The new era of PPPs: Does the Russia open the way for projects of 1.3 trillion rubles cost?

In the area of the public-private partnership (PPP) of Russia happened an epochal event: "lower" chamber of parliament passed a bill on PPP - the first time in the history of the Russian Federation.

According to Ministry of Economic Development of Russia, because of the lack of the appropriate law around 130 projects with more than 1.3 trillion rubles funding are "hovering".

As Tatarstan Investment Development Agency Chief Executive Taliya Minullina notes, "after the signing of the law by Russian President TIDA to prepare the necessary changes to the national law "On Public-Private Partnership in the Republic of Tatarstan" and proceed an active introduction of new public-private partnership that will give new impetus to the development of investment sphere".

TIDA has a function of "management of investment activity in the field of public-private partnerships and private investment".

By decision of the Acting President of Tatarstan Rustam Minnikhanov, TIDA Chief Executive Taliya Minullina is also a the person in charge from the Republic of Tatarstan for interaction with a committee of the group of experts in the UN European Economic Commission on the development and promotion of PPP international standards.

 The long road to the law

It is expected that passed on 1 July by the State Duma in the third reading the bill "On public-private partnership, municipal-private partnership in the Russian Federation and the Amendments to Certain Legislative Acts of the Russian Federation” on July 8, 2015 in the "upper" chamber of parliament - the Federation Council will be considered and then go for approval (signing) to the President of Russia.

The draft federal law on PPP was approved in the first reading more than 2 years ago - in April 2013.

It is expected that the law will come into force on January 1, 2016.

 What bill?

The bill, passed by the State Duma, establishes a closed list of objects of the PPP Agreement (MPP). Among them: private roads or their sections, bridges, road service facilities, ports, airports, power plants, waterworks, artificial islands, land improvements, health care, education, culture, sports, tourism, social services, facilities for which carries out the processing and disposal of solid communal waste. It is not allowed to make PPP agreement with sources of thermal energy, heat networks, water supply and sanitation.

According to the bill the private partner can only be a Russian legal entity and without necessarily dominant state participation (it cannot be state and municipal unitary enterprises and institutions, as well as economic entities under the control of the state).

Until now Russia has been used only one form of PPPs - concession agreements. However, there are more than 20 forms of PPP in the world. The principal difference from most forms of PPP from concession - the possibility of appearing a private ownership of the object of the agreement. Having an asset to the property, it can be used, for example, as collateral to banks. This section of the law has caused controversy in the State Duma of the Russian Federation, which, according to deputies, can lead to risks of hidden privatization. In the approved version of the bill, these risks sufficiently cropped by the fact that the obligations under the agreement on PPP follow the object and recorded as a burden. However, if the total volume of public investment in the project exceeds the amount of private investment, at the termination of the agreement is necessarily to transfer the object of the agreement into the public property.

TIDA Press Service