Print This PostThe DBOT contract signed for the Comarnic-Braşov highway is illustrative of a PPP type project developed under the concession models set forth by Government Emergency Ordinance No. 34/2006. The project failed, unfortunately, but due to the lack of finance and not because the legal support was not available.
Flaws in the New PPP Law
Although Law No. 178/2010 was drawn up with the specific aim of boosting private sector involvement in financing public projects and offering the public authorities funding alternatives, investors were initially cautious while legal practitioners voiced numerous objections.
To start with, it is not clear to which contracts the new law is supposed to apply. The envisaged model of relationship between public and private partners is similar to the one regulated as a concession in Government Emergency Ordinance No. 34/2010 (which is still in force). And yet at the same time Law No. 178/2010 expressly states that it shall not apply to contracts governed by Government Emergency Ordinance No. 34/2006.
Which invites the question, to which contracts does it apply?
The only substantial difference in the two pieces of legislation is the setting up of so called project companies, to be held jointly by the public and private partners. The project company is expressly regulated by Law No. 178/2010, but the establishment of such a project vehicle is not forbidden and so should be possible under Government Emergency Ordinance No. 34/2006 too.
Another key issue is the procedure by which the private investor is selected and the PPP contract awarded. Under Law No. 178/2010, the selection procedure is largely left to the contracting authorities, as the minimum procedural terms set down are very brief. This would leave scope for the very principles of the law to be neglected, as the authorities’ commitment to transparency and fair competition when awarding public projects is usually questionable.
Consequently, the projects awarded under the new law are likely to often generate controversy.
Consequences
Law No. 178/2010 was approved in spite of criticism from the EU Commission and its first draft being rejected by the Presidency and sent back to Parliament. Furthermore, it appears that Romania will face an infringement procedure brought by the EU Commission as a result of the flaws in this law.
Under these circumstances, is it likely that the new law will achieve its goals? Once again, the authorities will probably blame the failure of public projects on the lack of, or bad, legislation, when they should instead look at their own commitments and capabilities.
