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The Warsaw Voice » Business » March 1, 2013
Innovative Poland
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The Untapped Potential of PPP
March 1, 2013   
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Public-private partnerships (PPP) are an advanced form of doing business in developed economies. Well tested in countries such as Canada and Britain and in sectors including infrastructure, power engineering, healthcare, education, public administration and mining, it has a potential that has yet to be fully exploited in Poland.

Under the PPP system, the public sector, mostly local government, undertakes a constructive dialog with the private sector regarding socioeconomic needs and ways of meeting them. For the public sector, this is an excellent opportunity to obtain external (private) funding for projects benefiting local communities. For the private partner, working with the public sector means access to new market areas, new fields of expertise and opportunities for development through the implementation of long-term contracts. Investors gain the opportunity to raise their profile while contributing to local or regional development and helping improve the standard of living and quality of life for residents.

Above all, PPP facilitates the transfer of know-how and business concepts. This would often be impossible if the public sector (local government) acted on its own. A kind of synergy is created between the potential of the public partner and the private partner, enabling local and regional needs to be met better, more comprehensively, less expensively and more effectively thanks to cooperation and support. It seems there are two main factors hindering the development of PPP in Poland that we can influence and that we can eliminate, namely:

1) The lack of proper identification of needs and ways of meeting these (poor preparation of projects, their incompatibility with real life situations and failure to account for existing barriers; inflexible definition of the subject matter of the partnership).

2) Unfounded concerns on the part of the local government (misguided assumptions, often combined with excessive expectations—a desire to put most of the risks on the private partner’s side without increasing the payment to compensate for these risks; psychological barriers—a lack of openness to the suggestions of private partners who are frequently more experienced in carrying out a given type of project; fear of being prosecuted, stemming from a lack of experience and lack of support from experienced advisers capable of ensuring that everything proceeds correctly).

It is essential for local government to be bolder when approaching the challenges of PPP. They should be encouraged to take advantage of both Polish and international experience (including that applying to small-scale projects) and use the support of experienced legal and economic advisers. The practice of the past two or three years shows that when local government authorities consult practitioners with a good track record (for example as part of what is called “technical dialogue”), everything proceeds effectively.

The fact that the pros outweigh the cons and that there are good examples from other countries should provide a stimulus for local government to be braver in taking advantage of PPP—a tool that offers huge and still underutilized potential. These observations stem from a long-standing practice of our law firm—one of the first firms in Poland dealing with PPP.

Jakub Pawelec, Ph.D.
Legal adviser, partner at M. Mazurek i Partnerzy law firm
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