Poor PPP in Poland

No Partnership?

No Partnership?

Only 63 out of 322 procedures resulted in the conclusion of contracts and the granting of licenses in the five years since regulations on public-private partnerships (PPP) came into force in Poland. This positions Poland at the bottom of the European league table of effective PPP project implementation. Why is this the case? One reason might be that the public side of PPP is often unprepared. In consequence, it imposes on its prospective partners conditions which make projects unprofitable for businesses and unbankable for financial institutions because of the excessive risks involved. This is most visible in cases concerning licenses for the construction of recreation and sports facilities like stadia, swimming pools or water parks. As a rule, local governments offer just the land they own, but are unwilling to participate in any costs, letting the private partner assume the entire burden of building such centres and then ensuring a demand for the services offered there. In such circumstances banks are reluctant to provide financing. Another problem is the lack of understanding to the very idea of PPP. Local governments, companies and banks might be more eager to engage in PPP initiatives if they were more knowledgeable about the legal, financial and tax implications of such projects. In an attempt to remedy existing information gaps, the Ministry of Economy recently published the manual “Public-Private Partnership: from Idea to Strategic Partner Selection”. Planned changes in legal regulations are to be the main impulse in prompting PPP development. Amendments to the act on public-private partnership and the act on public finance would allow local governments to classify their liabilities assumed under PPP contracts as capital expenditures, which are neutral for the calculation of individual indebtedness of local government units. Whatever the regulations, it is the will to apply them and approach PPP projects open-mindedly to the benefit of both the participants and the general public that matter most.
Puls Biznesu

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