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REVIEW ON PPP IN LOCAL AND REGIONAL DEVELOPMENT Handbook for considerations on Public Private Partnership

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CONTENT Foreword Page 2 Links to worldwide PPP experiences Page 3 PPP in Germany Page 9 PPP in Latvia Page 17 PPP in Lithuania Page 21 PPP in Poland Page 26 PPP in Sweden Page 32 PPP in Norway Page 35

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FOREWORD In the Project Data Form it is stated that we should make a review on PPP in local and regional development. Lead partner is responsible for this task, but as stated in the approved Data Form we should do this based on open resources from the project partners. The texts presented in this publication are only partly input from our partners. However, the web has been helpful, and the open sources are many and diverse. Useful EU links are: Resource book on PPP case studies From the EU Commision June 2004 Green paper on public-private partnerships and community law on public contracts and concessions From EU Commision: April 2004 Guidelines for successful public-private partnerships From the EU Commision March 2003 Risk Allocation and Contractual Issues From Partnerships Victoria June 2001 Other links will be found on the next pages and in the texts for each partner country. Notodden, October 18. 2011 Bjørn Frode Moen Project manager

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Country Name Link

National PPP Forum www.pppforum.gov.au

Infrastructure Partnerships Australia www.infrastructure.org.au Australia

Partnerships Victoria www.partnerships.vic.gov.au

Belgium Flemish PPP Knowledge Centre www2.vlaanderen.be/pps/english

Bulgaria Public-Private Partnership www.eufunds.bg/?cat=229

The Canadian Council for PPP www.pppcouncil.ca

Partnerships British Columbia www.partnershipsbc.ca Canada

Canadian Health Coalition - PPPs (P3s) www.healthcoalition.ca/realitycheck5.html

China Efficiency Unit – The Hong Kong Special

Administrative Region www.eu.gov.hk

PPP Sector, Trade and Investment Promotion

Agency www.apiu.hr/Home.aspx?PageID=88

Agency for PPP www.ajpp.hr Croatia

PPP Knowledge Centre www.himk.hr

PPP Association www.asociaceppp.cz

PPP Center www.pppcentrum.cz Czech Republic

PPP Regulation and Methodology Unit www.mfcr.cz

Denmark Public-Private Partnership http://www.deaca.dk/publicprivatepartnership

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Estonia Public Procurement Centre www.riigihangetekeskus.ee

PPP Unit of the Ministry of Economy, Finance and Industry

www.ppp.minefi.gouv.fr

Centre d’Expertise Français pour

l’Observation des Partenariats Public-

Privé

www.cefoppp.org France

L'Institut de la Gestion Déléguée - The French

Institute for PPP www.fondation-igd.org

Public Private Partnership Task Force www.bmvbs.de/Bauwesen/Bauwirtschaft-,1521

PPP in Niedersachsen www.ppp.niedersachsen.de/master/C13274395_L20_D0.html

PPP Task Force Nordrhein-Westfalen www.ppp-nrw.de

Partnerschaften Deutschland www.partnerschaften-deutschland.de

PPP Baden-Wuerttemberg www.wm.baden-wuerttemberg.de/sixcms/detail.php/64030

PPP Bayern www.ppp.bayern.de

PPP Brandenburg www.ilb.de/ppp

PPP Hessen www.hmdf.hessen.de/irj

PPP Sachsen www.sib.sachsen.de/cms/de/projekte/oepp_projekt

PPP Sachsen-Anhalt www.sachsen-anhalt.de/LPSA/index.php?id=13299

PPP Schleswig-Holstein www.ib-sh.de/ppp

PPP Rheinland-Pfalz www.per-rlp.de/index.php?id=6

PPP Thueringen www.ppp-nrw.de

Germany

PPP Task Force Nordrhein-Westfalen www.thueringen.de/de/tmbv/shkv/ppp/ag

Greece The Special Secretariat www.ppp.mnec.gr/en

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for PPPs

PPP Committe www.sdit.mnec.gr/en/press_office/PPPCommittee/

Hungary Inter-Departmental PPP Committee www.khem.gov.hu/en

India Ministry of Finance, PPP Unit www.pppinindia.com

The Irish Government Public Private

Partnership www.ppp.gov.ie

National Roads Authority www.nra.ie

Railway Procurement Agency www.rpa.ie/en/Pages/default.aspx

Ireland

Centre of Expertise www.finance.gov.ie

Israel Ministry of Finance, PPP www.ppp.mof.gov.il/mof/ppp/mofppptopnavenglish

Technical Unit for Project Financing -

Italian PPP Task Force www.utfp.it/default_eng.htm

Italy Cassa Depositi e Presiti

Spa www.cassaddpp.it/cdp/index.htm

Private Finance Initiative Promotion

Office www8.cao.go.jp/pfi/e/home.html

Japan

Japan PFI Association www.pfikyokai.or.jp/english_v/new_v/03.html

Kazakhstan PPP Center www.ppp-center.kz

Korea

Public and Private Infrastructure Investment

Management Center

www.pimac.org

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Publiskā un privātā partnerība www.ppp.gov.lv/en/

Latvia LIAA www.liaa.gov.lv/?object_id=789

Malta Ministry of Finance - The PPP Unit www.finance.gov.mt

Mauritius

Ministry of Finance and Economic

Development - PPP Unit

www.gov.mu/portal/sites/ncb/ppp

Public Private Partnership and Asset

Management www.minfin.nl/english

Netherlands

PPP Unit www.verkeerenwaterstaat.nl/

Northern Ireland

Strategic Investment Board www.sibni.org

Norway EMCC http://www.eurofound.europa.eu/emcc/erm/studies/tn1010012s/no1010019q.htm

Poland PPP Institute www.ippp.pl/instytut

Portugal A Parpública –

Participações Públicas, SGPS, SA

www.parpublica.pt/parpublica.html

Romania Central Unit for the Coordination of PPP www.mfinante.ro/engl/index.jsp

RPA National Treasury, PPP Unit www.ppp.gov.za

Russia PPP Centre www.veb.ru/en/PPP/pppserv

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Schweiz PPP Competence Center www.ppp-schweiz.ch/sections/8

Singapore Ministry of Finance, PPP Policies www.mof.gov.sg/policies/ppp.html

Partnership for Prosperity www.p3.sk

Ministry of Finance PPP www.finance.gov.sk/EN/Default.aspx?CatID=418

Slovakia

Asociácia PPP www.asociaciappp.sk

Slovenia PPP Unit www.mf.gov.si/angl/index.htm

Spain

Spanish Centre for Excellence and

Knowledge on PPP's (CECOPP)

www.cecopp.com

Partnerships UK www.partnershipsuk.org.uk

PPP Forum www.pppforum.com

4ps www.4ps.gov.uk

HM Treasury - The Private Finance Initiative (PFI)

www.hm-treasury.gov.uk

National Audit Office - PFI and PPP

Recommendations Database

www.nao.org.uk

The PPP Arbiter www.ppparbiter.org.uk/output/Page1.asp

Highway Agency www.highways.gov.uk

Partnerships for Schools www.partnershipsforschools.org.uk

Community Health Partnerships www.communityhealthpartnerships.co.uk

Private Finance Unit www.mod.uk

UK

HM Prison Service www.hmprisonservice.gov.uk

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Ukraine Ukrainian Public-

Private Partnership Development

www.ukrppp.com/en

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PPP in GERMANY 1. LEGISLATION

There are a lot of specific rules depending on the kind of PPP, the area of PPP as well as the State where the PPP shall be implemented. Two Federal Ministries of Germany have introduced a consulting company for supporting PPP (in German: ÖPP). Their website you can see here: www.partnerschaften-deutschland.de/wer-wir-sind/ (sorry – in German only). Also there is a German Association for PPP as well – see in English, please: http://www.bppp.de/bppp.php/cat/27/title/Home

2. SUPPORT - Is there a support system for those who want to engage in PPP national,

regional or local? Please support us with link to the support organization. Their organizational structure if not mentioned in the open source. The support is given by business development organizations of the Federal States: e.g. the ZAB Brandenburg (Brandenburg Economic Development Board - see www.zab-brandenburg.de/en/18.aspx) is responsible for supporting respective stakeholders in the State of Brandenburg. Additional there is a Business Development Bank for supporting business activities in the State of Brandenburg including service for PPP (see: www.ilb.de/rd/services/1738.php and links to other states as well) Also some large cities (e.g. City of Potsdam) and counties have business development supporting departments for finance and PPP consulting.

