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Green Paper on public-private partnerships

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Green Paper on public-private partnerships

Outline of the Community (European Union) legislation about Green Paper on public-private partnerships

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Internal market > Businesses in the internal market > Public procurement

Green Paper on public-private partnerships

The phenomenon of public-private partnerships (PPPs), which re-define the relationship between the public and private spheres, is expanding rapidly. This Green Paper takes stock of existing practices in the European Union from the perspective of Community legislation. In letting those involved express their views, it launches a debate on whether a specific legal framework should be drawn up at European level.

Document or Iniciative

Green Paper on public-private partnerships and Community law on public contracts and concessions [COM(2004) 327 final].

Summary

PPPs describe a form of cooperation between the public authorities and economic operators. The primary aims of this cooperation are to fund, construct, renovate or operate an infrastructure or the provision of a service. PPPs are present in sectors such as transport, public health, education, national security, waste management, and water and energy distribution. At European level, they help implement the European Initiative for Growth and trans-European transport networks.

PPPs are characterised by:

  • the duration of the relationship between the partners;
  • the method of funding the project;
  • the role of the partners in the definition of objectives, design, completion, implementation, and funding;
  • the distribution of risks.

The Green Paper distinguishes two types of PPP:

  • PPPs of a purely contractual nature.
    In this case, the partnership is based solely on contractual links and may fall within the scope of European Directives on public procurement;
  • PPPs of an institutional nature.
    These PPPs involve cooperation within a distinct entity and may lead to the creation of an ad hoc entity held jointly by the public sector and the private sector or the control of a public entity by a private operator.

Analysing PPPs from the perspective of Community legislation

There is no specific legal framework for PPPs at European level. The Green Paper therefore seeks to examine whether the Treaty establishing the European Community (EC Treaty) and its secondary legislation is suitable and sufficient to cope with the particular challenges posed by PPPs. This analysis looks at both the selection of the private partner and the implementation of the partnership.

Any act whereby a public entity entrusts the provision of an economic activity to a third party must be examined in the light of the rules and principles of the EC Treaty. With regard to the freedom of establishment and the freedom to provide services (Articles 43 to 49), these principles encompass transparency, equality of treatment, proportionality and mutual recognition. The EC Treaty thus applies to PPPs.

Certain forms of PPPs are subject to European legislation on public procurement procedures. Revised in 2004, this legislation introduces a new procedure for awarding contracts: the competitive dialogue. This dialogue provides a legal basis for certain forms of PPPs in the case of very complex projects for which a competent authority has a specific need and seeks the economic operator offering the optimum technical solution.

PPPs may be involved in works or services concessions. These can be distinguished from public contracts insofar as at least part of the economic operator’s remuneration comes from operation of the infrastructure or service. At European level, concessions fall partly, or in the case of services concessions entirely, outside the scope of the European directives on public procurement. The Commission’s Interpretative Communication on concessions under Community law [Official Journal C 121 of 29 April 2000] sheds light on the obligations incumbent on the public authorities when selecting the applicants to whom concessions are granted.

Is there a need for a specific legal framework for PPPs at European level?

Professional circles complain about the lack of legal clarity in Community legislation, a situation which is holding back the expansion of PPPs.

The Green Paper launches a public consultation on the best way to ensure the development of PPPs under conditions of effective competition and legal clarity. It asks a total of 22 questions which deal in particular with the following topics:

  • the framework of the procedures for selecting the private partner;
  • the establishment of private initiative PPPs;
  • the contractual framework and any changes made in the course of a PPP;
  • sub-contracting;
  • the importance of effective competition in the case of institutionalised PPPs.

The Commission promises to analyse and publish the results of the contributions made to the public consultation. It will, where appropriate, submit concrete follow-up initiatives. There are various possibilities, none of which is compulsory: binding legislation, an interpretative communication, the better coordination of national actions, or the exchange of best practice among Member States.

Background

As announced in its Strategy for the internal market 2003-2006, the European Commission has published the Green Paper on public-private partnerships (PPPs).

PPPs have been expanding rapidly over the last fifteen years or so. The public authorities make increasing use of them in view of the budgetary constraints with which they are confronted. In this way, they can benefit from private sector know-how. Another advantage lies in the savings made possible by PPPs as they incorporate all the stages of a project, from its design through to exploitation. On a more general level, PPPs also contribute to the Community debate on services of general interest. The development of PPPs also forms part of the changing role of the State in the economy, as it moves away from being a direct operator towards the role of organiser, regulator and controller.

Related Acts

Communication from the Commission of 15 November 2005 to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on public-private partnerships and Community law on public procurement and concessions [COM(2005) 569 final – Not published in the Official Journal].

Trans-European networks: towards an integrated approach

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Trans-European networks: towards an integrated approach

Outline of the Community (European Union) legislation about Trans-European networks: towards an integrated approach

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Transport > Intermodality and trans-european networks

Trans-European networks: towards an integrated approach

Document or Iniciative

Commission Communication of 21 March 2007 to the Council and the European Parliament entitled: “Trans-European Networks: Towards an integrated approach” [COM(2007) 135 final – Not published in the Official Journal].

