreement; and finally, (iii) direct agreements of PPP. Other agreements that do not contradict the Law and are consistent with the objectives, tasks and principles of the PPPs are also possible. It must be remembered that the form of the PPP is determined by the decision-making body on the implementation of the PPPs.
The agreement on public-private partnership is a new kind of contractual relationship between the public and private partners, which determines the rights, obligations and responsibilities of the parties, as well as other conditions of execution of the agreement. It is mandatory to monitor the implementation of agreements, including through the appointment of an independent auditor.
Conclusion.
One of the main directions of economic transformations in Belarus is further development of the state property system for its effective implementation within market relations. The success of the solution of this problem depends not only on the implementation of privatization mechanisms, but also on using other methods and forms that do not provide full transfer of property rights to private companies. An effective way to increase the quantity and quality of state ownership is the development of partnership between the state and private business.
Belarus is at the very beginning of the process of establishment of an effective PPP system. The state authorities are making steps to improve and overcome the shortcomings of the current economic system proceeding from international experience.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