3. REGIONAL AND LOCAL EXAMPLES – please support us with links to relevant

PPP experiences from your region. Preferably by means of links, but also written examples, e.g. as done in the Note on PPP from LP in the coordinator meeting in Riga.

Some interesting German examples you can find here (see this webpage below, please): http://de.wikipedia.org/wiki/Public_Private_Partnership On local levels in rural area there are some PPP for schools (a private school in Baruth), for administration offices (e.g. city hall of Ludwigsfelde) and for hospitals (e.g. Johanniter hospital in Belzig and in Treuenbrietzen). Also many small PPP take place in frame of projects and marketing issues - as daily business mostly not contracted separately.

4. ADDITIONAL RELEVANT OPEN SOURCES ON PPP IN LOCAL AND

REGIONAL DEVELOPMENT. Open sources used in frame of TiF: Involvement of private and companies into rural town profiling and marketing as well as into implementation of specific town actions – but as daily business mostly not contracted separately.

Finally I like to send you two pdf-files from German Institute of Urbanistics (Deutsches Institut für Urbanistik – DifU). It is working in many fields of development issues for a lot of local and regional administrations in Germany. Please find attached their papers about Principles, opportunities and riscs of PPP” as well as a “Survey on projects on at Federal, State and Municipal levels” – both in English for your use.

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Key points

In Germany, there is no single body of laws governing Public Private Partnerships (PPPs). Instead, a plethora of acts, rules and regulations applies. However, the federal and state legislators now appreciate the importance of PPPs for future development in the public sector. They have enacted a series of laws to facilitate PPPs in Germany, the most notable being the PPP Acceleration Act. The federal government has also created institutions that are responsible for co-ordinating and facilitating the development of PPPs in Germany.

Currently, more than 100 PPP projects are in the planning or implementation phase in Germany. They range from big infrastructure projects such as the extension of motorways worth billions of euros to smaller projects such as the extension and renovation of schools, hospitals and prisons.

To facilitate the planning and implementation of PPPs, the federal government and some federal states have passed legislative measures ranging from rules and obligations for the co-operation of public and private partners to the specific promotion of such a co-operation.

We expect, especially in the face of the current financial crisis, that both the number and the value of PPPs in Germany will increase. Additional legislation to facilitate the planning and implementation of PPPs is in the making.

Framework for PPPs

Legal framework

In Germany, PPPs are usually based on an agreement governed by private law and concluded between a public partner and a private entity. The public partner can be the Federal Republic, a federal state or one of its authorities or a local community. In general, the private partner is a legal entity or consortium consisting of several companies as shareholders.

There is no specific law providing a comprehensive framework for PPPs. Instead, PPPs are subject to a number of legal regimes in federal and state laws. These include constitutional and administrative law, the law of public procurement, budget law, tax law, investment and finance law, the law on public subsidies, contract law and corporate law.

The first step towards a more comprehensive regulation on PPPs was made when the federal PPP Acceleration Act (ÖPPBeschleunigungsgesetz) was enacted in 2005. This act is a framework law, which has changed a number of previously existing provisions relevant to operating PPPs, including the Act Against Restraints of Competition, the Public Procurement Ordinance, the Federal Budget Law, the Federal Law on Investment and tax laws.

Phases of a PPP project in Germany

The laws described below apply during the typical phases of a PPP project.

Phase I: identification of possible projects

In phase I, the public partner needs to identify possible projects and to assess the economic demand for PPPs, as well as the economic, technical and legal feasibility of a project.

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Federal or state constitutional law may necessitate full public authority over a certain institution or service, or at least certain levels of public control over the process. For example, article 33 paragraph 4 of the Basic Constitutional Law stipulates that only civil servants may exercise administrative authority. Therefore the constitutional and administrative framework of a PPP may require a certain corporate structure for the private partner.

Tax, budget and investment laws and the laws on public subsidies may have an important effect on a project's financial feasibility.

The project must also comply with the provisions on state aid in articles 87 and 88 of the EC Treaty. For example, it has to be determined whether public contributions to the financing of a PPP project, either in the form of direct payments or as state guarantees, constitute illegal state aid.

According to the Federal Budget Law and state budget laws, the economic efficiency of a project has to be substantiated. This requires an economic analysis of the PPP project and its comparison with the implementation of the project on a 'conventional' procurement basis. Moreover, budget laws may set certain limits for the sale or use of public property and require a clearance procedure. Since such limits and provisions may impede the implementation of PPPs, a couple of federal states have introduced special legal provisions to promote the development of PPPs. For examples, please see 'Recent developments' below.

Phase II: preparation and planning

In phase II, the public partner has to develop a contract as well as performance-related specifications. It needs to determine a project's fundamental characteristics – for example, the duration, the suitable contract model and the level of public control. In this phase, contract and corporate law play an important role. This concerns, inter alia, the applicable type of contract, which defines the parties' mutual rights and obligations, various models of financing and the project's corporate design. In Germany, a variety of contract types may apply to PPP projects (eg concession agreements or leasing agreements) and models include supply-and-management contracts, turnkey projects, various lease and concession models, models of private ownership or use of assets. For example, in the case of concession models, legal advice is required to ensure that the fees charged by a private entity comply with laws and regulations on taxes and public fees.

Phase III: award procedure

In phase III, the public partner usually carries out a contract award procedure and invites the submission of applications from interested private entities. According to section 2 of the Procurement Ordinance, the PPP project is subject to a formal award procedure if its volume exceeds a certain threshold (eg in 2008 €412,000 for supplies and services for drinking water, energy or transport; €133,000 for general supplies and services for federal government institutions; €206,000 for all other supplies and services; and €5,150,000 for construction projects). Budget laws may require a tender even if the project remains below the thresholds in the Procurement Ordinance. Procurement law often requires a Europe-wide tender and entitles the applicant to seek legal remedies before a public procurement tribunal under section 107 et seq of the Federal Act on Restraints on Competition. The public partner needs to prepare and publish an award notice and performance-related specifications and conduct an awards procedure in accordance with procurement law. At this stage, legal advice is regularly needed to ensure that the procedure complies with all applicable laws and that the bidders' rights are duly observed.

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Phase IV: implementation and controlling

In phase IV, the project is implemented. Depending on the subject matter, a significant range of laws may apply during this phase – eg in the case of a construction or transport project, the provisions of public and private building law, transport law, environmental law, civil law and other laws. If the project needs to take over a service that has so far been publicly run, the private entity may be obliged to employ public servants. This requires the application of public service law and the relevant provisions of individual and collective labour law.

The PPP Acceleration Act

Some of the above-mentioned laws have been modified by the PPP Acceleration Act to facilitate PPPs. For example, the meaning of 'public contracts' has been clarified to facilitate the determination of applicable law.

Moreover, a new procedure for public procurement called 'competitive dialogue' (Wettbewerblicher Dialog) has been introduced. This is a procedure for the award of particularly complex contracts by public contracting entities. An invitation to participate is made and selected persons or companies are invited to negotiate all the details of the contract.

Furthermore, the Federal Budget Law has been modified. The amended section 7 paragraph 2 allows entities to take into account the assumption of risk in assessing the economic efficiency of a project as a condition for compliance with the Federal Budget Law. This is particularly relevant for PPPs because the risk allocation can be a major element of a PPP's economic balance. Section 63 paragraph 2 of the Federal Budget Law now allows the sale of federal real estate even though there is a public demand for such property. Before this amendment, the prohibition of sale rendered sale-and-leaseback contracts impossible.

Other amendments concern inter alia tax laws and the Federal Law on Investments. The latter one allows mutual real estate funds to hold a number of shares in a PPP project company.

