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Public-Private Partnership and Public Procurement in Ukraine

Public-Private Partnership and Public Procurement in Ukraine. Speaker: Wolfram Rehbock 12 th of July, 2012. About Arzinger. Content. General Overview of the PPP Legal Framework Single PPP Forms Concession Joint activity Product Distribution Agreements III. Public Procurement.

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Public-Private Partnership and Public Procurement in Ukraine

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  1. Public-Private Partnership and Public Procurement in Ukraine Speaker:Wolfram Rehbock12thof July, 2012 Колонтитул презентации

  2. About Arzinger Public-Private Partnership in Ukraine

  3. Content • General Overview of the PPP Legal Framework • Single PPP Forms • Concession • Joint activity • Product Distribution Agreements III. Public Procurement Public-Private Partnership and Public Procurement in Ukraine

  4. I. General Overview of the PPP Legal Framework Колонтитул презентации

  5. Legal Regulation: • Law “On State - Private Partnership” dd. July 1, 2010  No. 2404-VI; • Civil Code, Chapter 76 – joint activity; • Law “On Product Distribution Agreements” dd. September 14, 1999 No. 1039-XIV; • Law “On Concessions” dd. July 16, 1999  No. 997-XIV; • Law “On Concession for Motor Road Construction and/or Operation“ dd. December 14, 1999 No. 1286-XIV; • Law “On the Peculiarities of Leasing of the Objects of Centralized Water-, Heat Supply and Sewage System which are Municipally-owned” dd. October 21, 2010 No. 2624-VI; • Law “On the Peculiarities of Lease or Concession of State-Owned Fuel and Energy Sector Facilities” dd. July 8, 2011 No. 3687-VI. Public-Private Partnership and Public Procurement in Ukraine

  6. Development of PPP Legislation in 2011-2012 • Procedure on reporting on PPP contract execution - February 9, 2011 No. 81 • Methodology to identify PPP risks - February 16, 2011 No. 232 • Procedure on providing PPP state support - March 17, 2011 No. 279 • Tender procedure on determining a private partner - April, 11 2011 No. 384 • Efficiency analysis for PPP implementation - April, 11 2011 No. 384 • PPP Feasibility study form and Methodology for analysis of PPP efficiency - March 30, 2012 No. 255 Public-Private Partnership and Public Procurement in Ukraine

  7. PPP Definition, Art.1 of the Law “On PPP” • State-private partnership (hereinafter - PPP) is the cooperation between the state of Ukraine, the Autonomous Republic of Crimea, territorial communities as represented by appropriate state and local self-government authorities (public partners) and legal entities, other than state and municipal companies, and individual entrepreneurs (private partners) on the basis of an agreement and pursuant to the procedure established by this Law and by other legislative acts. Public-Private Partnership and Public Procurement in Ukraine

  8. Parties Public-Private Partnership and Public Procurement in Ukraine

  9. PPP Objects • Objects of state-private partnership shall be state and municipally owned objects or those belonging to the Autonomous Republic of Crimea. • Objects of state-private partnership can be the following: • existing ones, in particular, reproducible (via reconstruction, modernization, technical re-equipment) objects, including subsurface sites etc; • created or purchased objects. • Assignments of state and municipally owned objects or of those belonging to the Autonomous Republic of Crimea to a private partner for execution of the agreement concluded within the framework of PPP does not provide for transfer of the ownership of these objects to the private partner. • The ownership of objects which have been finished, rebuilt or reconstructed within the framework of PPP is that of the public partner. Public-Private Partnership and Public Procurement in Ukraine

  10. PPP Features, Art. 1 of the PPP Law • Provision of higher technical and economic efficiency rates of activities as compared with such activities exercised by a public partner without support of a private partner /PPP Feasibility study form and Methodology for analysis of PPP efficiency, Resolution No. 255/ • Duration of relationships (from 5 to 50 years); • Assignment of part of the risks to a private partner in the process of PPP implementation. Public-Private Partnership and Public Procurement in Ukraine

  11. PPP Application Area • Exploration, prospecting of mineral deposits and production thereof; • Heat production, transportation and supply, and natural gas distribution and supply; • Construction and/or operation of highways, roads, railroads, runways at airports, bridges, overhead roads, tunnels and subways, river and sea ports and infrastructures thereof; • Machine building; • Water collection, purification and distribution; • Health care; • Tourism, leisure, recreation, culture and sports; • Waste management; • Electric power production, distribution and supply; • Property management; • Other areas of activities, except for the economic activities which may only be carried out exclusively by state enterprises, institutions and organizations according to the law. Public-Private Partnership and Public Procurement in Ukraine