Summary

The trans-European networks (TENs) constitute an ambitious and essential objective for the competitiveness of the European Union and therefore for growth and jobs. Several major industrial programmes such as GALILEO, ERTMS and SESAR are following the logic of Europeanisation of transport infrastructures, often designed only according to national requirements.

Sustainable use of resources is a key element in TEN policy, since the most environmentally-friendly procedures enjoy a privileged status amongst the priority projects.

Assessment of TENs in 2006

The completion of 30 priority transport projects is behind schedule as the new, very costly infrastructures required have not been granted sufficient resources. The network is still incomplete, with investments of EUR 160 billion needed to finance the priority projects alone for the financial programming period 2007-2013. The European Regional Development Fund (ERDF) and the Cohesion Fund remain the principal sources of Community intervention, and the European Investment Bank (EIB ) will continue to fund the infrastructures via its loans and a specific Guarantee Instrument.

The Community has recently adopted guidelines aimed at updating the trans-European energy networks (Decision No 1364/2006/EC). Some 42 projects, including 10 relating to gas networks, have been declared of European interest. The EU must invest at least EUR 30 billion in infrastructures between now and 2013. Between 2000 and 2006, approximately EUR 140 million was invested in the trans-European energy networks under the TEN budget. A figure of EUR 155 million has been earmarked for the financial period 2007-2013. The Commission has stressed here again, however, that the allocated amounts are limited in light of the issues at stake and actual requirements.

Investments in telecommunications are currently focused on modernising existing networks. The Commission has highlighted the disparities between urban and rural areas (already identified in its communication entitled Bridging the Broadband Gap) and invites the Member States to take concrete measures and define goals for reducing these differences by 2010. Public aid is encouraged in the event of market failure, in strict compliance with telecommunications and State aid regulations. A map of the infrastructures is needed to help the competent authorities assess their requirements and take advantage of ongoing civil engineering work.

Towards an integrated approach: the findings of the steering group

The steering group set up on 20 July 2005 at the request of the Commission has examined the possible synergies between the trans-European networks along with methods of funding and potential distribution. It has established that combinations of rail and road networks have shown themselves to be of significant value (more efficient use of space, reduced costs and environmental impact) and there are definite advantages in linking the two types of TEN. Synergies between the transport and telecommunications networks seem the most promising and ways of interconnecting the electricity networks are also worth exploring.

The steering group also underlined the potential environmental benefits of integrating the TEN. In fact, the 30 priority projects involving the trans-European transport network largely favour methods of transport which are more fuel-efficient and environmentally-friendly, such as rail or water. Interconnections between the national energy networks and connections with renewable energy sources will also optimise the use of available capacities in each Member State, thus reducing the environmental impact.

The steering group recommends:

  • continuing research into synergies between the TENs with the aim of producing and circulating a manual of good practices, and developing synergies between the objectives of cohesion policy and the priorities adopted in the TEN context;
  • evaluating the need for alternative solutions for availability payments over several financial periods and making appropriate legislative proposals if necessary;
  • monitoring the development of public-private partnerships and promoting this type of funding;
  • completing TEN priority projects on schedule while ensuring the application of environmental law.

New technologies

A midterm review of the 2001 White Paper on transport policy acknowledges the role of new information and communication technologies in ensuring that people and goods can travel safely and sustainably. Numerous schemes, including the Intelligent Transport Systems (ITSs), the European Rail Traffic Management System (ERTMS) and the European satellite navigation project GALILEO, represent effective tools for increasing safety and reducing congestion and environmental impact.

The group thus recommends that investments in the ITSs be integrated, from the early planning stages, into all new trans-European transport network (TEN-T) projects.

Legal clarification on non-cumulation of Community funds

The steering group concluded that there must be no possibility of cumulation of subsidies from several Community funds and has confirmed the need to maintain a consistent approach across the various legal instruments. Thus, when granting aid under the TEN arrangements, the Commission will check whether or not the projects have already received aid from the Structural or Cohesion Funds.

According to the steering group, delays in the priority transport projects are largely due to difficulties in reconciling the rules for granting Community subsidies from the TEN budget with the actual financial needs of the projects. The new TEN regulation should make it easier to part-finance the major cross-border projects, which are technically and financially complex.

The steering group also stressed the advantages of funding by public-private partnerships (PPP), and the benefits of a European Guarantee Instrument (provided by the EIB) to encourage the PPPs to fund the TEN-Ts. Such a system could help to lessen the risks linked to insufficient revenue during the initial years of operation of a project, and generate a considerable lever effect.

Based on the availability risk, PPPs will also form an integral part of the forms of subsidies eligible for Community financial support under the new regulation on transport and energy TENs.