PPP institutions in Germany

• A number of institutions have been established to facilitate PPPs. They include the Federal PPP Task Force, which is a part of the Federal Ministry for Transport, Building and Urban Affairs in Berlin. A number of federal states have their own PPP commissions or task forces. These institutions have advisory and information functions and are not involved in the decision-making processes for individual PPP projects. They serve as knowledge databases and offer assistance to communities considering setting up a PPP. They also play an important role in informing the public and in developing common standards on the treatment of PPPs. The Federal PPP Task Force publishes a database of all PPP projects in Germany (www.ppp-projektdatenbank.de /).

• In December 2007 the federal government decided to establish a corporation called 'Partnerships Germany' (Partnerschaften Deutschland; PDG) to provide qualified and neutral advice on PPP-related issues to all public entities. PDG shall pool significant expertise and knowhow in the field. It will offer remunerated advice to public partners on specific projects, especially during the early stages of a PPP. For this purpose, PDG concludes framework agreements with public partners interested in receiving advice from it. PDG will also be involved in basic groundwork with regard to the development of the legal framework for PPPs in Germany. It plans to employ approximately 50 members of staff from sectors such as finance, industry, consulting

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and public service. PDG merely aims to cover its costs but is not profit-oriented. It complements the market for PPP consulting in Germany. Its shares are held by the federal government, 10 federal states and 82 municipalities (approximately 70 per cent) and private investors from various countries and all sectors dealing with PPP (approximately 28 per cent). PDG began its operational activity in early 2009. Freshfields Bruckhaus Deringer acted as a principal adviser to the government in the process of establishing PDG.

Risks for potential investors

The German parliament has recently adopted a reform of the German procurement law. In particular, the new law tightens the obligation to procure large quantities of goods and services in several lots rather than in one comprehensive package. It was argued that this reform could have negative effects on future PPPs by forcing the contracting authority to split PPP contracts, which could reduce the projects' efficiency. However, the new law allows public authorities to award several lots in a single package if economic or technical reasons necessitate this. This provision gives ample room for manoeuvre to preserve the implementation of comprehensive PPP projects in Germany. Moreover, there are various cases in which a separation into 'vertical' quantity lots may be reasonable. For example, if 60 school buildings in one region are to be renovated and operated, a separation into two or three lots of 30 or 20 buildings may be efficient.

On the level of each individual PPP project, the question of who is going to bear the risk of a reduction in demand is probably the most controversial issue within the negotiation leading towards a PPP contract. The public partner often attempts to shift the risk to the private investor. This can force the private investor to bear the negative consequences if the actual demand does not meet the expectations. For example, the current economic crisis could lead to a reduction in heavy goods vehicle (HGV) traffic on motorways. The revenue generated by the HGV tolls could therefore be lower than expected. Or the number of patients frequenting a medical institution run under a PPP scheme could be lower than estimated. This could bring the private investor into dire straits because it relies heavily on the revenues generated by the project in order to finance the project. If the numbers do not add up, the result could be the investor's insolvency. It is therefore vital for the private investor to insist that the public partner bears the risk of a reduction in demand. The private investor should bear this risk only if the reduction in demand can be directly attributed to its own performance – eg if a comparable facility attracts more customers than the one run by the private investor simply because it is better maintained or offers a better deal to customers.

Current PPP projects

Extension of motorways (so-called 'A-models')

Some of the most important PPP projects in Germany concern the extension of parts of German motorways (Autobahnen). In these socalled A-models ('A' as an abbreviation for Autobahnausbau; motorway extension), the private partner takes over responsibility for extending the number of lanes as well as for paying the costs of maintenance and operation of both the existing and new lanes in certain parts of existing motorways. In return, the private partner gets the revenues from the HGV tolls (tolls paid for the use of the motorways by HGVs). Additionally, the federal government may pay an initial subsidy to get the project started. The details of these A-models are governed by a concession contract. Currently, the following A-models are in the process of being executed:

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• A1 between Bremen and Buchholz in Lower Saxony: extension from two to three lanes in each direction (72.5km long); contract period for maintenance and operation: 30 years;

• A4 in Thuringia: construction of a 22.5km-long section of the motorway as well as extension of existing sections; contract period for maintenance and operation: 30 years;

• A5 between Malsch and Offenburg in Baden-Württemberg: extension from two to three lanes in each direction for a 41.5kmlong section of the motorway as well as maintenance and operation of a 59.7km-long section of the motorway for 30 years; the contract volume amounts to approximately €600m; and

• A8 between Munich and Augsburg in Bavaria: extension from two to three lanes in each direction for a 37km-long section of the motorway as well as maintenance and operation of a 52km-long section of the motorway for 30 years.

Other PPP projects

Additionally, approximately 100 other PPP projects are in the planning or implementation phase. Most of these concern the renovation, extension or construction of public buildings ranging from schools, hospitals, barracks and prisons to castles and gardens. For example, the city of Nuremberg awarded the contract to renovate and rebuild some of its schools to a private consortium within a PPP scheme. The overall worth of this contract is €50m. Similar projects for renovating and reconstructing schools in PPP schemes can be found in numerous cities and administrative districts all over Germany.

PPPs in the health sector are increasing, too. For instance, the university hospital of Schleswig-Holstein is building a new centre for particle therapy for curing cancer patients in Kiel. This new centre, worth €250m, is the largest PPP project in the health sector in Germany.

Recent developments

In the past few years, both the federal and the state legislators have passed – or are still working on – a number of legislative measures that directly concern the feasibility and implementation of PPPs in Germany. On the federal level, the most important developments are the reform of the public procurement law and the new Investment Act.

Furthermore, the reform of the Federal Investment Act in 2007 (the Investmentänderungsgesetz) introduced a new class of funds, the PPP funds. Investment companies can now invest in PPP project companies. Thus, this new act enables the use of private capital for PPP projects. Even individual private investors can now participate in the opportunities offered by the PPP market.

At the same time, the federal states have developed legislative measures to further the development of PPP projects.

One example is section 35a of the law on hospitals of the federal state of Hesse. This section extends the eligibility of state-owned hospitals for subsidies. Under the new scheme, hospitals can obtain state subsidies not only for construction or renovation projects run by themselves, but also for those implemented within a PPP. As long as the PPP is economically efficient, it

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gains the same rights of access to state funding as completely state-run hospital extension, renovation or reconstruction projects.

Another example for the promotion of PPP projects in the health sector is the 'lump-sum construction subsidy' for hospitals in the state of North Rhine-Westphalia (NRW-Baupauschale). Instead of approving and financing specific construction or renovation projects of stateowned hospitals, the state now gives each and every state-owned hospital a lump-sum subsidy of €460,000 per year. The individual hospital is able to choose the projects it wants spend the money on. It is also possible to use the money for acquiring private financing for larger projects or to pool the subsidies of several years and/or hospitals to realise larger projects. As a consequence, many hospitals are expected to use their newly gained freedom for renovating, reconstructing or extending their buildings and institutions with the help of PPPs.

Outlook

Legal developments

In 2006, a new parliamentary working group was established to draft a second federal framework law, the PPP Simplification Act (ÖPPVereinfachungsgesetz). This shall cover several economic sectors of relevance for the PPP market in Germany, including healthcare, social infrastructure, transport and defence. The act is still being debated within the working group and will presumably not enter into force before 2010.

In March 2009, the German parliament started the initiative 'Fair competitive conditions for PPP in Germany', which aims to increase the attractiveness of PPP solutions. As part of this initiative, the implications of value added tax (VAT) for PPP projects shall be assessed and potentially modified. So far, the provision of services by public authorities themselves is not subject to VAT. By contrast, VAT has to be paid if a private partner provides the same services in a PPP. Consequently, PPPs may be disadvantaged by comparison with the provision of services by public authorities. The new initiative shall serve to reduce or eliminate this disadvantage. Moreover, the parliament plans an amendment of the Federal Budget Law. This shall ensure that projects are implemented by private entities or on the basis of PPPs if an economic assessment has proven the efficiency of such an implementation. Finally, the parliament has asked the government to amend the Act on the Private Financing of Long-Distance Roads (Fernstraßenbauprivatfinanzierungsgesetz) to facilitate the construction of special buildings on roads, such as bridges or tunnels.

