Introducing a New Concessions System

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Introducing a New Concessions System Latvian
ExperienceRegional Workshop on
Concessions/Public-Private Partnerships Tirana,
11 12 December 2007

• Eriks Mezalis
• Public and Private Law Consulting, Law Firm
• Partner
• Head of Public Procurement and PPP Department
• Vilandes Street 3, Riga, Latvia
• E-mail Eriks.Mezalis_at_pplc.lv
• Web www.pplc.lv

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Geographical situation of Latvia

• Location Eastern Europe
• Territory 64,6 000 square kilometers
• Population 2,5 000 000 inhabitants
• Capital Riga (800 000 inhabitants)
• Borders with Lithuania, Estonia, Russia, Belarus
• Baltic See border 1840 km

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Political and Economical situation

• Joined EU in 01.05.2004.
• Permanent right wing government
• Strong political will to introduce PPP
• High demand for different public services and
  works
• High budget constraints

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PPP history in Latvia

• 1995 2000 unrecognized PPPs
• The operation of e system of Register of
  Enterprises
• Operation of canteens in schools, hospitals and
  universities across Latvia
• Waste treatment services in municipalities
• Contracts awarded by Public Procurement Contracts
  Law
• No separate legislation regarding Concessions

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Legislative development

• 20.11.2000 Concessions Law
• Lack of regulation of many necessary aspects
• Consequences
• legal uncertainty
• low courage to step into concessions agreements
• low interest from investors.

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Legislative development (continued)

• 2002. 2005. A number of policy documents
  regarding PPP and concessions
• 01.05.2006. (New) Public Procurement Law
• Concessions and long term public contracts still
  without appropriate regulation

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The PPP institutional system and new PPP law
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Institutional system of PPP

• Ministry of Economics responsible for PPP and
  Concessions policy
• Investment and Development Agency responsible
  for implementation of PPP policy, assistance to
  the public partners, gathering the best praxis
• Procurement Monitoring Bureau responsible for
  procurement issues
• No unit directly responsible for PPP accounting

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What do we want to achieve with PPP law?

• Legal certainty for both public and private
  partners
• Regulation that promotes
• the justice
• value for money principle in public spending
• flexibility
• The impulse to improve the institutional system
  of PPP

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PPP law the concept and structure

• Definition of PPP
• Concessions contracts
• definition as in EU Procurement Directives
• Procurement contracts
• definition as in EU Procurement Directives
• No business slang DBFO, BOT e.t.c.

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PPP law the subjects

• State, municipalities and derived public entities
• Bodies governed by public law (according to EU
  Procurement Directives)
• Public utilities

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PPP law reaching value for money

• Obligation for public partners to do value for
  money calculation and choose right option of
  cooperation
• Elaborating the system of risk evaluation

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PPP law contract award procedures

• For subjects that are not public utilities
• open and restricted procedure
• competitive dialogue and negotiated procedure
  if appropriate
• For subjects that are public utilities
• open, restricted and negotiate procedure with
  prior publication
• negotiated procedure without prior publication
  and competitive dialogue if appropriate

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PPP law concluding the PPP contract

• The regulation of review procedures
• need for following EU Remedies directive
• The components of PPP contract
• The regulation of Step in process
• the interests of lenders
• potential conflict with EU law

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Key points

• PPP legal and financial regulation functions
  within the legal system of state and is its
  integral part
• The attention to PPP institutional system also
  should be paid
• PPP policy making
• control
• advice giving
• examining the appeals

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Key points (continued)

• In the process of adopting the PPP law, the
  interests of all involved parties should be
  carefully considered
• Communication with society is highly important

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Key points (continued)

• Experience form other countries should be used,
  still critically applying it to local situation
• Each person involved in drafting the law should
  leave its corporative interests (if any) a little
  behind and look to the whole picture

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Thank you for your attention!