Draft Concessions Act introduced into Parliament

07/20/2016

On 9 June 2016, a draft Concession Act (the "Act") was submitted to the Bulgarian Parliament. The Act shall replace current legislation on concessions and Public-Private Partnerships ("PPP") and shall implement the provisions of Directive 2014/23/EU (the "Concessions Directive"), aiming to improve the conditions for using concessions as a form of PPP.

The Act regulates both works and services concessions, as stipulated in the Concessions Directive, as well as the Bulgarian specific option on awarding concessions for the (sole) use of state or municipality owned properties.

With regard to works concessions, beyond the inherent economic risk for the concession holder, the draft legislation provides that concession holders shall further assume construction risk.

Another new improvement will result in more flexibility for the contracting authorities to apply negotiations in the procurement procedure. By virtue of the Act, beside the open procedure, contracting authorities shall have the option of awarding concessions with a cross-border dimension, based on competitive dialogue or a competitive procedure with negotiation.
The current draft does not provide for a maximum duration of the concession period, which is a major change compared to current legislation. However, all works and services concessions which duration might exceed 50 (fifty) years, would require parliament's preliminary approval. In addition, with regard to works and services concessions for municipality-owned properties, a qualified majority (2/3) of the votes of the municipal council would need to be reached.

In light of the government's intention to increase the use of concessions, the Act provides for the adoption of (i) a National Strategy for Development of Concessions that would set the goals and the priorities for awarding concessions' contracts, and (ii) an Action Plan with regard to concessions for state-owned properties.

Authors

Picture of Gabriela Edreva
Gabriela Edreva
Associate
Sofia