New PPP projects

Various PPP projects will be executed within the next few years. In particular, the government's measures to support the German economy in the face of the financial crisis will probably lead to faster execution of planned projects. Among those projects are several extensions of motorways within the A-models scheme. The German Ministry of Transport has launched the planning and procurement process for the A8 between Ulm and Augsburg in Bavaria. This project worth €280m comprises a lane extension as well as maintenance and operation of a 58km-long section of the A8. Moreover, the A9-project between Hermsdorf and Schleiz in Thuringia has been launched. In a second wave, four other A-projects will be launched, probably in 2009 or 2010 at the latest: the A1 between Lotte and Münster together with the A30 Rheine-Lotte autobahn in North Rhine-Westphalia; the A6 between Wiesloch-Rauenberg and Weinsberg in Baden-Württemberg; the A7 between Bordesholm and Hamburg in Schleswig-Holstein; and the A7 between Salzgitter and Drammetal in Lower Saxony.

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Additionally, parts of the A45 near Gambach and the crossing of the A60 and A643 near Mainz shall be restored within PPP projects. No timeline has yet been set for these projects.

Partnerships Germany has become operative by advising the City of Dresden on a PPP project in the culture sector. Furthermore, it shall play an important role in providing advice on opportunities for PPPs under the 'rescue packages' for the German economy. PPP is a institutionalized form of cooperation between public and private actors in which both sides invest different resources, in order to pursue complementary goals and to split gains and losses between them. From this definition we can identify the three important dimensions (Vogel, Stratmann): - Institutionalization: Institution as form of regulated cooperation; the degree of

institutionalization could be from informal to formal (e.g. informal networked relationships, contractual agreement, social law-form (gesellschaftsrechtlich)

- Resource pooling: Resource as capital, building, equipment, right, know-how etc.: putting together complementary resources for the mutual utilization: controlling resources according to the degree of formalization

- Complementary goals: economy: primary financial goals, science: primary basic research; PPP pursue equally public and commercial goals which the both sides can not reach alone. Gains and losses are split between the both sides.

- 2. Types of PPP in Germany Since the nineties PPP has been seen in Germany as attractive alternative for the previous division of task between public and private sectors. There are many different types of PPP in Germany. The following list gives an overview: PPP are being build: - in community or city development and renewal - in tapping financial sources in communities - in traffic area - in housing construction - in management of cultural institutions - in environmental protection - in research - in municipal supplying and waste disposal - in security - in forestry - in education - in training

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PPP in Latvia http://www.ppp.gov.lv/en/ The notion of PPP first was introduced in late 1990s when working group drafted a Concession Law which was approved by the Parliament in January 2000. Despite this fact, no transactions were signed for two years after the Law was adopted, and in April 2002 Cabinet of Minister adopted the “The Concept on Concession Promotion” that resulted in establishing a dedicated PPP unit in the Ministry of Economics and Latvian Investment and Development Agency (LIDA), an institution reporting to the Ministry of Economics. The tasks were divided according to the mandate approved by the Government, where Ministry of Economics were in charge of promoting PPP policy, LIDA – provide for project support. In 2005, Cabinet of Ministers adopted the PPP Policy Framework Document 2005 – 2009, and the PPP Action Plan 2006 – 2009, to achieve the goals set by the PPP Policy Framework Document.

Contractual PPPs In Latvia similar as in other EU member states, we can talk of two kind transactions of PPP - contractual and institutionalised. This classification is propped on European Commission 2004 published “Green book of PPP”, where Contractual PPPs is collaboration between the public partner and private partner, concluding an agreement for performance of construction-works or for rendering services. Contractual PPPs can divide thus:

• PPP Procurement agreements, what assign according to the Public Procurement Law in open, restricted or negotiated procedures.

• Concession agreements, what assign according to the Law of Concession.

PPP Procurement agreement PPP Procurement agreement - agreement, which is concluded between the public partner and private partner for a time, that is longer than five years and, where largest part of economic risks undertakes the private partner, which designs, builds, finances, operates and at the end of the contract term delivers an object to the partner of public sector. The public partner pays the annually payments, which depend on quality of the given service. The Contractual PPP in Latvia is regulated by the law of the Public Procurement.

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Those kinds of agreements can also be called as incorporated planning, building, financing and operating agreements or DBFO ("Design - Build - Finance - Operate"). DBFO projects have various modifications, for example, if the public sector has already designed the technical project and the private partner is attracted only for object building, financing and operation then it is BFO project ( „Build – Finance – Operate”). However if the private partner renovates existent object (for example, school or kindergarten) of the public sector, finances renovation and afterwards operates this object, but the public sector pays annually (monthly) payments then it is RFO project (Renovate – Finance – Operate”). Concession agreement Concession agreement - agreement, which the public partner concludes with the private partner on a fixed time (to 30 years), and a concessionaire (the private partner) within the framework of concession agreement undertakes all or a great part of economic risk. Concession – the transferring of rights to provide services or exclusive rights to utilise concession resources, which are transferred for a specified time period pursuant to the entering into of a concession agreement between a conceder and concessionaire in regard thereto; Transferring of rights and liabilities can be assigned:

• In a case of building concession to built new infrastructure objects or systems or this works make together with project designing, modernization or extending being infrastructure object or the systems for a compensation getting rights to exploit building, which is formed according to conceder (the Public partner) requirements;

• In a case of concession of services to provide the public services, for compensation getting rights to give services.

Concession agreement according to law concludes for a time to 30 years, grounded on competitive, opened and clear competition conditions. Using concession model ownership of current and new assets keeps public sector. For using and operating assets in concession period is responsible private partner. At the end of concession period all assets need to be transmitted to public sector in good condition. Examining experience of other member states of EU to providing Contractual PPP there is created special purpose entity. The main task of this entity is to provide a services or building and operating of object under arrangement of PPP.The public sector pays payments in accordance to quality of given service or buildings availability. Institutionalized PPPs In Latvia similar as in other EU member states, we can talk of two kind transactions of PPP - contractual and institutionalised. This classification is propped on European Commission 2004 published “Green book of PPP”, where Institutionalized PPPs is collaboration between the public partner and private partner in basis of participant agreement creating Joint - venture, where participants and shareholders are public partner and private partner.

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The Joint-venture can create:

• Founding new capital company in accordance with requirements of Commercial law;

• Transforming public capital company to private capital company with public capital investments in accordance with requirements of law “On state and municipal capital (common) stock and capital companies”.

Institutionalised PPPs involve the establishment of an entity held jointly by the public partner and the private partner. Public partner when forming a joint venture entity with private partner shall comply with the basic principles or the EU Treaty, - Equality of treatment, Transparency, Proportionality and Mutual recognition. Although, currently there is no special regulation on how to select a private partner in institutional PPP, but are many laws which shall be taken into account. Law “On prevention of squandering state and municipal financial resources and property”. The objective of the Law is to prevent illegal and unsuitable use of state and municipal financial resources and property. Legal usage means that the action shall be in accordance with the respective normative acts, not allowing the approach “what is not forbidden is allowed”. Principle of suitability incorporates three components:

• action shall be driven to achieve the objective of using less state and/or municipal financial resources and property;

• selling of property should be done for the highest possible price;

• property can be purchased or used for the lowest possible price.

Law „On Order of Public Administration of the Republic of Latvia”, Section 88 stipulates cases, when a public person may perform commercial activities:

• if the market is not able to ensure the implementation of the public interest in the relevant field;

• in a sector in which a natural monopoly exists, thus ensuring public availability of the relevant service;

• in a strategically important sector;

• in a new sector;

• in a sector, for the development of the infrastructure of which large capital investments are necessary; or

• in a sector, in which, in conformity with the public interest, it is necessary to ensure higher quality standards.

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Law “On state and municipal capital (common) stock and capital companies” and Commercial Law sets procedures on how joint-ventures are established, how they are managed, etc.

