ZRP
Tuca Zbarcea & Asociatii

Romania: Is the new PPP legislation giving a boost to infrastructure projects?

27 Noiembrie 2018   |   Oana Vodă, Senior Attorney at Law & Valerie Stropșa Associate- Schoenherr

This seems to be a hot year-end for Romanian infrastructure, with the government recently launching the first public procedure for the award of a strategic infrastructure project under the new Romanian PPP legislation: the construction of the Ploiesti-Brasov motorway.

 
 
This seems to be a hot year-end for Romanian infrastructure, with the government recently launching the first public procedure for the award of a strategic infrastructure project under the new Romanian PPP legislation: the construction of the Ploiesti-Brasov motorway. If successful, the project will validate the effectiveness of the new PPP legal framework, while also putting an end to a series of failed attempts to build this motorway under concession or PPP regimes.

Interested investors may submit their initial bids by 17 December, pursuant to the tender documentation published by the National Commission for Strategy and Prognosis (NCSP) for the award of the PPP contract regarding the construction of the Ploiesti-Brasov motorway. Given the complexity of the project and the fact that the Romanian authorities are only taking their first steps in awarding PPP contracts, we believe this is a good time to recap the main aspects of interest for both investors and lenders.


To ensure the success of a project of such magnitude, a vital step concerns the clear definition of the object of the contract. When clearly and unequivocally set out, this allows the correct qualification of the scope and legal nature of the contract, thus mitigating the risk of uncertainty in establishing the contractual relationship. Likewise, the contracting parties must be clearly identified from the beginning. Formerly, where the procurement process was initiated by a state entity, a public authority or institution operating at a central, regional or local level, Romanian contracting authorities sought "fronting" by a state-owned company, especially in case of important strategic projects. The shifting of primary responsibility in a PPP scheme from governmental authority towards a quasi-public entity may raise liability concerns, as well as budget-related risks. Provided Romania's limited experience in implementing and managing complex projects such as PPPs, potential investors' worries would be alleviated if the counterparty includes decision-makers at a central level and/or authorities with policymaking powers in the relevant field.

Another aspect that should be clearly addressed in a PPP contract is the rights that will be transferred to the private partner for the execution of works and their legal nature. A correct qualification of the nature of such rights may seriously impact the execution of works in terms of obtaining authorisations, building permits, etc. In this respect, the Emergency Government Ordinance no. 39/2018 (EGO no. 39/2018) expressly sets out, inter alia, the rights over goods that are deemed public property which can be transferred to the private partner, such as concession rights or rights ensuing from the lease of public property goods. Accordingly, a clear presentation of the current legal regime governing the land which will be affected by transport infrastructure projects, especially in terms of the current expropriation status, is more than welcome to ensure that potential bidders are fully informed.

A sine qua non condition for potential investors is the provision of an estimated project calendar, as well as a comprehensive risk matrix within the tender book, to allow investors to conduct a thorough economic and legal analysis. Based on this information, the performance terms, applicable penalties and even the duration of the project will be outlined, among others. Explicit clauses will be included in the contractual framework to ensure predictability for potential private investors and to minimise the risk of the contracting authorities' decisions being qualified as discretionary.

Considering the complexity of the contract as well as the long duration of PPP projects, financing related aspects are paramount for potential investors. Accordingly, a clear perspective regarding required financial resources to be committed to project implementation as well as the means to recuperate such investment are required, to ease the negotiation of facility agreements with third-party lenders. Compared to previous PPP-related legislation, EGO no. 39/2018 expressly regulates step-in rights. According to this legal deed, the PPP contract must provide for a step-in mechanism, addressing the possibility of the contracting authority to agree on a procedure for lenders to step in and rescue a project before it is terminated. These new provisions seem to address former requests from private investors regarding the consent to the internationally recognised concept of step-in rights and their application by the Romanian authorities. Once recognised under the applicable legal framework, the practical implementation of this concept shall be translated into detailed wording to be included within the terms and conditions governing the contractual set-up in a PPP project.

