Maris Brizgo, Loze, Grunte & CersNovember 22, 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

Maris Brizgo, Loze, Grunte & CersNovember 22, 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)

Maris Brizgo, Loze, Grunte & CersNovember 22, 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

Maris Brizgo, Loze, Grunte & CersNovember 22, 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 Government’s discretion

Maris Brizgo, Loze, Grunte & CersNovember 22, 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.

Maris Brizgo, Loze, Grunte & CersNovember 22, 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.

Maris Brizgo, Loze, Grunte & CersNovember 22, Draft Concession law Drafted by the Ministry of Economics and approved by the Government Drafted in cooperation with Sweden’s 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

Maris Brizgo, Loze, Grunte & CersNovember 22, 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

Maris Brizgo, Loze, Grunte & CersNovember 22, 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

Maris Brizgo, Loze, Grunte & CersNovember 22, 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

Maris Brizgo, Loze, Grunte & CersNovember 22, Thank you!