Assessment of the Public Private Partnership in the Water by c0aAXw

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									            Irina Zapatrina,
    Chairman of the Board,
Doctor of economic science
                               1
I
N   Determining influence on
F
R   attractiveness of a territory
A                                                   P
S   • High capital intensity of project, its long
T                                                   P
R
      implementation and payback period
U                                                   P
C   High social importance and
T
U   macroeconomic effect
R
E   • Complexity of project implementation
      management, high risks


                                                        2
            • Weakly developed infrastructure (highways and railways, airports, heat and water supplying
              systems, water drain)
            • Absence of necessary financial resources, lost experience of implementation of large
The State     systematic projects, imperfect technologies




            • High-capacity market for management services, introduction of new high technologies,
              equipment supply
            • Opportunity to ensure systematic development of business due to implementation of long-
 Private      term capital-intensive projects at monopoly markets




            • Improvement of living conditions, increasing of attractiveness of territory, increasing of
              employment

 Society    • Improvement of environment and as a result increasing of length and quality of life




                                                                                                           3
                  Draft Law of Ukraine «On fundamental of state-private partnership»


          Approved and rejected by the Parliament, sent for improvement




         Concept of development of state-private partnership in housing and communal sector


                        Approved by the resolution of the Cabinet




Draft Law on peculiarities of rent and concession of DH, water supply and water drain object, other draft
                                                  laws

   Initiation of PPP projects in housing and communal sector and other fields of activity
                    (concession, rent, establishment of joint ventures …)



                                                                                                            4
                                                              Local government:
The state:
                                                        1. Reliability and quality
1. Reliability and quality
                                                                 2. Social aspect
2. Social aspect
                                                       3. Minimization of tariffs
3. Minimization of state support
                                                                4. Capitalization
4. Energy efficiency
                                                           5. Profit (sometimes)
                                     Communal
                                   infrastructure


Private:
                                                                  Consumers:
1. Profit
                                                    1. Reliability and quality
2. «Eternal business»
                                                    2. Minimization of tariffs
3. Capitalization



                                                                                     5
                   Motivation                       Constraints

 State    New energy efficient           Loss of controllability
          technologies                   Responsibility for reliability
          Decreasing of budget           and quality




                                                                          WRONG EXPECTATIONS
          support
 Local    Escape from «headache»         Loss of controllability of
govern-   Attraction of financial        infrastructure
 ment     resources, new technologies,   Loss of «earnings»
          management                     Impossibility to evaluate
                                         efficiency
Private   Profit,                        Imperfection of regulation
          «Long business»                (tariffs, rules, strategies)
Consu-    Lack of understanding and related fears
 mer




                                                                                               6
Development of institutional environment



Accounting and control


Improvement of PPP methodology


Dialogue with consumers, formation of correct
expectations

Stimulation of private investors to implementation of
PPP projects


                                                        7
Improvement of state regulation
system at the natural monopolies
markets (depolitization and
professionalization of tariff formation,
licensing, access, standards)



Independent regulating commissions



                                           8
   Inventory and и market evaluation of housing and communal
              objects– trustworthiness of information



                 Installation of metering devises



Development of plans of infrastructure development; monitoring of
                      their implementation



                            RESULT:



      Clear formulation of objectives of PPP mechanisms use



   Choice of adequate mechanisms and formation of adequate
                    indicators of efficiency




                                                                    9
Development of PPP mechanisms and their legal
regulation

Trainings (state servants, local government,
enterprises)

Trainings (state servants, local government,
enterprises)

Trainings (state servants, local government,
enterprises)

Development of corporate culture of business
conduction


                                                10
Active promotion in mass media




Spreading of positive experience of PPP




Organization of public discussions



Result:
Overcoming the resistance of population to development of PPP



                                                                11
• Improvement of state support system of the sector ( priorities of
  budget financing, transition to support based on payback, co-
  financing of projects implemented in the framework of PPP, …)



• Tax benefits ( special regime of VAT, exemption from tax on profit
  from investments into infrastructure modernization)




• Providing state guaranties for project implementation




                                                                       12
• Threatening                       • Absence of funds
  technical state of                 for modernization
  infrastructure                    of infrastructure in
                                     the state and local
                                                budgets



                         the
                         Center


• Absence of                      • Negative perception
  experience of                                of private
  attraction of credit                         operators
  facilities at the                 participation by the
  world markets of                            population
  capital



      Institutional potential




      Avoidance of political
     influence and populism



     Long period of formation
    and implementation of PPP
             projects
                     Imperfection of
                       legislation,
                    absence of proven
                       models and
Negative attitude      mechanisms          Bureaucratic
of the society to                          difficulties in
  presence of                                 projects
private sector in                        implementation.
 infrastructure                             Corruption

                     Cautious attitude
                      to participation
                     in PPP of serious
                     private operators
                               Search for optimal
                             variants of cooperation




Trainings, clarifications,
                                                         Deep professional
 spreading of positive
                                                       elaboration of projects
     experience




                                           Creation of competitive
         Ensuring of transparency
                                           conditions for attraction
              and publicity
                                             of the private sector
                                         State,
             Science, civil
                                       Local
                society
                                    government



                               Private
                              operator




Modernization of infrastructure, ensuring of
proper level of life support of the population
Strategic Council




  Supervisory
     Board




   Executive
     Board




    Founder
    • Scientific-methodological support
1   • Development of normative base


    • Trainings, increasing of qualification
2   • Public dialog



    • Formation and support of PPP projects
3


    • Attraction of credit resources for pool of
4     infrastructure projects
                                   Approval of
                                   legislative
                  Support of       acts, state
                  draft acts,      programs,
                  ministries,      budget
                  local
Elaboration       government,
and expertise     the Cabinet of
of draft acts -   Ministers of
SCIENCE           Ukraine
 Global              Central                 Local
   level                level                level

                                         Training seminars

                       Training of
                   participants of PPP
  Learning the                             Joint work on
  experience,                            implementation of
   analyses of                              PPP project
opportunities of
implementation
                     Conferences,
                                         Public discussions
                     Round tables
                                             Conduction of
                      Preparation of
Choice of optimal                          competition with
                       competitive
mechanism of PPP                           attraction of wide
                        conditions
                                         circle of participants




                    Support of project      Conclusion of
                     implementation          agreement
                                                         Utilities
Utilities
                Local
                gover
                                             Develop-        Local
                nment
                                               ment          gover
                                              Agency         nment
     Develop-
       ment
      Agency
                        Centr
                        al PIG
                                       PPP Center



                                                        Cabinet of
                                                        Ministers
                                                        of Ukraine
                                 IFO
1.   Introduction of advanced experience and new technologies

2.   Attraction of financial means (own and borrowed)

3.   Overcoming of fragmentation of sector’s enterprises and
     efficiency increasing

4.   Avoidance of populism in housing and communal sector.
     Formation of «lobbyists» of reforms

5.   Increasing of general professional level in management of
     enterprises of housing and communal sector due to the
     competition of operators

6.   Quick and adequate reaction on the sector’s demands,
     technological, social and ecological challanges




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