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PPP framework, features and advantages
05.09.2018 | 12:05 | Investments department

Public-private partnership:

• cooperation between public and private partners

public partner - state or local communities represented by relevant public bodies, or local self-government bodies;

private partner - legal entities, save for state-owned and municipal enterprises, or sole proprietors;

• based on the contract

within the framework of the implementation of public-private partnership agreement can conclude agreements on concession, joint activity, property management, mixed contract, other contracts.

Objects of public-private partnership are objects that are in state or communal ownership.

According to the Law, the objects of public-private partnership can be:

• existing facilities in public or municipal ownership, or owned by the Autonomous Republic of Crimea, including subsurface plots, in particular facilities to be renovated (through rebuilding, modernization, or technical upgrade);

• facilities created or acquired as a result of performing the public-private partnership agreement.

The main features of the PPP mechanism, which determine its effectiveness in attracting private business:

  • granting the rights for management (use, or operation) of the partnership property, or acquisition, creation (construction, renovation, modernization) of the public-private partnership property, with further management (use, or operation), subject to the private partner assuming and performing investment obligations in accordance with the public-private partnership agreement;
  • long-term relations (5 to 50 years);
  • transfer of some risks in the course of public–private partnership to the private partner;
  • private partner’s introduction of investments to the targets of the partnership from legitimate sources.

Advantages of the PPP mechanism:

• improving the efficiency of management of state and communal property objects;

• improving the quality of public services for the population and business;

• creation of conditions for the use of the latest technologies and introduction of innovations;

• reduction of the burden on the state budget and optimization of budget expenditures on provision of public services and maintenance of budgetary institutions.