Latvian Legal Perspective of Structuring Public

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Latvian Legal Perspective of Structuring Public
Private Partnership Project

• Maris Brizgo
• Loze, Grunte Cers (Latvia)
• International conference Public private
  partnership in the Baltics and Europe
• Reval hotel Lietuva, Vilnius, Lithuania

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Current PPP legislation

• Public procurement law (effective from
  01/04/2006)
• Concession law (effective from 16/02/2000)
• State administration structure law (effective
  from 01/01/2003)

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Public procurement law

• Applies to all PPP contracts, except concession
• PPP contracts from 5 to 30 years could be
  concluded with the consent of the Government
• Term of PPP contracts could be 5 to 30 years if
  it is essential for existence of PPP contract
• Procurement procedures applies to PPP in the same
  manner as to the contracting

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Concession law

• Applies to all economic sectors
• Term of concession restricted to 30 years
• Foreign company should be established in Latvia
  in order to conclude concession contract
• Methods for granting a concession are an auction
  or a competition
• Concessions of state property and assets and
  conditions for such concessions should be
  approved by the Government
• Very general law
• Does not govern series of important issues
• Lack of legal certainty for private partners
• The law does not almost restrict Governments
  discretion

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State administration structure law

• Sets general principles for institutional PPP
• Does not govern procedure for granting rights to
  establish joint companies with public persons
• Public person may establish joint company with
  private persons when
• carrying out transactions that are necessary in
  order to ensure the activities of such public
  persons
• providing public services and
• performing commercial activities.

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State administration structure law

• Public persons may perform commercial activities
• if the market is not able to ensure the
  implementation of the public interest in the
  relevant field
• in a sector in which a natural monopoly exists,
  thus ensuring public availability of the relevant
  service
• in a strategically important sector
• in a new sector
• in a sector, for the development of the
  infrastructure of which large capital investments
  are necessary or
• in a sector, in which, in conformity with the
  public interest, it is necessary to ensure higher
  quality standards.

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Draft Concession law

• Drafted by the Ministry of Economics and approved
  by the Government
• Drafted in cooperation with Swedens leading
  business law firm Manheimer Swartling
• Based on UNCITRAL guidelines Model legislative
  provisions on privately financed infrastructure
  projects
• Should be adopted by the Parliament in three
  readings
• Already adopted in second reading by previous
  Parliament
• Legislative procedure will start over again due
  to newly elected Parliament

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Draft Concession law

• Allows two types of concession building
  concession and concession of services
• Applies to all economic sectors excluding various
  state and municipal companies
• Decision on concession should be based on
  financial and economical calculations if those
  calculations show that concession is more
  effective
• Commission should established for each concession
  granting procedure

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Draft Concession law

• Concession granting procedure
• Decision to start concession granting procedure
• Establishment of concession granting commission
• Drafting of statute of concession granting
  procedure
• Pre-qualification of applicants (optional)
• Submission of offers
• Evaluation of offers
• Negotiation and conclusion of concession contract

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Draft Concession law

• Shortcomings
• Does not provide for Negotiated Procedure
• Does not provide an obligation for concession
  granting commission to invite experts but sets
  this as the right
• Does not provide specified rules for monitoring
  quality and fulfilment of project
• Novelty
• Provides an important role for banks financing
  project in case of default on the part of the
  Contractor or its subcontractors

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• Thank you!