  12. Forms of State Support of PPP • Granting state guarantees, guarantees of the Autonomous Republic of Crimea or of local self-government authorities*; • Financing on account of state or local budgets or other sources pursuant to national and local programs; • Other forms provided for by law. * - the CMU approved the Procedure on providing state support to PPP projects regarding state-owned facilities by its Resolution No. 279 dated 17 March 2011. The state support for communal property projects shall be provided in accordance with the procedure approved by the relevant local authority. Public-Private Partnership and Public Procurement in Ukraine

  13. II. Single PPP Forms Колонтитул презентации

  14. Contractual Forms for PPP Implementation: • Concession; • Joint activity agreement; • Product distribution agreement; • Other contractual forms. * BOT (Build-Operate-Transfer) and institutional PPP forms are excluded from the PPP Law. Public-Private Partnership and Public Procurement in Ukraine

  15. 1. Concession Колонтитул презентации

  16. Concession, Art. 1 of the Law “On Concessions” • Concession is granting of rights for creation (construction) and (or) management (operation) of a concession object by an authorized executive or self-government body to a legal entity or an individual (entrepreneur). • Such granting is possible only provided presence of all below stated requirements: • for satisfaction of public demand; • on basis of a concession agreement; • on a paid basis; • on a term basis; • under condition that concessionaire is obliged to create (construct) and (or) manage (operate) concession object, to take material liability and possible business risks. Public-Private Partnership and Public Procurement in Ukraine

  17. Concession Objects • Concession is granted for state-owned and municipal property. Such property can be: • property of enterprises being integral property complexes or system of integral property complexes which ensure complex provision of services; • unfinished construction objects and laid-up construction objects which can be completed with the purpose of using them for public consumption; • objects specially built in accordance with terms and conditions of concession agreements for public consumption. • List of state-owned property which can be currently transferred into concession is approved by the Resolution of the CMU dd. December 11, 1999 No. 2293. Public-Private Partnership and Public Procurement in Ukraine

  18. 2. Joint activity Колонтитул презентации

  19. Joint Activity Agreement ( JA) • Under a joint activity agreement, which requires written form, the parties (partners) are obliged to exercise joint activity without establishment of a legal entity in order to achieve certain goal not contradicting the law (Civil Code, Art.1130) • The joint activity can be exercised: • on basis of capital consolidation (simple partnership); or • without consolidation of partners’ capitals. Public-Private Partnership and Public Procurement in Ukraine

  20. Joint Activity • Simple partnership – joint activity, exercised on basis of capital consolidation without establishment of a legal entity. • Partner’s contribution is everything contributed to the joint activity (joint property), including monetary funds, other property, professional and other knowledge, skills and abilities, as well as business reputation and connections (Part 1 Article 1133 of Civil Code) Public-Private Partnership and Public Procurement in Ukraine

  21. 3. Product Distribution Agreements Колонтитул презентации

  22. Product Distribution Agreement (PDA) • The PDA Law dd. September 14, 1999, Art.4 Under the product distribution agreement one party – Ukraine (hereinafter – the state) – for a certain period of time authorizes the other party – investor – to conduct exploration, survey and mining operations on a certain site (sites) of mineral resources and to perform works connected to the agreement, and the investor is obliged to perform works at its own account and risk with further reimbursement of expenses and receipt of payment (compensation) in kind of remunerative production. Public-Private Partnership and Public Procurement in Ukraine

  23. Products: • Products manufactured – total volume of products extracted in accordance with product distribution agreement and delivered to the measurement point. • Compensational products – part of products manufactured, which becomes a property of the investors as compensation for their expenses – no more than 70% of all products manufactured for a calculation period (1 quarter) • Profitable products– part of products manufactured, which is being distributed between the state and the investor (the gap between the products manufactured and compensational products) Public-Private Partnership and Public Procurement in Ukraine

  24. Product Distribution Products manufactured shall be distributed between the parties to the agreement: the state and the investor(s) according to terms and conditions of the agreement as follows: • determination of whole amount of the manufactured (mined) products and their value; • determination the part of compensational products (which become property of the investor as compensation for its expenses); • distribution of profitable products between the state and the investor; • transfer of the part of the manufactured products to the state in accordance with terms and conditions of the agreement or its monetary equivalent. Public-Private Partnership and Public Procurement in Ukraine

