Public Private Partnership: Experience of Riga City

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Public -Private PartnershipExperience of Riga
City
By A.Ludviks, Vice Mayor of Riga City Council
24.08.2006
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Introduction

• PPP is a partnership between the public and
  private sector for the purpose of delivering a
  project or service which was traditionally
  provided by the public sector.
• Wilingness of national and local governments to
  build supportive legal environment.
• Establishment of PPP task force - a major driver
  for the development of PPP.

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The role of PPP task force

• Possession of competences and responsibilities
  for providing standardised documents.
• Provision of efficient procedures for training of
  civil servants.
• Selection of pilot projects for demonstrating
  innovative PPP projects serving as the base model
  for the implementation of further projects.

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PPP in Latvia

• Shortage of public infrastructure estimated in
  the amount of 65 75 billion Euro.
• Ministry of Economics of the Republic of Latvia
  is responsible for
• - Planning process regarding the national
  policy
• - Development of legal base
• - Provision of information to society on the
  PPP issues.
• Latvian Investment and Development Agency (LIDA)
  is set to be the PPP task force in Latvia and is
  responsible for
• - All kind support to PPP projects
• - Development of methodological tools.

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LIDA 5 possible pilot projects

• In the field of construction and repair of
  municipal roads
• Repair of roads in Cesis City (Vidzeme region)
• In the field of energetics
• Reconstruction of heat supply system in Jekabpils
  City
• In the field of public housing construction
• Construction of new elementary school in Cesis
  City (Vidzeme region)
• Renovation of Art school in Ogre territory (Riga
  region)
• In the field of construction of dwelling houses
• Construction of housing facilities with social
  apartments in Salaspils territory (Riga region).
• Only the preliminary analysis is made
• None of these PPP projects is concluded
• None of the national pilot projects is planned in
  Riga City.

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Experience of Riga City

• Perspective development of PPP projects
• - In the field of road construction
• - In the field of water and wastewater
• - In the field of lightning
• - In the field of public housing construction
• (schools, hospitals, public administration
  buildings).
• The pilot projects are selected.
• Preliminary works have been started in 2004.

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PPP pilot projects in Riga

• New administrative centre of Riga City
• Northern passage (transport corridor)
• Completion of reconstruction of the National
  Opera building
• Development of Lucavsala Island.

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New administrative centre of Riga City

• Trilateral co-operation model of municipality,
  state and private sector is planned to apply
• Building costs for the building of RCC account
  to 44.7 million LVL (63.6 million EUR)
• Other state institutions have announced their
  interest to take part in the project
• It is planned to fulfil the function of a new
  administrative centre of Riga City including RCC
  building, offices of other state institutions,
  new convention centre, shopping malls, hotels etc.

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RCC building (based on DBFO (Design- Build
Finance -Operate))
Municipality

• Investment (5)
• Land
• Rent

• Investment (95)
• design
• construction
• operation
• letting
• transfer

Agreement
Special Purpose Vehicle
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RCC building the role of municipality
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RCC building the role of private partner
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Location of new administrative centre of Riga City
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Riga Convention Bureau (founded in May, 2005)

• RCB is a PPP model based cooperation of
• Riga City Council (involved since November, 2005)
• Ministry of Economics
• Inspiration Riga- association of major congress
  and travel - trade companies in Riga and Latvia
• With a goal to promote Riga and Latvia as
  attractive congress, meeting, incentive and
  business travel (MICE) destination in order to
  increase the national income.

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Riga Convention Bureau

• RCB main target groups
• International organisations, foreign corporations
  
• Latvia professional associations, institutions
  from state and academic sector represented in
  international organisations
• Foreign media, specialising in the field of MICE
  
• RCB focuses on
• Creation of Riga city image as a safe MICE
  destination point
• Attraction of conventions of international
  organisations
• Attraction of corporate conferences, events and
  business trips
• Convention industry development in Latvia

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Benefits of the Parties involved in PPP

• For public sector
• Possibility to realize large public
  infrastructure project
• Optimized allocation of all kinds of risks
  between public and private sector
• Utilisation of management skills from the private
  sector
• Save on construction expenses and operational
  costs.
• For private sector
• In PPP projects that are based on a long- term
  contract (up to 30 years) between the parties a
  guarantee for continuity of business activity is
  provided.

Source LIDA
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Conclusions

• Riga City Council should focus on
• Introduction of PPP task force (unit) in the
  structure of Riga City Council that is liable for
  strategic and day-to-day responsibilities
  regarding implementation of PPP.
• Continuation of work with the projects mentioned
  and consideration of other PPP perspective
  projects of public infrastructure in Riga City.

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Thank you!