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The Warsaw Voice » Law » April 26, 2012
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PPP: Time for a More Open Approach
April 26, 2012   
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Public-private partnership (PPP) is all about awakening and attracting ever more impatient investors. If even a small proportion of the numerous conferences, seminars and training sessions organized on this subject corresponded to actual projects in this form of co-operation, then Poland should already be peppered with examples of successful investments made jointly by the private and public sectors.

As it is, however, PPP investments remain few and far between. In particular, there are too few high-value or economically-significant projects. And with the projects that are currently underway, the drawn out negotiation process reveals the extent of the practical obstacles may be encountered by the parties involved. Efforts to remedy the situation have not been of any great success. In particular, attempts to liberalize the relevant legislation have not seemed to help especially. So what then is the reason for the failure of PPP to take off in Poland, and is it still possible to bring things around and get the ball rolling? It seems to me to be highly ironic that the flagship and most often cited examples of PPP projects were implemented in Poland before any laws governing this area had been passed, and when no one in the country had even heard of “triple P”.

The fact that the practical use of PPP projects is moving forward at a snail’s pace, despite all the incentives applied and oral encouragements from enthusiasts, should lead us to several conclusions. The first is that adopting new rules is not always a panacea for all the problems of this world. Thinking that yet another law will solve a problem that has not been solved by the legislation already in place is simply naive, like whistling to bring rain. Most problems can usually be resolved by stepping back and looking at the core problems again, and then by implementing correct interpretations and ensuring the proper application of the provisions already in force. Passing another law instead of resolving the problem is counterproductive and merely creates new doubts and new problems. In other words, instead of encouraging the public sector to explore PPP opportunities under the Law on Public-Private Partnerships, perhaps we should take a long, hard look at its meaningfulness at all. Possibly we should consider why co-operation between the public and private sectors, having been growing throughout the 1990s, has now suddenly slowed right down. What rules of administrative law, civil law, tax, construction, finance, etc. are currently acting as barriers that actually discourage co-operation through PPP, and should simply be abolished? In this context, it seems that the current and planned amendments of the PPP Act, despite being well-intended and basically heading in the right direction, have failed to correctly identify the underlying reasons behind the slow development of PPP in Poland.

This leads to the second main conclusion, namely that it is difficult to change human thinking by using new laws on top of old ones. Often this requires a very long time and a good understanding of the root causes. For public-private partnerships to flourish it will require the authorities to adopt a completely new approach to problems, and to learn to look at projects through the eyes of the other side. So far, the administration has taken a very one-sided approach – focusing solely on taking care of the public interest, even if that interest is to be implemented at the expense of other private sector entities. PPP requires a much more open and multilateral approach, especially as the success of the project requires that both parties achieve their interests. If the public entity of the project will not allow the creation of conditions giving opportunities to the private partner to carry out its business, then the PPP project will be rendered meaningless and doomed to failure. This requires the public side to make some very tough decisions, which it appears the Polish administration is not at all prepared to do.

Unfortunately, even if the public body is ripe for such a change and open to the true spirit of a mutually beneficial partnership, there is some concern whether the regulators, the inspectors and the judiciary, for example, will also be ready for a multidimensional approach to a project, to make concessions that the parties themselves have made while negotiating the PPP, along with accepting the benefits achieved in return for giving up certain demands, etc. In this situation, the policy-makers of public bodies are faced with a dramatic choice: to strongly protect the interest of the individuals on whose behalf they operate, thereby exposing themselves to the risk of the private partner walking away, or giving ground on specific points and facing the risk that the perception of concessions in certain situations may expose those policy-makers to liability.

It seems clear, therefore, that the wider use of PPPs in Poland requires some work at a basic level: in the administration and inspection bodies, and in the courts. It requires churning up the patterns of thinking that have become blinkered and fixed over the years, and opening minds and hearts to new ideas and new ways of progressing. However, I am still an optimist and firmly believe that repeated meetings, conferences and seminars on the methods and benefits of PPP will result in increased numbers of successful collaborations across sectors, in time snowballing into some spectacular investments in the future.

Michał Kubicz, legal advisor at Gide Loyrette Nouel law firm

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