  25. Product Distribution Scheme: Public-Private Partnership and Public Procurement in Ukraine

  26. III. Public Procurement Колонтитул презентации

  27. Legal Framework of Public Procurement • Law “On Implementation of Public Procurement” dd. June 1, 2010 No. 2289-VI with further amendments • Executive authority on coordination of government procurement - The Ministry of Economic development and Trade of Ukraine • The procurement contract template is approved by the Ministry of Economy (Order dd. July 27, 2010 No. 925) Public-Private Partnership and Public Procurement in Ukraine

  28. Customers • Customer could be any government funds administrator performing state procurement: • State authorities; • Authorities of the Autonomous Republic of Crimea; • Municipal authorities; • State enterprises, public utility enterprise; • Commercial entity under condition that state/municipal share or the state/municipal entities’ share in their charter capital is exceeding 50%. Public-Private Partnership and Public Procurement in Ukraine

  29. Tender Thresholds • The Law on Procurement sets the tender thresholds at the following level: • For goods and services – UAH 100.000 (in construction – UAH 300.000 ) • For works – UAH 1.000.000. Public-Private Partnership and Public Procurement in Ukraine

  30. Public Procurement Announcement • Public Procurement Reporter information bulletin; and • Web-site on public procurement/www.tender.me.gov.ua/ (after announcement in the Public Procurement Reporter, but not later than 30 days before disclosure of tender offers) • International information publication on issues of public procurement of the Ministry of Economy and on the web-site of the Ministry of Economy in English in case the sum of the expected public procurement exceeds: • for goods – EUR 200.000 • for services – EUR 300.000 • for works – EUR 500.000 Public-Private Partnership and Public Procurement in Ukraine

  31. Bid Security • The right of the customer to specify the requirements on tender bid security, not exceeding: • 1 % of the expected purchase sum - for procurement of works; • 5 % - for procurement of goods and services. Public-Private Partnership and Public Procurement in Ukraine

  32. Types of Procurement Procedures • Open tenders • Two-stage tenders (first stage - customer receives participants’ proposals, holds consultations; second stage - prepares the complete tender documentation) • Request for price proposals – quotations (concerning goods and services for which the stably-acting market exists, and the procurement price doesn’t exceed UAH 200.000) • Preliminary assessment of participants (the subsequent participation in the competitive bidding is allowed for all participants which got through the preliminary assessment) • Procurement from one participant (where no competition exists) Public-Private Partnership and Public Procurement in Ukraine

  33. Appeal of Procurement Procedures • The right to appeal the customer’s decision, action or lack of action contradicting the public procurement legislation to the: • Customer itself • Appellate body - the Antimonopoly Committee of Ukraine • Court Public-Private Partnership and Public Procurement in Ukraine

  34. 1. Appeal to the Customer • Is not an obligatory stage • Doesn’t prevent from appealing to the other appellate body • Free of charge • The final customer’s decision may be immediately appealed at the court Public-Private Partnership and Public Procurement in Ukraine

  35. 2. Appeal to the Antimonopoly Committee • Within 14 days after the violation of rights or the respective customer’s decision • Before conclusion of procurement agreement • Appeal fee: • for appeal of goods and services‘ procurement – UAH 5.000 • for appeal of works’ procurement – UAH 15.000 • Final Committee’s decision may be appealed to the court within 30 days Public-Private Partnership and Public Procurement in Ukraine

  36. 3. Appeal to the Court • Customer’s decision – Circuit Administrative Court at the customer‘s location • Committee‘s decision - Kyiv Circuit Administrative Court • Term – within 30 days • Appeal of concluded procurement agreements – are considered exclusively by courts Public-Private Partnership and Public Procurement in Ukraine

  37. Thank you for attention! Колонтитул презентации

  38. Our Contacts Head Office Eurasia Business Centre 75 Zhylyanska St., 5th Floor 01032 Kyiv, Ukraine Tel.: +38 (044) 390 55 33 Fax. +38 (044) 390 55 40 Email: mail@arzinger.ua URL: www.arzinger.ua Wolfram Rehbock, Senior Partner West Ukrainian Branch 6 GeneralaChuprynky St., Office 1 79013 Lviv, Ukraine Tel.: +38 (032) 242 96 96 Fax: +38 (032) 242 96 95 Wolfram.Rehbock@arzinger.ua South Ukrainian Branch Pokrovsky Business Centre 33 Zhukovskogo St., 6th Floor, Office 601 65045 Odesa, Ukraine  Tel./Fax: +38 (048) 711 74 74

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