The new Public-Private Partnership Act has been officially published in the Bulgarian State Gazette and will come into force on 1 January 2013.
Although there has been a number of public-private initiatives in recent years (eg in gas extraction, ports and airports concessions), they have not been regulated by a specific piece of legislation. Projects and programmes involving public (governmental or municipal) and private bodies have until now been conducted through the Public Procurement Act and the Concessions Act.
There has been a growing need for a separate PPP law to reduce the burden on municipal or governmental authorities to supply public interest services and ensure means of supporting private investors by grants of property or money transfers.
The Act lays down the regulatory framework, with details to be added through secondary legislation:
- describing PPP as a long-term cooperation between public and private bodies in the public interest in order to ensure the provision of services with a view to better distribution of risks and resources between the parties;
- limiting PPPs to the situation where either the government agency or municipal authority is unable to provide finance for public services or the participation of the private party would lead to a better use of public money;
- limiting PPPs to public services requiring financing, construction, operation or maintenance of technical and social infrastructure (the spheres indicated the Act are: public transport and supervision facilities, parks and green areas, car parks and garages, healthcare, education, culture, sport and recreation, social assistance, dormitories and prisons, and administrative services);
- ensuring that PPP delivers the public service by usage of real estate, buildings, and movable and intellectual property;
- allowing the public partner to participate by providing property rights or direct subsidy to the private partner as compensation for its investment and operation costs, but requiring the private partner to be the principal finance provider, bearing the risk in construction, insurance and delivery of the public services. The private partner will not be able to transfer any property received from the public party for the purposes of the PPP;
- specifying the term of PPPs as between 5 and 35 years
- limiting PPPs to those listed in the National PPP Programme and Operation Plan (adopted annually by The Council of Ministers) or Municipal Operation Plan (adopted by the Municipal councils)
- allowing PPPs to be initiated by either public or private bodies. Once the public body starts the process of selecting a private partner, it must follow a tender procedure similar to those used in public procurement.
- requiring the PPP contract to be signed by the first-ranked candidate - it should reflect the tender offer without further negotiations, specify the public services to be provided, the financing, the support provided by the public partner, the distribution of risks, etc.
- allowing the contract to be performed by a project company or a PPP company. Where the private partner is a not a company, it must be a special project company in which the private partner is the single shareholder. Where the public services demand close supervision by the public authorities, it must be a PPP company in which both public and private partners hold stakes. The public partner may participate by providing finance or a contribution in kind, such as real estate or intellectual property. The public partner is also entitled to a voting share capable of blocking corporate resolutions.
