After a period in which it seemed that the public authorities were determined to develop strategic investment projects through PPPs, the situation after two years is as follows: no actions have been taken in respect to more than 50% of them, and only a number of three PPPs are in more advanced stages of materialization. The actual works were not started at any PPP.
More than two years ago we were writing an editorial about Public-Private Partnerships (PPPs), due to the fact that in the first part of 2018 (more precisely, in May 2018) a new normative act was published and entered into force (more precisely the Government Emergency Ordinance) which was intended to give a major impetus to the construction of strategic investment projects in transport infrastructure, medical, energy, etc.
Given that the previous law did not attract private partners in the development of projects, the new legal framework was intended to boost PPPs. We were saying at the time that the public-private partnership can be applied for the development of projects in the field of transport (highways, ports, stations, bus stations, airports, rail transport, subway, port terminal, etc.), health (hospitals, etc.), education (kindergartens, schools, etc.), sports, hotel or environment, in other words, any project that can be developed jointly by a public authority (public partner) and a private partner.
The new normative act brought a series of long-awaited legislative clarifications regarding PPPs, including setting up a Special Fund to finance public-private partnership contracts within one year.
Following the adoption of that new normative act, we noticed an effervescence of the business environment and public authorities, the latter through the Government and the Forecast Commission, starting to approve multiple projects to be built and operated through PPPs, in which the private partner ensures the financing of at least 75% of the project value.
Thus, in a short time, a list of 22 strategic investment projects which was to be developed through PPPs was concluded, among which we mention: Ploiești – Brașov Highway, Bucharest – Craiova – Calafat – Drobeta-Turnu Severin – Lugoj Highway, Târgu Neamț – Iași Highway, “Carol Davila – Universitary Medical City” Medical Complex, Bucharest – Craiova/(Sofia) – Timisoara/(Belgrade) – Cluj/(Budapest) High Speed Railway, Bucharest South Airport, Siret – Bărăgan Main Canal , Arrangement of the Argeş and Dâmboviţa rivers for navigation, etc.
Moreover, the public authorities seemed convinced that this is the way forward for the development of major transport infrastructure projects, medical, tourism or energy, so that during September 2018 – November 2019 a number of four substantiation studies were approved by the Government for the following four PPPs, namely: Ploieşti – Braşov Highway, “Dr. Calistrat Grozovici” Multifunctional Clinic, building A and building B, Târgu Neamţ – Iaşi Highway and the construction and the operation of a national blood, human plasma and stem cell bank.
In addition, the Forecast Commission published for public debate three other substantiation studies for strategic investment projects: Bucharest – Craiova – Calafat – Drobeta-Turnu Severin – Lugoj Highway (“Southern Highway”), Tarnița – Lăpușești pump storage hydroelectric plant and the Arrangement of the Argeş and Dâmboviţa rivers for navigation.
In May and July 2019, two awarding announcements were published in the Electronic Public Procurement System (S.E.A.P.) for the projects Târgu Neamț – Iași Highway and the “Dr. Calistrat Grozovici” Multifunctional Clinic. The first project included two associations from China and two from Turkey, and for the second, two associations from Turkey and one from the islands of Barbados, with a subcontractor a company registered in Romania.
However, in February 2020, a new Government Emergency Ordinance was published, amending the 2018 Emergency Ordinance and repealing both the Government Decision for approving the 22 PPPs and the Government Decisions that approving the four substantiation studies.
In addition, all PPP projects were transferred from the Forecast Commission to the line ministries, namely: (i) the Ministry of Transport, Infrastructure and Communications, (ii) the Ministry of Health, (iii) the Ministry of Economy, Energy and Business Environment, (iv) the Ministry of Agriculture and Rural Development, respectively (v) the Ministry of Public Works, Development and Administration.
Before the Covid-19 pandemic (in January 2020) the synthetic situation of the 22 PPPs was as follows: regarding a number of 12 projects, no steps were taken, seven substantiation studies were prepared, the rest being at various stages in the preparation and/or approval of substantiation studies.
According to the information available as of January 2020, only a number of three PPPs were in more advanced stages of implementation, respectively: (i) Ploiești – Brașov Highway – the award procedure was in the competitive negotiation stage, respectively in the negotiation of contractual clauses with a single bidder; (ii) Târgu Neamț – Iași Highway – the award procedure was in the qualification stage of the registered candidates, the deadline for submitting bids being extended until April 6, 2020; (iii) Dr. Grozovici Multifunctional Clinic – the award procedure is in the qualification stage.
In conclusion, as we showed in 2018, a major role in the success of PPPs, which in other states has proved to be an instrument for infrastructure development, will be owned by the ability of the public partner to present in an economically attractive manner for private partners, the strategic investment projects they intend to carry out. At the same time, the professionalism and seriousness of the public partner is essential, and regarding the first condition we have serious doubts considering, by way of example, the legal quality of the PPP Contract model proposed by the public partner. Regardless of the potential arguments that the public partner may present, the reality that after more than two years the work on not even one of the 22 PPPs has been started, we appreciate that it speaks for itself. For projects worth hundreds and billions of EUR, if the state leaves key issues such as the preparation of substantiation studies with images taken from Google or the preparation of the contract standard with many errors, including grammatical, then do not be surprised that the results are not those expected.