Marketization of Public Services – Best Practices and Lessons Learned in Public-Private Partnerships in SEE and CEE Countries

October 30-31, 2008 in Belgrade

As the final stage of the research carried out in Serbia, Poland, Hungary and Bulgaria on Public-Private Partnerships, the Workshop was organized by OSI/LGI from Budapest with the support of PALGO Center and the MEGA Program in Serbia (USAID).

Presenters from Poland, Hungary, Serbia, Bulgaria, Czech Republic and Croatia attended this meeting, along with Serbian State Secretary for Regional Development, representatives of the MEGA Program in Serbia (USAID), City of Belgrade, Faculty of Political Science and other participants from various organizations, both public and private.

Day 1: After the welcoming remarks and the introduction to the “PPP – Common issues raised in Researched Countries”, the Workshop participants discussed the risks and challenges of PPPs in selected SEE and CEE countries. This was a session in which cases from Serbia, Bulgaria, Poland and Hungary were presented. The focus of these country studies was on: 1) scope and legal framework of public private partnerships; 2) incentives for PPP, as a risk sharing vehicle; 3) regulatory issues of PPPs to increase benefits and to reduce risks.

Day 2: The second session presented cases from Croatia and the Czech Republic. The discussion was on the following subject : Critical factors of successful PPP projects – Elements of effective PPP schemes in different sectors – infrastructure, urban development, tourism, social services.

Main conclusions

The closing session of the Workshop was focused on lessons for Serbia and the ideas on the future projects. Some key elements emerged during that discussion. Participants noted some critical factors of successful PPP projects and the ideas of future LGI projects in Serbia and in the target region:

1. The rigidity of existing contracts is a major impediment of successful PPP. There might be changes in public demand or in technology, which would require flexible response from the governments. But the signed agreements will make these changes more expensive and slow.

2. There is no limit to public risk: e.g. public services have to be provided, employment is a high priority. The real risk of PPPs is the imperfect risk analysis.

3. EU funds might crowd out private resources, so PPPs have to target municipal solid waste management, water service and less waste water treatment. In general research is needed how to use Structural Funds better. High co-funding requirement might be an incentive for PPP.

4. Undivided, ultimate responsibility of professional managers is hindered by PPP and contracting out (e.g. limited control over cleaning services in hospitals, which increases infection).

5. Techniques for increasing transparency: registry of all PPP contracts (Croatia, Czech Republic), open public decision making process over PPP agreements, PPP project selection should be harmonized with the local development plans and sectoral development strategies. There are competing procurement regulations: concession (sole source) or public procurement rules.

6. PPPs in public (pre-university) education might be a subject of further research, together with OSI/ESP. Cases and country examples comparing services provided for schools, private schools, the textbook market in Serbia could be studied.

7. All relevant laws, bylaws, guidelines, handbooks prepared for decision makers in local languages by various institutions should be collected and it should be made available for public use.

8. Institutions for knowledge dissemination on PPP should be supported. The PPP Centers, Agency, Associations in the studied countries might be supported. NALAS could be invited for taking part in the regional exchange of information.

9. Simple, user friendly handbook for local level decision makers should be prepared. This “rough guide on PPP” will supplement the detailed, theoretical and complex guidelines and regulations prepared by various governments, international organization, training programs. The targeted audience is the politicians and local government officials. This toolkit will help the users in the various stages of PPP project design and implementation. It should present some theory, standard procedures, cases and examples by step by step throughout a typical PPP project.

10. Short training program on financial analysis of PPP projects for practitioners. Based on the program developed by the OSF-Sofia the training present specific examples, Tips and tricks and at the same time will promote the PPP techniques by familiarizing them with experts and decision makers.

11. The edited (shortened) versions of the country papers will be published in English (LGI) and Serbian (LGI/PALGO Center) The two countries joining the project later (Czech Republic and Croatia) will write a short paper (app. 15-20 pages), following the standard ToR. The papers will be co-edited by Dusan Damjanovic and Gábor Péteri.

The financial support is provided by OSI / LGI from Budapest, Hungary.

Project period: September – December 2008.