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PPP in LITHUANIA The issue of public–private partnerships is especially relevant nowadays. Despite the economic crisis and undergoing reforms in the public sector, problems require a long-term solution and not just one certain reform according to the state programme at a specific period in time. Political, economic, institutional and other social aspects must be harmonized. Legal instruments can guarantee consistency in all of these actions. The informational and legal issue of the reform in administrative and public sectors arises because of the changing sociallegal values, norms and principles. They are expressed in new ways, and an objective need of dissemination emerges. Reacting to the needs and fulfilling these needs are the features of a value-oriented public administration. However, the state alone (the public sector) cannot solve all of these questions without participation of social partners from the private, public and third sectors. Thus, the need for a social partnership emerges. The understanding of public–private partnership later underwent various changes and tendencies due to many social factors. A decade ago, the analysis of problems of partnership between the private and the public sectors in Lithuania could be relevant only on a theoretical level. In Lithuania, like in many other countries of Eastern and Central Europe, implementation of public–private partnerships is still a novelty. However, in recent years the institutions of these countries have undertaken many business projects in collaboration with the private sector, and attempts have been made to legally regulate the field of public and private sectors’ contractual relations. What is the nature of these contractual relations? At the moment, it may be claimed that public–private partnerships are implemented in the practice of public administration in Lithuania and the significance of such partnerships is also growing in the field of the administrative law. An analysis of scholarly and legal sources leads to the conclusion that since the adoption of the Law on Concessions, all legal subjects need a more accurate and unified concept of the public and private sectors. This concept must be legally used in the process of implementing public administrative functions. The analysed documents show that the necessity to use this concept had occurred prior to adoption of the Law because the laws applicable in the field of public administration had been inadequate and the concept itself has not been clear. In the author’s opinion, results can be satisfactory only with the involvement and connection of science, technocracy, and legal regulations—rational actions, strength-based improvement, neutralising and compensating business threats, etc. When a public–private partnership, a social object of multifaceted research and assessment, is not sufficiently recognized in the practice of public administration, favourable conditions for corruption and misuse of official positions are created, and the state suffers great losses; for instance, termination of public–private partnerships and similar cases identified by the National Audit Office of the Republic of Lithuania in 2008. During the last decade, in many member states of the European Union and third countries the public sector has been increasingly more involved in the funding and implementation of state and municipalities investment projects for the creation of public infrastructure, development of public services, and the improvement of public services provision. Only in 2009, with the modification and supplementing of certain legal acts analysed in this article, the significance of private–public partnerships has been brought to light. Important legal acts were adopted which established the concept of public–private partnership, defined the objectives, identified inter-sectoral activities, principles, features and content of public–private agreements. Therefore, considering the relevance of the discussed problem, the object of the study focuses on the

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understanding of public–private partnerships in Lithuania. The author broadly discusses the use of the concept of public–private partnerships. The concept must reflect the objective possibilities of such cooperation, considering social economic processes that have an effect on the implementation of public–private partnerships and consequently on the legal definition of the term. One of the fundamental pillars of understanding inter-sectoral partnership is the identification of practical objectives of cooperation, making the necessary decisions, and a clear system of values and goals in the partnership. The parties interested in partnership must have a common vision and harmonize their actions for the purpose of maximum cooperation. Unfortunately, the nature of public and private sectors differs, and this impedes cooperation. Sometimes the private sector is chosen carelessly based on the opportunity to receive funding for the project. This distorts the essence of the partnership itself. The final result of cooperation may leave the parties unsatisfied, and furthermore, fail to meet the expectations and needs of targeted consumers.

PPP – pilot project: framework project scheme

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The objectives of the paper are the following: 1. to reveal the interrelations of the legislative process and the public-private partnership issues that require regulation; 2. to present the interrelation between the strategy of private–public sectors’ partnership and changes in the understanding of this partnership; 3. to outline the author’s position on the spread of public–private partnerships. Hypothesis. Attempts to find the meaning and essence of public–private partnerships solely through legal analysis, without regard to the social inter-disciplinary connections, has impeded the understanding of the concept and possibilities to rely on useful integral information of other social sciences. The formation of the public–private partnership concept has been impacted by the lack of an integral approach. Researchers have failed to identify connections between the legal and other social ideas and therefore, the spread of partnerships in Lithuania has been impeded. Description of the used methodology. The method of document analysis was used to find information and quantitative analysis was used to investigate the concepts (frameworks), programs, applicable legal acts, documents of various institutions, and scholarly publications. These data allowed to evaluate, retrospectively, the tendencies of change in public–private partnerships. The method of systemic analysis was used to identify the reasons for forming public–private partnerships and possibilities for the spread of such partnerships. The problems of administrative law are discussed as part of the general social environmental system, revealing their relation with other problematic social situations. The method of meta-analysis was applied in analysing the development of public–private partnerships on the basis of the civil, administrative law, legal theory, and sociological, philosophical, and historical point of view. The historical method was used to analyse the genesis of public–private partnerships and change in the relevant legislation in Lithuania. Case study analysis was based on the results of a social network intervention method. The author analyses public–private partnerships as a social phenomenon in the city of Druskininkai. Conclusions 1. The author concludes that the research conducted affirms the paper’s hypothesis. The analysis of the origin and change of the public–private partnership’s content reveals the objective need for this cooperation in Lithuania. The amendment and supplementation of the Law on Investments with the category of “public–private partnership” and supplementation and adoption of new laws demonstrates the need to clarify the concept of public–private partnerships. At first public–private partnership was interpreted much broader than its purpose allowed, related in many cases with undertaking of joint economic risk and mutually important financial obligations. The legal category of public– private partnership was included belatedly, only on 16 June 2009, while the Law was adopted a decade ago.

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2. Implementation of public–private partnerships is still a novelty in Lithuania, like in many countries of Eastern and Middle Europe, although in recent years public institutions of these countries implement a larger number of business projects in cooperation with the private sector. On the one hand, there is a lack of a uniform and consistent policy on the strategy of implementation of public–private partnerships in Lithuania. On the other hand, legal acts are being adopted one after another and systemic direction is lost, even if one of the first legal acts establishing guidelines for public–private partnership, was adopted in 1996 (the Law on Concessions). for a more precise and uniform concept of public–private sectors for all legal subjects and the necessity of its legal use in implementing public administration functions. Public–private partnership is not sufficiently recognized as a social object of multifaceted research and assessment, thus corruption and misuse of powers is fostered in public administration practice and the state suffers great losses. In Lithuania, public–private partnership is impeded by laws and negative public view of joint project implementation as a method for non-transparent privatization. The analysis of the cooperation problem shows that in the nearest future it is important to conceptually draft and adopt a strategy on the implementation of public–private partnership in which the directions and limitations of activities aimed at harmonizing the actions of relevant institutions would be clearly defined, and their functions and responsibilities firmly established. The strategy must be in line with changes in social policy, the market situation and must incorporate the possibility to adjust to any further changes in this field. The strategy should include the mission of the main activities, its purposes and objectives. The principle of the rule of state that “state institutions shall serve the people,” which is established in the Constitution, must be respected. Thus, drafting of the strategy must be public and proper conditions should be established for discussion on all possible public–private partnership initiatives and limitations thereof. 3. Upon legitimizing the public–private partnership’s concept by law, all applicable legal acts must be evaluated. The point of reference should be the grounding of this concept and harmonization with other terms included in other legal acts. All terminology must be revised in order to avoid inaccurate use of the public–private concept’s content. 4. After an analysis of the positive and negative aspects of public–private partnerships, the need and the state of legitimizing of public–private cooperation, the author suggests considering the possibility of legally regulating certain forms of public–private partnership in Lithuania in more detail. We should take note of the opinion shared by many researchers, who underline the legal contractual relations of partnership: concession, shareholders, investment services, contract of works, sub-contract, supply contract, service contracts, as a minimum between the awarding institution and concessionaire (project developer). Thus, these two sectors should cooperate by undertaking infrastructure development projects, supported by state aid and private funding and at the same time sharing a certain risk and responsibility.

