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PUBLIC-PRIVATE PARTNERSHIP AS AN INSTRUMENT FOR SUSTAINABLE DEVELOPMENT OF RURAL AREAS

PAVLO SHYLEPNYTSKYI PROF.,

OKSANA ZYBAREVA PROF.,

YURII LOPATYNSKYI PROF.,

YU. FEDKOVYCH CHERNIVTSI NATIONAL UNIVERSITY, CHERNIVTSI, UKRAINE

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PUBLIC-PRIVATE PARTNERSHIP (PPP):

  • AN AGREEMENT BETWEEN THE GOVERNMENT AND ONE OR MORE PRIVATE PARTNERS (WHICH MAY INCLUDE OPERATORS AND FINANCIERS) UNDER WHICH PRIVATE PARTNERS PROVIDE SERVICES IN SUCH A WAY THAT THE GOVERNMENT'S SERVICE OBJECTIVES ARE CONSISTENT WITH PROFIT-MAKING OF PRIVATE PARTNERS AND WHERE THE EFFECTIVENESS OF SUCH ARRANGEMENTS DEPENDS ON THE APPROPRIATE TRANSFER OF RISK TO PRIVATE PARTNERS (OECD)

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PPP VS. CONVENTIONAL PROCUREMENT

Consortium

State Agency

Financing

Design and construction

Operation and maintenance

State Agency

Financing (Ministry of Finance)

Design and construction

Operation and maintenance

Public-Private Partnership

Conventional procurement

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CHARACTERISTICS OF PPP

  • REPRESENTATIVES OF THE PUBLIC AND PRIVATE SECTORS UNITE AROUND COMMON GOALS.
  • PARTNERS INVEST TIME, MONEY, EXPERIENCE AND OTHER RESOURCES IN THE PARTNERSHIP.
  • PARTNERS WORK TOGETHER TO ACHIEVE COMMON GOALS.
  • PARTNERS SHARE RISKS AND RESPONSIBILITIES IN DECISION MAKING AND MANAGEMENT.

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COMBINING PUBLIC AND PRIVATE PARTICIPATION IN PPP

Fully government production and provision

Public-Private Partnership

Privatization

0%

100%

Governmental risk

100%

0%

Private risk

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THE NEED FOR PPP

  • THE STATE OF THE INFRASTRUCTURE IN NEED OF RESTORATION;
  • BUDGET OPPORTUNITIES EVEN FOR ITS RESTORATION, NOT MENTIONING THE DEVELOPMENT ACCORDING TO UP-TO-DATE REQUIREMENTS ARE NOT ADEQUATE
  • OPERATIONAL INEFFICIENCY OF PUBLIC SERVICES;
  • LOW QUALITY OF PUBLIC SERVICES OFFERED.

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Deterioration of infrastructure

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PPP MODELS

Service contracts

The private party supplies, operates and maintains assets for a short period of time. The public sector bears the financial and managerial risks

Operating and management contracts

The public sector operates and manages state assets. Revenues of the private party are tied to the results. The public sector bears financial and investment risks

Leasing contracts:

Buy-Build-Operate (BBO)

Lease-Develop-Operate (LDO)

Wrap-around addition (WAA)

The private sector buys or leases existing assets from the state, upgrades, modernizes and / or expands and then operates assets without the obligation to transfer ownership back to the state

Build-Operate-Transfer (BOT)

Build-Own-Operate-Transfer (BOOT)

Build-Lease-Operate-Transfer (BLOT)

Будівництво-передача-експлуатація (BTO)

The private sector designs and builds assets, operates them and transfers them to the state when the contract expires or at another time.

Design-Build-Finance-Operate (DBFO)

Build-Own-Operate (BOO)

Build-Develop-Operate (BDO)

Design-Construct-Manage-Finance (DCMF)

The private sector designs, builds, owns, develops, operates, manages assets without the obligation to transfer ownership to the state

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PPP TYPES IN REGIONAL DEVELOPMENT

  • PPPS DESIGNED TO STRENGTHEN TERRITORIAL COMPETITIVENESS;
  • PPP AS MEANS OF FINDING OTHER RESOURCES TO FINANCE PROVISION OF PUBLIC SERVICES;
  • PPPS AIMED AT THE DEVELOPMENT OF SERVICES OR GENERAL ECONOMIC INTERESTS.

