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Frequently Asked Questions

What are the projects where the end-user pays a fee to the private partner and the projects where the public sector reimburses d

In the first projects the initial investment of the private partner is reimbursed via the fees that the end-users pay directly to the SPV for the use of the infrastructure or service provided. Under such schemes, the private partner constructs the project and following its completion has the right to collect fees from the end-users for the services provided. The amount of these fees, the conditions and their collection mechanism are clearly defined in the contractual agreement between the Contracting Authority and the selected private partner. At the end of the contractual period, the infrastructure is transferred to the public entity. In case the fees paid by the end-users are not sufficient enough to cover the whole cost of the project, the public sector may support this venture, either through lump sum contributions during the construction phase or through availability payment during the operational period. In the projects where the public sector reimburses the private sector, the initial investment of the private partner is reimbursed by the Contracting Authority through regular availability payments, linked with pre-determined output specifications criteria for the provision of quality infrastructure and services. Under such schemes, the private partner constructs the infrastructure of the project and upon its completion receives availability payments from the public partner, based on the provision of pre-agreed quality services. In order for the availability payments to be made in full (without any penalty or even full probation) the private partner should cater for the efficient operation and maintenance of the infrastructure or the services that it provides. The private partner undertakes the management and operation of the project throughout the contractual period and upon its termination, the infrastructure is transferred to the public entity. The form of PPP that will be implemented depends on the allocation of the risks between the two contracting parties and on the extent of the involvement of the private sector, which is a decision to be made by the Contracting Authorities, depending directly on the optimum allocation of risk. Key for their success is that risk is undertaken by the party that can better deal with it.

Will the previous forms of partnership between the public and private sector be discontinued after the ratification of Law 3389/

PPP schemes are complementary not only to the traditional public works but also to other forms of partnerships between the public and the private sector, such as the concession agreements of the Ministry of the Environment and Public Works or the collaborations of Local Authorities with private partners, that will of course continue to be implemented. Anyhow, the Ministry of Economy and Finance intends to offer to Public Authorities a new additional financial tool (PPPs), the use of which is upon them.

Can a Private Entity submit a proposal for a PPP project?

Law 3389/2005 defines that only Public Authorities may submit proposals to the Special Secretariat for PPPs. The Private Entities can propose ideas for PPP projects either to Public Authorities or to the PPP Unit. However, it must be stated that if a project proposed by a Private Entity does get approved to be implemented as PPP, this Private Entity has to participate in the contract award procedure, so as to be eligible to implement the project.

Can a Contract already signed between a Private Entity and the Public Sector be included in the PPP legal framework?

No. Partnerships may be subject to the provisions of Law 3389/2005 provided that all the necessary procedures are followed. Firstly, the Inter Ministerial PPP Committee has to approve the project and then the Contracting Authorities may start the tendering processes according to Community Law. Nevertheless, the collaboration between Public and Private Entities is beneficial for the elaboration and preparation of proposals for PPP projects.

Will PPPs be beneficial for the Greek companies or only for the foreign ones?

With the wider implementation of PPPs, Greek companies now have new, greater opportunities. They can participate in contract award procedures for projects, which will be implemented both in Greece and internationally, since the PPP market is constantly developing globally. Beyond UK, where PPPs were first implemented in the early 90s, other countries of Western Europe, such as Portugal, Germany, and Spain, have been implementing PPP projects as well. Countries such as France, the Netherlands, Belgium and the Czech Republic have recently set up specialised units and, where necessary, as in the case of France, ratified a special legal framework to accelerate the promotion of these partnerships. The fact that countries of the Eastern Europe and the Balkans are now in this process is indicative that this institution is booming.

Will projects stop being procured in the traditional way?

On no occasion will PPP projects substitute the public works implemented through the Public Investments Programme. PPP schemes are complementary to these projects, aiming at offering to the citizens more infrastructure and better services, that are financed by private funds, complementary to the public ones.

Why do the European countries implement PPP projects?

The main reasons for the implementation of PPP projects in the U.K. were the budget overruns and the delays in the implementation of the projects procured in the traditional way. It has been proven that in the U.K. 88% of the projects procured as PPPs are delivered both in time and within initial budget, whereas their cost is usually less than that of similar projects procured in the traditional way. Anyhow, the State benefits, since the payments start after the operation of the project and depend on the efficiency and performance of the operation. These are reasons why other countries such as Portugal, Spain Italy, Netherlands, and France have been also implementing PPPs.

Why does a country implement PPPs?

PPPs, beyond being a reliable alternative for the financing of public works, are also used for: - the efficient maintenance of the construction projects (as Private Entities cater for the operation or performance of the project and their repayment depends on its good maintenance) - ensuring the quality of services provided during the contractual period (via availability payments depending on the quality specifications set out in the contractual agreement). PPPs ensure that the public budget will not be burdened by overruns and delays that have increased the cost of projects in the past. Finally, PPPs constitute a tool, which can be used by Public and Local Authorities to implement projects, which have not so far been implemented because of lack of relevant know-how.