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5. The IPPP practice in the Republic of Lithuania has shown both positive and negative aspects. However, it is important to take into account both the mistakes of negative practice and the advantages of good practice with the view of developing the IPPP in Lithuania into a strong legal institute that fosters the effective establishment of a public–private cooperation system. Properly drafted IPPP projects would help maintain the state’s competitive abilities and facilitate a positive public view.

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PPP in POLAND The PPP Act and the Concession Act http://www.centrum-ppp.pl/templates/download/ppp_act_19.12.2008_eng.pdf The PPP Act resolved by the Parliament on the 19th December 2008 and the Concession Act resolved by the Parliament on the 9th January 2009 were announced in the Officiel No.19 on the 5th February 2009. The Concession Law came into force on the 20th February 2009, the PPP Law came into force on the 27th February 2009. There is a strict relation between the PPP Act and the Concession Act; the PPP Act refers to the Concession Act in the field of private partner selection process. The work plan for the 2010 adopted by Centrum PPP includes:

• Continuing trainings for the Regional Chambers of Auditors and Supreme Chamber of Control, as well as start training for the other control bodies (Central Investigation Bureau supervisory organs (Central Anticorruption Bureau, Central Investigation Bureau, Prosecution, Police) - in cooperation with the Ministry of Economy,

• Launching the PPP projects database in Poland - in cooperation with the Ministry of

Economy,

• Developing and promoting PPP good practices - standards and procedures,

• Trainings aimed at territorial authorities and central government,

• Trainings directed to the PPP project funders and financing institutions,

• Organizing conferences and seminars on the topics of cooperation under PPP, • Cooperation with the Ministries: the dissemination of the PPP strategy, the definition

of the rank of the PPP in strategic government documents, CSO reporting, creation of units within the ministries of the PPP, the creation of individual "certifying" decisions of the PPP, international cooperation at government level,

• Cooperation with foreign PPP entities,

• Cooperation with the Public Procurement Office,

• Increasing the role of the www.centrum-ppp as a platform connecting sides of PPP

contracts, • European projects.

Public-private partnership is used to carry out public functions in many countries around the world. It is increasingly difficult to find a region of the world, in which the PPP model has not been, or is not used. Over the last 14 years in 1994 - 2007 has been realized almost 1,200 contracts PPP medium for the amount of almost 290 million EURO.

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The value of projects completed during the period 1994-2007 in the various geographic regions the world.

Source: development based on Dealogic data ProjectWare and PricewaterhouseCoopers

In most countries around the world the existence of a central processing unit dealing with public-private partnership was deemed to be reasonable. Such institutions already exist in the United Kingdom, Ireland, Germany, the Czech Republic or France. In most cases, these units, even if they are not part of the public administration, is subject to its supervision - most effected by the Ministry of Finance or the Treasury. But beyond this common element, form and structure of the central units for the PPP is very diverse. http://pppinstitute.com

Governmental and Public Administration Zone

IPPP is the first non-governmental organisation in Poland supporting the local and central public administration as well as representing external diplomacies and international organisations in regards to the development of the PPP market. Our primary focus is the public investments market of Poland and the surrounding countries especially from Central, Eastern and Southern Europe.

Our goal is to support public entities in driving regional development through PPP which we believe is the right answer to the demand of meeting public needs in today’s economy. Making Things Happen is the statement of ours that gives us will and determination in being substantially beneficial to societies both locally and nationally.

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At IPPP we understand that it is the public side that initiates public-private partnerships and that there are fundamental rules that must be followed at any time such as concern for people, meeting the public demand, transparency, securing a sustainable development or minimizing financial risk and exposure.

In order to help local and national governments as well as their bodies in bringing successful PPP projects to the market, we are taking a calm approach and are strict in following some crucial requirements:

• bankability of PPP projects regardless of how tempting visions a development strategy or plan may have,

• transparency as public investments are open and competitive by definition,

• trust which is a function of things well done in time,

• complementarity of our expertise through accurate recognition of public and private sector’s needs,

• reliability as decisions should only be made basing on proven information.

Accessing Poland through IPPP

What kind of support can IPPP offer to external governments and bodies of international public organisations?

• Precise insight into the public investments market in Poland in regards to PPP projects including:

o up-to-date PPP project’s database and market researches,

o networking with relevant parties from the PPP market (from both public and private sectors),

o full legislative expertise and analysis,

o PPP market’s development forecasts.

• Local representation of your organisation on the Polish market in a way suiting your needs:

o up-to-date and unique information feed about the PPP market,

o a remotely set up business development outsourcing of your organisation in either an open or a discrete manner including a confidentiality agreement securing your interests if required,

o support in establishing of a subsidiary branch in Poland.

“PPP” stands for Public-Private Partnership. It is also known as “P3” and is basically an alternative method for the public administration to meet public infrastructure’s needs and deliver quality public services. PPP is often described as value for money. The British Local Government Improvement and Development (formerly IDeA) defines best value for money as the “optimum combination of whole-life costs and benefits to meet the customer’s requirement” and this is indeed what PPP is.

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Challenging the future

Today’s world stands in front of challenges such as globalisation, climate change, waste utilization, population ageing, the need for renewable energy and infrastructural and technological progress. Social services such as education, healthcare or social housing are not less important. All these require intelligent and effective investing and public means won’t be sufficient to meet the world’s demand in the foreseeable future.

Therefore it is vital to pursue additional means in order to let the world continue its development. These means can be gathered from all of the potential the private sector has to offer including financing as well as effective managing and operating.

Our mission

At IPPP we trust in what we believe. We do care about sustainable development and aim to keep investments secure for both parties – the public and the private one. We invest not only in PPP projects but also in relationships between people and organisations. The key values that has brought IPPP to its unique position on the market are trust, reliability, hard work and the pioneering role we have been playing in creating, exploring and driving the PPP market in Poland.

IPPP can be defined as a PPP for PPP. As a private partner we are promoting the idea of PPP and are driving PPP projects for the public administration. At the same time we are enabling development and profits to those of the private sector who are willing to be part of the constantly growing PPP market.

On the high level PPP projects are the most strategic fields of human kind’s development: waste management, green energy, infrastructure, telecommunication, housing, social needs, transport, defence, urban revitalization and other public domains. PPP is an intelligent solution for delivering cost effective and high quality public services and we see the cooperation of the public and the private sectors as a way to make the world a better place to live in.

Most wanted in PPP

• project’s bankability which is key to make the project come true,

• value for all stakeholders – this means achieving the public sector’s core objectives and giving profit to the entrepreneurs,

• transparency and fairness of all processes leading to PPP-transaction close,

• transaction safety in a changing economic environment – guaranteed by national governments,

• flexibility – PPP project can be launched in a wide range of public domains,

• professionals driving PPP projects,

• true partnership which means sharing of risks as well as profits between both sides of the PPP agreement – the public administration and the private sector.

Choosing IPPP as a partner for PPP investments in Poland is a sort of a profitable investment in itself. Our activity is namely not only profit oriented but also dedicated to the development

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of the Polish PPP market. Because of this we want to bring only bankable PPP projects to the market suiting both sides of a PPP agreement: the private and the public sector.

At the same time, because of our attitude and orientation we have the ability to keep our expenses under control and to offer you attractive pricing for services which are of a unique high quality and accuracy as performed by first-class specialists with the longest experience in PPP on the market. IPPP has been building its unique position as an independent body since 2003 and is now a trusted partner with outstanding references in the field of PPP/concession public investments.

IPPP’s mission is Making Things Happen and while working with our clients our main focus is to continuously deliver a satisfactory and high quality result that is exactly as expected and what’s important – that is delivered for an affordable prize being a good example of the “value-for-money” rule.

What can your organisation gain by choosing IPPP?

• Securely and confidently leading through the complexity of public investments in a professional, approachable and timely manner.

• Playing a prominent role on the PPP public investments market.

• Accelerating business through opening to PPP investments which are profitable and safe as guaranteed by the public administration.

• Strategic settlement in this part of the world or, looking more locally, inCentral-Eastern Europe (CEE).

• Not missing any investment opportunity coming from the promising Polish PPP market through up-to-date and reliable source of information.

