Last updated: 10 April 2024
Public-private partnership (PPP) legislation has been subject to several changes lately, under the Law no. 7/2024 for approval of the GEO no. 39/2018, published in the Official Gazette no. 13/2024, and more recently, under the GEO no. 31/2024.
At the same time, the Ministry of Finances published this early February a set of guidelines aimed at better understanding the PPP mechanism and, thus, fostering the implementation of PPP projects by the public authorities, considering that the use of this mechanism in Romania is among the lowest across Europe.
There follow the main changes brought by the Law no. 7/2004 and the GEO no. 31/2024, mainly aimed at:
Redefining some important terms
Under the old regulation, “contractual PPP” meant executing a contract between the public partner, the private partner, and the project company, whereas now, according to the newly enacted modifications, the contract is executed between the private and the public partners and is implemented by the project company.
Also, if “private partnership” was previously defined as the private investor or the association of private investors having entered in the public-private partnership agreement, currently qualify as “private partner” those how are winning bidders of an award procedure in a public-private partnership agreement.
Espansion of the funding mechanism
A new funding source was added, in the form of issuance of corporate bonds by the project company for the implementation of the public-private partnership project.
Exclusion of the ceiling for the public contributions
The legal provision stipulating that the public partner’s contribution to funding investments under a public-private partnership contract could not be greater than 25% of the total value of the investment was repealed.
Possibility to grant to the project company certain rights over public goods, free of charge
The new provisions allow the public partner to grant, free of royalties or rent, concession rights or lease rights over public goods, benefitting the project company.
International arbitration
According to the new provisions, in institutional PPP where the contracts stipulate that disputes between the parties shall be referred to international arbitration courts, representation falls to the public and, respectively, the private partner, who may select domestic or international lawyers, if required.
Feasibility study
The feasibility study is a landmark in the development of public-private partnership projects. Being a stage prior to the actual start of the project, it is a process of assessment and analysis of the project’s feasibility from multiple angles.
Thus, the new legislation clarifies the fact that the amounts of the public contribution for the materialization of the public-private partnership project are approved based on the feasibility studies approved, as the case may be, by the Government or the county and local councils, depending on the types of projects aimed at.
We shall see if the legislative changes have the intended effect of speeding up the implementation of such projects by use of the PPP mechanism.