PPP registered reboot – Newspaper Kommersant No. 196 (7397) dated 10/21/2022
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Against the background of falling investment activity in the country, participants in the public-private partnership (PPP) market are proposing a “reset” of this mechanism. In a letter sent by them to the White House, it is proposed to systematize relations between the state and private investors within the framework of the national PPP program – in particular, to identify priority areas, create a project office, expand the use of the mechanism through regulatory changes and increase project funding. It is assumed that all this will make it possible to implement PPP projects by 2026 for an additional 1 trillion rubles.
PPP market participants prepared proposals for the development of this industry – in the form of a resolution following the results of the September specialized congress, they were sent by the National PPP Center to Prime Minister Mikhail Mishustin (Kommersant has the letter). The White House confirmed the receipt of the letter to Kommersant. The proposed measures are positioned as a “reset” of the PPP model – it is promised that it will allow launching more than 500 additional PPP projects worth more than 1 trillion rubles by 2026. (currently 3.7 thousand projects are being implemented with an investment volume of 5.4 trillion rubles).
Among the problems of the industry noted in the letter is a decrease in investment activity in the face of uncertainty (with the exception of the areas of education, sports and waste management, where there are mechanisms for budgetary support for PPP projects) with an already existing funding gap of 4% of GDP. There was also a decrease in investors’ income from the implementation of investment projects due to a decrease in effective demand with rising costs. Against this background, follows from the letter of the PPP center, the market sees the need for an accelerated launch of investment projects, but this will require the optimization of the mechanism and increased control over the efficiency of spending budget funds. It should be noted that such an approach as a whole fits into the logic of the authorities, who expect to increase investment in the economy, including through PPP.
The “reset” proposed by the market provides for the expansion of the use of PPPs by industry (see Kommersant-Online) and through the replication of quasi-PPP mechanisms (in particular, offset contracts, SZPK and SPIC), as well as the settlement of their combination with PPP- mechanisms. In general, as follows from the letter, the market lacks the state’s systemic demand for PPP, and therefore it is proposed to develop a national infrastructure development program using PPP mechanisms, which would link state programs that provide for co-financing of such projects and identify priority areas. As part of the program, it is proposed to launch a project office – according to the PPP center, this would double the number of launched projects with state participation.
Also, the market sees the need to increase funding – in order to increase private investment in PPP projects by 30-50% per year, it is proposed to actively use state guarantees and guarantees of development institutions, expand the VEB.RF project financing factory mechanism for its use together with other mechanisms, and also involve banks in concessional financing of PPPs. Regulatory measures are also required to increase investment, in particular, the lifting of the ban on private investors attracting organizations that are directly or indirectly under state control. Now this makes it difficult, in particular, to launch high-tech projects that require the participation of scientific organizations, as well as capital-intensive initiatives with the participation of state funds, corporations and state banks (for the latter, the Ministry of Economy has already announced a clarification of the status; see Kommersant on September 14).
It is proposed to increase budgetary investments in PPP, both within the framework of state programs that already provide for financing of PPP projects from the budget (for example, education and sports), and by providing for such a mechanism in other sectoral state programs, for example, in the housing and communal services sector. It should be noted that it is this point that may become the most difficult to implement – the market participants themselves in the resolution, as a challenge, note the likely reduction in spending under the state program with a budget deficit of 2023 of 3 trillion rubles.
How else is it proposed to expand the PPP mechanism
In the sectoral context, market participants continue to insist on the need to use PPP mechanisms in industry (see Kommersant of September 14), now their proposals are more detailed. Thus, it is proposed to provide for a separate procedure for concluding PPP agreements in the industrial sector, providing for such an opportunity for the modernization of private facilities. It is also desirable to prescribe the optional occurrence of state ownership of the property being created, if the state’s share in the project is more than 50%, and provide for the possibility of long-term privatization (purchase option). For the development of industrial PPP projects, market participants see it necessary to allow development institutions on the side of a public partner so that all support measures can be provided centrally within a single project. It was also said about the consolidation of various options for the state’s financial participation in the project (in particular, the issuance of preferential loans, sureties and guarantees for the obligations of the investor). Proposals for “regulatory measures” concern the extension of existing temporary concessions – in particular, it is proposed to extend to 2023 the possibility of adjusting the terms of concession agreements without coordination with the antimonopoly service, as well as concluding such agreements without a tender.
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