Unified concept of a state-private partnership is enshrined in law

The law, which gives the unified concept of a state-private partnership, will come into force on January 1, 2016.

In July 2015 the President of the Russian Federation signed the Federal Law from July 13, 2015 of No. 224-FZ "About state-private partnership, municipal-private partnership in the Russian Federation and modification of separate legal acts of the Russian Federation".

Various infrastructure projects in the form of state-private partnership (SPP) are implemented in Russia within more than 10 years and regulated by 9 Federal Laws and number of acts of federal and regional executive authorities. The regional laws about participation of the Russian subject in the state-private partnerships are adopted in 71 Russian regions, however for implementation in specific projects they were used only in 18 regions; regional legislation, which is estimated as effective, acts only in Saint-Petersburg, Tomsk region and Yamalo-Nenets Autonomous district. 

According to the «Unified information system of state-private partnership in Russia», the official resource about state-private partnerships, created with the assistance of the Ministry of economic development, countrywide almost 1000 projects are under practical implementation stage in the following sectors: transport infrastructure and construction, water supply and drainage, heating, electricity, urban beautification, health, culture and education, social services, tourism and sport, waste disposal.

The practice showed undeniable advantages of the state-private partnership such as redistribution of risks, increasing of private initiative role, long-term and stable nature of relationships between public and private partners, confidence in completion of the project according to the original plan, potential profitability and increasing of chances of investors’ participation in large projects.

The new Federal Law generalizes the previous legal framework and practices and also regulates the legal relations in preparation, execution and termination of SPP agreements and projects, including the level of municipal authorities.

The Law clearly describes the range of public and private partners and the objects of SPP agreements; the guarantees of legitimate interests and rights of private partner are fixed; the procedures, starting from projects and agreements development, to their completion or termination are regulated; the criteria and rules of competitive procedures, requirements to tender documents are set; direct agreement of the parties about contract terms and the order of interaction of the partner with funding entity is provided; the object deposit of the SPP agreement (rights under the agreement) is allowed as the way of ensuring the fulfillment of obligations to the funding entity; the potential appearance of the private partner's property right on the object of SPP agreement under the condition of its encumbrance is provided.

The Law also made correlative changes in a number of Codes and Federal laws. For example, in the Federal Law "About insolvency (bankruptcy)", it regulates the sale features of the object of SPP agreement in case of initiation of bankruptcy proceeding in respect of the private partner.

The transitional period for SPP legislative acts of regional and municipal levels is set until July 1, 2016 to make changes in accordance with the Federal law. Thus the agreements, which are already made, can be executed till their completion under previously adopted legislation.

According to the experts of Information Agency Credinform, the implementation of provisions of the law about state-private partnership, as one of the key events of the market, will influence on the harmonization of SPP legislative acts of all levels, give the possibility to the Government to make more informed decisions about projects and increase the effective return in the form of additional investment, increase tax revenues and new working places.