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The Warsaw Voice » Law » April 30, 2010
Advice from Law Firm
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Project: Poland
April 30, 2010   
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The amended Act on public-private partnership and the Act on concessions for construction works open gigantic opportunities to businesses interested in pursuing projects in co-operation with the public sector. Poland is at the start of a boom in this area. Everybody who considered investment in Poland has a unique chance to take a bite from this enormous cake of profits. The key to success is finding someone in Poland who, as a guide, will show the right direction.

Public-Private Partnership is a form of long-term cooperation between private and public sectors in undertakings to pursue public objectives. The point of this cooperation is to achieve mutual benefits both in terms of the social and commercial objectives of the whole undertaking.

Typical features of Public-Private Partnership also include greater social benefits as compared to traditional methods of executing investments, risk sharing by the partners and the possibility of using EU funds. As to sharing the responsibility, the partners assume the risks they can manage best. The most important benefits for the private sector resulting from cooperation with the public sector include a stable and long-term contract, independence of annual budgetary constraints of the public sector, flexibility in deciding on the specification of the final product or service, a chance for commercial use of innovations and for generating additional income from third parties.

The Act allows for various models of public-private partnership. The most important are DB, BOT/DBOT, DBFO and BOO. The DB model (Design-Build) is so-called private outsourcing, where the public sector is the owner of the investment, has decisive powers and bears the financial and economic risks while the private sector takes the investment risk. In the BOT/DBOT model (Design-Build-Operate-Transfer) the private investor is responsible for construction and management of the investment and the public sector is in charge of financial and economic risks. On the other hand, the DBFO model (Design-Build-Finance-Operate) is a standard concession where the public partner is the owner of investment, while in the BOO model (Build-Own-Operate) the ownership of investment is transferred, for example, through the sale of public property or interests into private hands. In this case, the private sector is the owner, investor and manager of the investment.

The new legislation motivates local governments to search for agreement with private business on a far greater scale than before. With the statutory basis in place, local governments will build schools, hospitals, airports, motorways and city circulars, modernize railway stations and provide services along with private partners—as far as possible investments are concerned, the sky is the limit.

Warsaw City Hall has recently announced a list of projects prepared and recommended for implementation under PPP which include, for example, the construction of a tramway line worth more than 100m euros. The City of Wrocław has planned the construction of a circular/ a bridge east of the City to be executed under PPP, with an estimated value of some 150m euros. The state railway company Polskie Koleje Państwowe (PKP) along with the City of Sopot are looking for a private partner for a commercial development of the area around the PKP railway station in Sopot, which is worth around 150m euros. These are only a few examples; there will be many more such projects in the weeks to come.

Foreign businesses which want to compete successfully with firms already present in Poland, have to get to know and accept the rules of the market play applicable in Poland and, first and foremost, strictly adhere to regulatory and legal requirements. As a law firm with a vast experience in cooperation between private and public companies, we can observe an increase in interest in PPP procurement. This does not always go hand-in-hand with proper preparation of the documentation and sometimes very interesting projects are turned down for formal reasons. This is particularly visible in the course of bidding for infrastructure projects.

We recommend that businesses entering the Polish market should also collaborate with local sub-contractors who can provide invaluable advice and instructions at this stage of the procedure.

The law office of Trusiewicz Siwko is a leading legal adviser operating in all fields of law including real estate and PPP.
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