I . Zapatrina , Chairman of the Board of

1. Experience and perspectives of implementation of state-private partnership (SPP) projects in housing and communal sector I. Zapatrina, Chairman of the Board of Ukrainian Public-Private Partnership Development Support Center, doctor of economic sciences

2. State-private partnership in the world, 2010 Опыт и перспективы реализации проектов государственно-частного партнерства в жилищно-коммунальном хозяйстве И.В. Запатрина, Председатель Правления Украинского центра содействия развитию публично-частного партнерства, докт.экон.наук

3. SPP: objective, instruments, principles Objective– satisfaction of interests of the society, implementation of projects of social importance, increasing of the efficiency of public management system Instrumentsof achieving the objective – attraction of financial resources, intellectual potential, experience, competence and technologies of private sector by the public sector. Principles: • Trust, observance of obligations • Diversification of risks • Consolidation of finances, competence, intellectual potential, technologies

4. Current opportunities on implementation of infrastructure projects Infrastructure project SPP Budget Credits of IFI • - Long period of preparation and signing of agreements • Budget guaranties • insufficient qualification of local personnel (projects preparation, negotiations, projects implementation) • - Decreasing of the budget load and tariffs • Increasing of number of investment projects to be implemented • Attraction of new technologies, experience and knowledge • Employment increasing • Budget load • Limited number of projects • Uncertainty in stable, rhythmical financing • Absence of stimulus of efficient project management

5. What SPP could bring? 1) Attraction of financial resources, experience, technologies 2) Optimization of budget expenditures for infrastructure 3) Renewal of infrastructure, decreasing of logistics expenditures of business (34% in cost – Peruу, 10% - USA) 4) Increasing of availability, quality and reliability of services 5) Employment increasing, internal market development 6) Speed up of economic growth Effect on GDP growth of a 1% increase in infrastructure assets (percent) Source: J.L.Guasch “Granting and Renegotiating Infrastructure Concession”, WBI Development Studies, 2004 7) Assistance in economic reforms

6. Barriers for implementation of infrastructure SPP projects at the example of Latin America 1. Regulatory risks and their influence on the capital cost: • Increasing of capital attraction costs by 2-6% in certain countries; • Increasing of capital attraction costs by 5% Tariffs increasing by 20% Источник: J.L.Guasch “Granting and Renegotiating Infrastructure Concession”, WBI Development Studies, 2004

7. Barriers for implementation of infrastructure SPP projects at the example of Latin America • Law qualification of public sector 1000 contracts, 1980-2000 Source: J.L.Guasch “Granting and Renegotiating Infrastructure Concession”, WBI Development Studies, 2004

8. Readiness of public sector to SPP Initiators of renegotiations Some of the renegotiation outcomes Source: J.L.Guasch “Granting and Renegotiating Infrastructure Concession”, WBI Development Studies, 2004

9. Incidence of renegotiated concessions Source: J.L.Guasch “Granting and Renegotiating Infrastructure Concession”, WBI Development Studies, 2004

10. Barriers for implementation of infrastructure SPP projects at the example of Latin America • Political instability (change of priorities, review of economic course) • Underdevelopment of institutional environment and low quality of institutes • Unreadiness of public authority to adequate reaction on aggressive private operators • Speeding up of GPP initiation process and their contractual mounting • Negative attitude of population to the private sector • Too high expectations related to SPP

11. Lessons for Ukraine • Creation of conditions for SPP(reforms, system modernization of legislation, strict observance of laws and agreements) • Development of institutional environment(quality of institutes, science, self-regulated organizations) • To hurry slowly(to start with small pilot projects – housing and communal sector, untraditional energy sector) • Formation of trust, understanding and mutual responsibilityin relations «society – state – private business»

12. Concept of GPP development in housing and communal sector Tasks: • Creation of conditions for GPP development in housing and communal sector(modernization of legislation, development of state regulation system, justification and ability to forecast the tariffs). • Development of new models and mechanismso private sector attraction to housing and communal sector. • Determination of ways and directions of budget supportas an element of SPP stimulation inhousing and communal sector and the criteria of providing such support. • Widening of positive experienceof GPPP mechanisms application inhousing and communal sector. • Determination ofstages, principles and peculiaritiesof introduction of GPPP mechanisms inhousing and communal sectorof Ukraine.

13. Risks in implementation of SPP projects in housing and communal sector • Imperfect legislation(taxation, tariffs, controlling bodies, non-transparency, etc.) • Lack of properinstitutional infrastructure(preparation, selection, monitoring of GPP projects) • Insufficient qualificationof public authorities, loss of institutional memory • Political instability, lack of continuity • Lack of experiencein implementation of GPPP projects • Negative attitude of the societyto the private business • Overexpectations of municipalities and the state regarding private partners • Decentralizationof water supply and sanitation sector and heat supply sector • High risks for officialsrelated to decision making, non-adequate remuneration for the qualified activity

14. Encouraging factors • Interestof the state and municipalities to SPP because of lack of budget financing • The law on National regulation commissionat the communal services market • Experience of formation of investment projects poolin the framework ofthe World Bank project (Ministry of housing and communal services) • Interest of IFI to crediting of energy saving projects(EIB, IBRD, EBRD, Swiss initiative, Fund of clear technologies) • Experience of regional companies establishment(Water of Donbass) • Concept documents (law on SPP, concept of state regulation, concept of SPP in housing and communal sector, program of reforming of housing and communal sector, draft laws in field of housing and communal services) • Existence ofpositive and negative examplesof SPP • High potential on implementation of SPP projects(waste water treatment, replacement of pumps, accounting …), influence of situation in the country on ecological situation in the neighboring countries (general water resources)

15. What could be expected by implementing SPPP projects in housing and communal sector? Introduction of the best experience, new technologies Attraction of financial resources (own and loaned) for modernization of infrastructure Overcoming fragmentation of enterprises of heat and water supply, efficiency increasing Avoiding populism regarding housing and communal sector. Formation of «lobbyists» of reforms Increasing of general level of professionalism in infrastructure enterprises management due to operators competition Quick and adequate reaction on economy’s demands, technological, social and ecological challenges

16. Key factors of SPP development in housing and communal sector • Qualificationof public sector • Institutionalization of SPPP market • Systematic qualifiedwork on legislation improvement • Establishment of national regulation commission and ensuring of professional regulation • Introduction of nondiscriminatory transparent procedures • Professinal and responsible dialogue with the society • Partnership with science

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