• First-class specialist having your goals set as theirs helping you to drive profitable investments on the PPP market.

• Flexible approach and respect to your habits and views on ways of doing business.

• A wide range of investment areas such as: waste management, transportation & logistics, renewable energy, gas & power, healthcare, housing, education, tourism, telecommunication, sport & entertainment, military defence, water systems and other types of infrastructure and services being a public domain.

• Receiving best practise solutions resulting from the longest experience of IPPP on the Polish PPP market.

• Access for your goods and services to offers brought to the market by the public sector.

• Advisory services delivered by individuals with relevant practical experience in their areas of expertise.

• Membership in the Chamber of Private Partners giving your organisation unique and fair advantages on the PPP investment market.

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• Opportunity to advertise your company in the only hard-copy public investments magazine issued in Poland which is dedicated to PPP.

• Minimizing of risk and financial exposure within investment strategy through outsourcing of services.

POSSIBLE PROJECTS FOR PPP

• parking projects – strongly desired by the Polish local governments: basing on the most recent PPP market’s report published by IPPP parking infrastructure is the 2ndmost often chosen investment area for a project in the PPP formula,

• public transport & outdoor, which are very well suited fields for PPP agreements also with a strong interest from the side of Polish local governments in developing such type of contracts – there is also an already signed and valid concession contract in Poland whose scope is providing public transport services and another for outdoor advertising on bus shelters which is currently in procurement phase,

• revitalization projects and lighting, whose objective is rising the quality of public infrastructure and adjusting it to new functions and challenges especially in regards to destroyed and forgotten

city areas or on the other hand to the most representative city parts adored by tourists and vital interchange stations,

• Road and transport infrastructure projects which are playing one of the most important roles in cities development making urban areas more approachable and capable of being a good place for doing business for both domestic and foreign companies.

• The „Forum PPP” Magazine. It is the only hard copy public investments magazine dedicated to PPPs and concessions issued on the Polish market. The magazine is issued since 2008 and is distributed exclusively and be name among more than 5000 individuals – the most influential representatives from the public administration (both governmental and local), financial institutions, universities, foreign diplomacies and private sector companies from such industry sectors as construction and engineering, transportation, power and energy, real estate, legal advisory, lightning, IT, transportation and many more.

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PPP in SWEDEN

The context for local employment development (LED) and joint public–private partnerships This section aims to collect information about the context for LED and public–private partnerships in place prior to the onset of the economic crisis. The aim is to provide a general impression of LED and public-private partnerships rather than a full picture of LED initiatives.

1.1 A description of local employment development in your country before the onset of the financial crisis

The system of local partnerships in Sweden is built around collaborations between companies, municipalities, government agencies and social partners. The municipalities and government agencies provide a basic support structure and funding for special projects. The system is built around a mix of bottom up and top down measures, in which the main goals and operations of government agencies are decided centrally by the government. These decisions are then adapted to fit the local situation, often in collaboration with local actors.

The same system applies to the social partners. The demarcation of collective agreements is national, but local agreements and negotiations also take place in order to adapt to a specific situation. With regards to local partnerships and LED, this means that while there are national collective agreements, if there are specific local issues these can be solved using local negotiations.

The geographical demarcation for a local partnership is often a municipality. Sweden is divided into 290 municipalities, who in turn are divided into 20 county councils. The municipalities in Sweden are responsible for the educational system within their geographical demarcation, and to ensure that the supply of educations corresponds to the needs of the individual, the needs of society and the needs of the local economy. They are also responsible for providing employment for the disabled and for those with special needs. In 2008 35,5% of the municipalities stated that they are part of a public-private partnership.

LED in Sweden are fairly flexible, and the types of activities that are provided will depend on the local context. However, the Public Employment Service (Arbetsförmedlingen) provide a wide range of active labour market programmes (ALMPs) which can be utilised and adapted in a local context. This will include training and educational activities, as well as mentoring and coaching activities. During the crisis Arbetsförmedlingen has worked closely with companies in sectors that were hard hit, for example by setting up a local desk at firms with a large number of notices.

Support to businesses are generally provided by the municipalities or by the Swedish Agency for Economic and Regional Growth (Tillväxtverket), which provides funding for local partnerships, for specific programmes and also administers the projects within the European Regional development fund.

The social partners have an important role in the Swedish labour market model, and LEDs are no exception. Collective agreements in some sectors include employee security agreement (trygghetsavtal), which provides help, active brokering services and financial support to

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workers who are dismissed. Trygghetsråden (Job Security Councils) can help redundant workers find new employments or help them start an enterprise. During the crisis some unions have signed agreements on decreased working time to decrease layoffs, and some of those included educations schemes as well.

Another partner in the LED are arbetsgivarringar (authors translation: employer rings).An employer ring is a network of employers and other organisations that help employees to overcome different adjustment processes. An employer ring operates in a local or regional context, and provides assistance for employee’s that require vocational rehabilitation or help finding new work. Through the network employees can switch between different work places and assignments in order to adapt to a new situation.

In order to strengthen the collaboration between the actors listed above the government created the position of “regional coordinators” (authors translation: regionala samordnare), which were filled by county governors. The regional coordinators’ assignment is to facilitate the collaboration between the various agencies involved in the local partnerships in sectors and regions more affected by notices and layoffs. In theory, the logic behind partnerships is simple: All organisations have strengths, but no organisation has all the strength required to do everything. Triggered by global perspectives and challenged by sustainability objectives, the United Nations Conference on Environment and Development (UNCED) in Rio de Janeiro in 1992 pointed out needs for corporate responsibility. In this conference, Private-public partnership, PPP, was identified as a potential way to work towards sustainability, especially as a way to emphasize a corporate responsibility commitment. Nowadays, organizations exist to satisfy the needs and interests of all their stakeholders, such as customers, markets, shareholders, as well as secondary stakeholders such as media, NGOs, and society at large. Addressing all stakeholders and working towards a sustainable business development makes PPP a potential solution, but also a source of challenges. Therefore, PPP has been also described as a form of art, given that today’s leaders have to manage their businesses in a world of complicated issues and uncertainties. So the question arises, what are the challenges and motivators from a corporate perspective? And within this context, what are the perceived conditions for PPP to be a part of SBD strategy? Food retailers have a special function given that they are the link between consumers and food producers and therefore have somewhat a negotiating and influencing role. The focus of this project is to describe different conditions for a perceived successful PPP from a retailer’s perspective. It is based on a comparative case analysis of three major retailing companies in Sweden (ICA, COOP and Axfood). Given that these retailers combined own more than 85% of the Swedish retail market for Fast Moving Consumer Goods, the findings in this project carry importance in the future development of the industry. NGO perspectives from Rädda Barnen, WWF and Naturskyddsföreningen have been taken into account to provide a holistic analysis. Further, this project is based on an exploratory and qualitative research ethodology, aiming at understanding underlying rationale and reasons beyond what a quantitative study could provide. Interviewees were chosen with representative persons in each organization. After the theoretical framework was developed in a careful review, we decided on a stakeholder and network theory, Charter & Polonksy’s (1995) concept of motivators and challenges and Sustainable Business Development strategies by Rainey (2006). This study aimed at understanding why and how PPP is approached, what are the motivators and challenges perceived. The findings are similar to the ones pointed out in previous

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literature, yet it seems that PPP is used rather as an operational tool than as part of a holistic management strategy such as Sustainable Business Development (SBD). Access to knowledge was found to be the main common motivator for PPP, whereas on the challenges side there was a wider confusion. The governance and structure of the organization seem to have a significant impact on how and why the PPP is managed, where network ties are rather weak. Further, it seems that long-term perspectives are not in the immediate stakeholder analysis, where private organizations need to be more inclusive and actively addressing stakeholder’s interests. PPP can be constructive and effective way to address sustainability issues, yet it should be taken seriously as the concept that it is; a holistic approach that requires respect, commitment, trust, transparency and reciprocity. Yet, this is highly dependent on time, assuming that the concept of time exists and is valid. Finally, clear objectives and constant dialogues with all stakeholders are key factors for a successful PPP. Motivations & challenges for PPP Mendleson & Polonsky (1995) argue that the willingness to enter into an external collaboration, both companies and non-profit organizations, has increased due to the fact that they realized that both parties benefit from these associations. Comprehension of these motivations is important as the authors stated “forming an alliance assumes both parties cooperate, mutually beneficial and are not adversial” (Mendleson & Polonsky, 1995, p. 15). The authors come up with five motivations for businesses; which emerge from strategic collaborations with NGOs (Mendleson & Polonsky, 1995, p. 9). This kind of cooperation is considered to increase marketer’s credibility of its products and their associated claims. Nongovernmental organizations also hold access to huge information or information networks as well as access to new markets. Hence this attribute can play an important role to benefit organizations with which they establish collaborations. Forming collaborations with NGOs may also trigger increased publicity, where meanwhile leading to better publicity and less criticism. In addition, non-profit organizations constitute important sources of education information and materials. Figure 6 illustrates the motivations and challenges arising from private-public partnerships facing businesses and non-profit organizations.

