The end of 2010 saw the introduction of a new law to regulate public-private partnerships (PPP) in Romania. PPP has been seen as an alternative means of financing public projects, especially in areas such as transport and public utilities, at a time when the authorities were facing a shortfall in public funding, and the lack of necessary skills and commitment formed serious obstacles to accessing EU money.

A PPP model should offer a suitable alternative not only to the traditional framework of public financing, but also to the public management of projects and, in particular, of project-related risks.

PPP has emerged as a successful strategy to finance public projects in Europe since the late 1980s and more recently in the US. PPP models have been developed to satisfy various project needs – DBO, BOT and DBOT, to name just a few.
Romania used to have a specific PPP law. In 2002 there were great expectations from the Government Ordinance No. 16, but its implementation failed, due to a lack of transparency, clarity and consistency with other legislation. Following criticism from the EU Commission, the ordinance was repealed in 2006 by Government Emergency Ordinance No. 34, which set out the general framework applicable to procurement and concessions.

Was a New PPP Law Necessary?

Historical and recent failures in the development of public projects, especially in road transport, made the calls for suitable PPP legislation more urgent. Such concerns have been heightened by the economic downturn and financial crisis, especially since the Romanian economy and availability of public finance show no signs of getting back on track anytime soon. Legislation is definitely important in all areas, including PPP. Lawmakers can set in place the ground rules that involve the private sector to the advantage of PPP and satisfy the public interest. But the actual implementation of PPP and successful project development based on PPP models depend more on political will and the administrative capabilities of the public authorities.

Unfortunately, experience over the past decade has shown that PPP failure in Romania was not primarily caused by the lack of proper legislation, but rather by the authorities not having the necessary experience, expertise and, sometimes, willingness to assume responsibility for handling complex arrangements such as those of a PPP project. While many have voiced their desire for PPP projects and various initiatives have been put in place each year, officials have not used the available legislation for the implementation of PPP projects to its best effect – and sometimes not at all.

The fact that Government Emergency Ordinance No. 34/2006 neither developed nor even defined PPP as a concept did not preclude the implementation of PPP projects.This legislation regulated concessions of public works and services, under the general procurement framework, and it could have accommodated PPP contracts relatively easily.

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