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The Warsaw Voice » Business » November 18, 2009
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Licensing as a Qualified Form of ....
November 18, 2009   
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Licensing as a Qualified Form of Public-Private Partnership and the Procedure for the Selection of Licensees

Along with the new Act on Public-Private Partnerships (the "PPPA"), adopted in December 2008, the beginning of 2009 saw the enactment of an accompanying Act on Licenses for Construction Works or Services (the "License Act").

A license may be viewed as a special type of public-private partnership, the option available where revenues from third-party users represent the main source of income of the private partner. The PPPA is the main act governing cooperation between any public and private partner, whereas the License Act regulates the procedures for appointing the private partner-licensee. Otherwise, the standard procedures provided for under the Public Procurement Law (PPL) govern the selection of private partners.

The significance of the License Act is that it establishes much more straightforward and flexible procedures than is the case under the main PPL. A comparison between the two acts simply in terms of volume reveals that the PPL has over 200 articles and over 40,000 words, whereas the License Act has a mere 31 articles and 4,000 words. The latter is significantly less formalized and provides for a shorter, less complicated appeal procedure (although, in this respect, certain simplifications are also planned for the PPL). At the same time, a license is more attractive to a public entity than a "normal" public-private partnership as it calls for less financial involvement in terms of public funds due to user payments being the main (or even exclusive) source of remuneration for the private partner-licensee in such cases.

Consequently, there are two independent incentives for public entities seeking to take advantage of the license method. First of all, it is more financially attractive in budget terms and, secondly, public entities will be able to appoint their private partners-licensees more quickly. As far as the private partners are concerned, the advantages of the license method may be less apparent since, as licensees, the risks they take on are enhanced. A general feature of public-private partnerships, as opposed to standard public procurements, is that some of the risks are shared by the private partner. However, in the case of licenses, the scope of the private partner's risk is even greater.

Nevertheless, the decision does not lie with potential private partners, but rather with the public entities intending to make a particular public investment. Private partners will therefore most likely have to accept the public entity's decision and decide whether or not and on what financial terms they are willing to take part in such investment opportunities.
Tomasz Opaliński, legal adviser and senior lawyer at Garrigues Warsaw office
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