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PPPS DESIGNED TO STRENGTHEN TERRITORIAL COMPETITIVENESS

  • AIMED AT BUILDING, IMPROVING OR PROMOTING LOCAL AND REGIONAL ECONOMIES THROUGH THE INTERACTION OF PUBLIC AND PRIVATE INSTRUMENTS FOR THE DEVELOPMENT OF RESEARCH, INNOVATION AND THEIR DISSEMINATION AT THE LOCAL LEVEL, WHERE PARTNERSHIPS INITIALLY BRING TOGETHER GOVERNMENT ORGANIZATIONS AND FIRMS

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Rolls Royce, Mercedes, BMW, Saab, Opel, Fiat, Porsche, Hyundai, Ferrari, Bosch, Haldex, Mando, GKN, Volvo

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PPPS AS MEANS OF FINDING OTHER RESOURCES TO FINANCE THE SUPPLY OF PUBLIC SERVICES

  • PUBLIC-PRIVATE PARTNERSHIPS ON A PURE CONTRACTUAL BASIS, IN WHICH PUBLIC-PRIVATE PARTNERSHIPS ARE BASED EXCLUSIVELY ON CONTRACTUAL RELATIONSHIPS;
  • PUBLIC-PRIVATE PARTNERSHIPS WITH AN INSTITUTIONAL NATURE, INVOLVING COOPERATION BETWEEN THE PUBLIC AND PRIVATE SECTORS WITHIN A SPECIFIC OWNERSHIP.

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PUBLIC-PRIVATE PARTNERSHIPS WITH INSTITUTIONAL NATURE

  • LOCAL STATE-OWNED ENTERPRISE - WHICH PURSUES PUBLIC GOALS OF GENERAL ECONOMIC INTEREST AND IN WHICH ONE OR MORE LOCAL AUTHORITIES OWN MORE THAN 50% OF THE CAPITAL
  • MIXED COMPANY
  • CONCESSION - IS AN AGREEMENT WHEREBY THE GOVERNMENT TRANSFERS RESPONSIBILITY FOR FUNDING (IN MOST CASES PROVIDED BY THE PRIVATE SECTOR) TO THE PRIVATE SECTOR ALONG WITH THE RISKS, WHILE THE BENEFITS ARE SHARED BETWEEN THE PARTIES.

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PPPS AIMED AT THE DEVELOPMENT OF SERVICES OR GENERAL ECONOMIC INTERESTS

  • INVOLVES THE ACTIVE PARTICIPATION OF CIVIL SOCIETY

PRIVATE FINANCE INITIATIVE (PFI):

  • IS A FORM OF PUBLIC-PRIVATE PARTNERSHIP THAT COMBINES PUBLIC PROCUREMENT PROGRAMS FOR CAPITAL ASSETS IN THE PRIVATE SECTOR UNDER CONTRACTS
  • UNDER THE GENERAL PFI SCHEME, THE PRIVATE SECTOR DESIGNS, BUILDS, FINANCES AND OPERATES ASSETS IN ACCORDANCE WITH THE SPECIFICATIONS OF THE PUBLIC SECTOR.

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PFI TYPES PROJECTS

  • INDEPENDENT PROJECTS
  • JOINT VENTURES
  • SERVICES SOLD TO THE PUBLIC SECTOR

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PPP ACTIVATION MEASURES

  • REGULATORY CONTENT OF THIS PROCESS
  • TRANSFER OF POWER FROM THE "CENTER" TO THE "PLACE“
  • SEARCH AND ATTRACTION OF INVESTORS IN THE IMPLEMENTATION OF INVESTMENT PROJECTS MAINLY ON A COMPETITIVE BASIS.
  • RETURN ON CAPITAL GUARANTEES
  • INVARIABILITY OF THE FORMS OF PUBLIC AND COMMUNAL OWNERSHIP OF PUBLIC-PRIVATE PARTNERSHIP OBJECTS DURING PPP CONTRACT PERIOD;
  • GUARANTEEING THE INVARIABILITY OF LEGISLATION
  • POSSIBILITY OF THE CONCESSION EXTENDING.
  • PARTICIPATION OF EXECUTIVE BODIES IN PARTIAL FINANCING OF FACILITIES USING FORMS OF PUBLIC-PRIVATE PARTNERSHIP

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THANK YOU FOR YOUR ATTENTION!