PPP Motivations and challenges

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PPP in NORWAY In February 2001, the Parliament in Norway discussed a white paper on transport. The Parliament then decided to find out whether PPP is a suitable model for financing and building roads in Norway. Three road projects have been selected to test if the PPP-model will lead to greater efficiency in road projects, and at the same time give the public sector the required control of the projects and political flexibility. The Government is also positive to test the PPP concept in the railway sector, but for the time being no project has been proposed. I will therefore focus on the road sector.

The Norwegian road network is comprehensive – because of long distances and a scattered distributed population. Norway has approximately 27.000 km state roads and 64.000 km regional and local roads. The total investments in the state road network in the 2003-budget is 6,7 billions Norwegian kroner (about 850 mill Euro). Road toll financing makes up about 25 % of the total investments.

The Ministry of Transport and Communications is at present preparing a revised white paper on transport, the National Transport Plan, that is scheduled for presentation to the Parliament in January 2004. Here, the total investments and the distribution among projects will be set for the next 10 years, both for the road and the railway sector.

The Norwegian PPP-model

The PPP-company in the Norwegian PPP-model will receive an annual unitary payment, but with the actual level of payment being varied according to performance against a number of pre-defined criteria. These criteria are related to our political goals of good accesibility, high performance and a high level of traffic safety on the road network. The annual payment consists of both government funding and toll money.

The payment mechanism will be based on four separate elements: 1. Availability payment for the road being accessible to certain standards

2. Performance payments based on the operation and maintenance of the road being of a specified standard

3. Safety payments based on the safety record of the road in comparison to other comparable roads in Norway

4. Traffic payments relating to traffic that is significantly higher than the estimated forecasts

The most important difference from the traditional model for road construction in Norway is that in the PPP-model the private sector will have the entire responsibility to deliver a service,

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while today the private sector is a supplier of single, specified tasks. In PPP-projects the authorities will place orders and make demands on what to be delivered, as opposed to demands on how to deliver it.

The PPP-contract will give the PPP-company full responsibility to ensure that the project road is perceived by the users and the surrounding population to have good aesthetic and environmental standards over the life of the contract.

The PPP-model assures a value for money allocation of risk between the public and private sectors. The risk allocation will be clearly defined in the PPP-contract. The Norwegian PPP-model assures that risk is allocated to the party best able to manage the different risk elements. Risk factors over which the PPP-company has little or no influence will be allocated to the public sector. The traffic risk will – neither in form of toll collection nor shadow toll – be allocated to the PPP-company.

The first PPP-project in Norway

The Norwegian Public Roads Administration has just finished the process of awarding the PPP-contract for the first of the three state highways which are to be developed as PPP-projects in Norway. This contract is the first PPP-contract ever in Norway, and the project serves as a pilot scheme for the whole country. The PPP-contract has been awarded to Orkdalsvegen AS after the candidates have gone through a tender period and after negotiations according to public procurement regulations have been carried out between the state and the selected PPP-company. The candidates have been competing on the annual payments and the economically most advantageous tender from the state’s point of view has be awarded the project.

This first project (E39 Klett-Baardshaug) is situated in Soer-Troendelag County in the middle of Norway. The distanse between Klett and Baardshaug is 27 kilomter. The estimated value of the construction element of the contract is 1-1,2 billion Norwegian kroner. Orkdalsvegen AS will be responsible for building, operating and keeping the road in repair for a defined period of time (20-25 years). In addition, the company will be responsible for handing over the road to the Government in a predefined technical condition at the end of the concession period. The road shall at the end of the concession period comply with pre-defined functional requirements.

As I mentioned earlier, the traffic risk will not be allocated to the company. The toll company for the first project is a state owned non-profit company which has entered into a separate agreement with The Directorate of Public Roads. The agreement regulates how the toll funding will be used to partly finance the road development. The PPP-company will be paid solely based on the PPP-contract and the payment mechanism and a payment profile specified in this contract. The Norwegian Parliament agreed to this project in June last year. The contract was with Orkdalsvegen AS was signed in March 2003. Orkdalsvegen AS is owned by the Swedish Skanska BOT and the British Laing Investments.

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The two other road projects to be procured as PPP-projects in Norway are E39 Lyngdal-Flekkefjord in Vest-Agder County and the E18 Grimstad-Kristiansand in Aust-Agder County, both in the southern part of Norway. The pre-qualification for the former started earlier this year. The latter project has not yet been defined, but it will be the most extensive of the three projects, and the pre-qualification for this project will most likely start in 2003.

The Norwegian government has plans for extensive investments in the transport network in the years to come. We regard the PPP-model as one of several measures to increase the efficiency of our investments, and thereby give people and industry and trade better public services. The government has recently also got the Parliament´s approval to another extensive reform – which involves setting out all the construction, operation and maintenance of public roads to open competition in the market. This means that from 1 January 2003 all new projects previously conducted by the Public Roads Administration are to be presented to the private market. In addition, the production department of the Public Roads Administration is from 1 January 2003 organised as a state owned limited company, that will have to compete on equal terms with private companies.

Recent years experience abroad has revealed that realisation of transportation projects by the private sector has led to savings, access to new sources of funding and the moving ahead of high-priority projects. Hopefully we will experience these benefits from using PPP in Norway too. In Norway (unlike in EU) there are no limitations to public loans. To prove the efficiency of infrastructure building and maintenance an elaborate PPP model was developed to be applied on the test projects. The experience from the three Norwegian test projects is not given a full social evaluation, but it is evaluated within the scope of socioeconomic efficiency. Data from comparable traditionally funded projects and interviews with stakeholders and leaders in government and private organisations have been used in the analyses. Among the questions asked are the following. 1) Has the construction process been more efficient due to the incentives of the PPP model? 2) Has the PPP process lead to innovative solutions and to optimisation of life cycle costs? 3) Has the model lead to the transference of risk different from traditional models? 4) Has the valuing of increased risk lead to a higher price compared to traditional projects? 5) Have the private loans been more expensive than similar public financing? 6) Has competition in the bidding and negotiation process been fair and efficient? Although Norwegian experience is quite limited we hopefully may give some answers of general interest.

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Concluding remarks The test projects have provided a number of positive experiences, which can be brought into existence as PPP projects or under other contract forms. The PPP model that was tested in the Norwegian test projects implies private financing and transference of cost responsibility to the PPP company. The efficiency gains, which are due to treating of the project as one, the coupling of planning, construction, operation and maintenance together with increased project size, can be carried out independently of private financing. The most important positive asset of private financing is the independency of the annual public budgets, which in some cases can ruin the continuity of a conventional project. This may also be realised in other ways, e.g. through project financing. By this the government will make the total building budget available for the private concessioner from the start. However, there are some efficiency drives that will not be realised in this way, like the role of banks and professional investors making demands towards the SPV concerning the management of the project. Financing by tolls is not necessary for a PPP project – even if it is frequently a part of it. In many cases it can be quite disadvantageous since it might reduce the social benefits, especially if tolling does not have a positive effect on traffic concerning congestion or other external costs.