PUBLIC-PRIVATE PARTNERSHIP IN SLOVENIA

1. PUBLIC-PRIVATE PARTNERSHIP IN SLOVENIA Miranda Groff Ferjančič ICPE Seminar 2012

2. PPP is a win-win situation The PPP contract can be closed only when public and private sector have interest for that (public sector needs to get better services, and private sector needs to earn money).

3. Legislation in Slovenia • The special law on PPP was adopted in November 2006, came into force in March 2007 • Regulation on Uniform Methodology for Preparation and Treatment of Investment Documentation in Public Finance • Rules on Contents of Justifications on Realization of Investment on PPP

4. The PPP Act • an Umbrella Act • Clear destinction between public procurement and PPP • PPP is wider definition as concession and involves also public power and licenses or authorizations of practices.

5. Main Stress • Definition of PPP • Service concessions are covered with the PP Act • Private sector can play active role • Obligatory market test for project above 5,2 mio EUR

6. Definition of PPP Public-private partnership represents • a relationship involving private investment in public projects and/or • public co-financing of private projects that are in public interest, and such relationship is formed • between public and private partners in connection with the construction, maintenance and operation of public infrastructure or • other projects that are in public interest, and in connection with the associated provision of commercial and other public services or activities provided in a way and under the conditions applicable to commercial public services, or • of other activities where their provision is in the public interest, or • other investment of private or private and public funds in the construction of structures and facilities that are in part or entirely in the public interest, or • in activities where their provision is in the public interest.

7. Main goals of the Act: • to increase investments in public infrastructure, • discharge of public finance • increase welfare of citizens • to get infrastructure on time, without costs overruns, • to get better service in terms of quality and quantity. • ensure legal certainty to private and public sector

8. Slovenia and PPP • PPP is a known way of collaboration between public and private sector in Slovenia. • The main contracts are in the field of service concessions. • Municipalities are more advanced in this field

9. The future is with PPP Resolution on National Development Projects for the Period 2007-2023 involves 25 large projects where public sector funds are envisaged; Projects in the pipeline: - railway system must be refurbished, - we consider to find a concessioner for highways, - other investments in dormitories, hospitals…

10. Where we stand in Slovenia: • In 2010 we reached financial closure for one project: re-organization of a public institute to a private company with involvement of private sector. • second phase of investment finshed in 2012 • a model for the future • A large project in the railway sector is under examination by the experts of EIB – we will try to find private investor but we shall see how much risk he will be willing to take

11. Main macroeconomic obstacles: • Small real-estate market • Alternative use of infrastructure is difficult to find • Small investments (few investment above 20 millions EUR) • As a result: the length of PPP Agreement should be the same as lifetime of the project (no residual value at the end of the agreement)

12. Identified microeconomic obstacles: • Lack of investment project prepared in accordance with the legislation, • Lack of knowledge about combining the EU funds and private funds, • Lack of accounting skills.