Finally, a few tax-related matters should be carefully analysed and assessed, especially considering the two PPP forms provided by the applicable legislation, namely contractual and institutional PPP. Tax-related aspects may cover several areas and can be highly complex. It is therefore important that they be carefully addressed, to avoid negative consequences affecting the profitability or liquidity of the parties involved. Moreover, the Romanian legislation contains a general framework for stimulating investments in certain fields and provides for certain schemes that should be analysed to determine possible benefits on a case-by-case basis. If foreign personnel are dedicated to the implementation of projects in Romania, aspects related to immigration and taxation should also be considered.

All these aspects should be considered and addressed in the procurement procedures organised for the award of PPP contracts, especially as this project aims to be the first in a series of strategic PPP investments to be prepared and awarded by the Romanian government.

To close the trust gap between the public and the private sectors, public authorities should allocate the required resources to carefully prepare award procedures targeting the modernisation of infrastructure of national interest. Doing so will address investors' and lenders' demand for clarity and predictability as regards the implementation of such projects.

 
 

PNSA

 
 

ARTICOLE PE ACEEASI TEMA

ARTICOLE DE ACELASI AUTOR


     

    Ascunde Reclama
     
     

    POSTEAZA UN COMENTARIU


    Nume *
    Email (nu va fi publicat) *
    Comentariu *
    Cod de securitate*







    * campuri obligatorii


    Articol 49 / 2164
     

    Ascunde Reclama
     
    BREAKING NEWS
    ESENTIAL
    Gabriel Zbârcea, Managing Partner Ţuca Zbârcea & Asociaţii: În România, o firmă de avocați poate ajunge la afaceri de 20 mil. € anual. În anii următori se va consolida tendința de divizare a pieței
    KPMG Legal cooptează doi avocați de talie grea. Vlad Peligrad și Cătălin Oroviceanu se alătură echipei ca parteneri coordonatori
    Cum văd partenerii Noerr evoluția firmei în perioada următoare. Prof. dr. Jörg K Menzer, Head CEE Offices, Noerr: În 2019 vom mări și echipele, dar și baza de clienți. În ciuda ultimelor schimbări juridice din Ungaria, România și Polonia – pe alocuri foarte controversate – am remarcat că există în continuare interes pentru fuziuni, achiziții și investiții noi în regiune
    KPMG Legal – Toncescu Mihai Olteanu SPRL a câștigat definitiv anularea taxelor vamale, antidumping și TVA impuse de autoritățile vamale la importurile produselor din afara spațiului UE pentru unul dintre cei mai importanți producători de piese pentru industria automotive
    Cei mai buni avocați de fuziuni și achiziții din România. Clasamentul Chambers Global 2019
    La un an de la înființarea departamentului de drept penal, CLO își mărește echipa de „white collar crime”. Departamentul numără, la început de an, 6 avocați specializați
    Chambers Global 2019: Șapte firme locale domină ariile de practică analizate în România
    Cei mai buni avocaţi în domeniul mărcilor, remarcați de WTR 1000, ediția 2019. NNDKP, lider pe segmentele analizate, poziții fruntașe pentru Mușat, TZA și ZRP
    Suciu Popa a asistat Central Bottling Company Ltd. în preluarea Muller România | Tzafrir Granat, CEO Muller Dairy Romania: Echipa Suciu Popa implicată în proiect ne-a impresionat. Vom continuam colaborarea, pe masură ce business-ul nostru se dezvoltă
    Premiile Client Choice 2019: Ion Dragne intră în topul preferințelor clienților, Schoenherr are doi avocați în lista pe care sunt înscrise 6 nume pentru România
    PeliFilip a asistat Digi Communications N.V. și RCS & RDS S.A. cu privire la emisiunea unor obligațiuni în valoare de 200 mil. €
    România participă la cel mai mare hackathon pe teme juridice din lume: GLOBAL LEGAL HACKATHON ROMANIA (22-24 februarie 2019)
     
    Citeste pe SeeNews Digital Network
    • BizBanker

    • BizLeader

        in curand...
    • SeeNews

      in curand...