“Investment diagnosis doubtful”
Denis Kachkin, the Managing Partner at Kachkin & Partners, considers the first amendments to the new federal law on public-private partnership to be possibly made this year.
In the PPP scheme, businesses prefer projects with a clear financial model, predictable and controllable risks and acceptable level of profitability, experts say. But its regulatory base has too many loopholes for investors to count on stable profitability.
Denis Kachkin, managing partner of Kachkin & Partners, is skeptical about the project of the public-private hospital. «We didn’t evaluate investment prospects of this project. It is likely to be interesting for many companies, but we think that serious complications can arise at the stage of legal risks assessment,» believes the expert. According to him, the project is supposed to be implemented based on a regional PPP model, which in its current form is in its final days. The new federal law on PPP will come into effect from the beginning of 2016 – it will change the rules completely and create higher risks for all projects, structured according to the existing regional legislation. The concession law is amended twice or thrice annually. «I am sure that the same destiny awaits the new law No. 224-FZ on PPP. Maybe we will see the first amendments even this year, before it goes into effect,» predicts Kachkin.
Alexandra Koroleva, head of the civil projects department at GC Hosser, named lack of life cycle contracts in the health care sector as one of the restrictions, which decrease the efficiency of PPP projects in the industry. This means deficit of long-term cost planning for services and incapability to enable continuous diagnostic and treatment process. Lack of approved methods for calculation of operating costs also matters, as it complicates the process of justification for compensations, sufficient for high-quality maintenance. There are also gaps in the compulsory health insurance rate structure: investment costs (capital expenditures and fund raising costs) are not present there, as well as equipment modernization costs above 100,000 rubles. Finally, lack of approved standards and operation methods influences the implementation perspective of this scheme. «Professional operation can extend the useful life of equipment by 20-25% and reduce downtime of medical equipment because of breakdown to 1-3% of operational time per year,» calculated the expert.
By the way
After the meeting, Prime Minister formulated a number of tasks aimed at entrenchment of the PPP model in the social sphere. Thus, Ministries of Economic Development, Healthcare and Finance were requested to elaborate issues of state-owned health care facilities taking part in concession agreements on the grantor’s side. Such changes will make the preparation of objects for concession a lot easier. Another decision was changing the list of life cycle contracts. After amendment to the cabinet of ministers’ resolution dated November 28, 2013 No. 1087, it will finally include health care facilities. Amendments will also be implemented into the Land Code: it will allow to provide land for projects, supported by transactions of investment attraction to federal infrastructure objects.
- Legal support for an investor at the stage of preparing a proposal on a PPP project in the field of medicine
- Legal support of the largest PPP project in the field of public transport in Russia — building and operating a tram network in St Petersburg (Kupchino — Shushary — Slavyanka) with total investment of about RUB 26 billion.
- Legal support for two projects involving the creation of swimming pools in Leningrad Region, implemented on the basis of private concession initiative
- Development of a concept for the creation of an Innovational medical cluster in the Caucasian Mineral Waters Region spanning a total area of several tens of thousands sq km and an action plan for its implementation
- Legal support in preparing the private investor’s proposal on implementing a concession project in the field of medicine
- Support of conclusion of concession agreements on hotels construction in the frames of private initiative procedure in favour of private investors
- Legal support for a project involving reconstruction and operation of the Leningrad Regional Medical Rehabilitation Center in Leningrad Region on the basis of PPP
- Drafting of PPP legislation in Pskov Region
- Legal support for the participant in a tender for the right to conclude a concession agreement on highway construction
- Support of real property buyout in respect to the St. Petersburg Ring Road construction
- Legal study of prospects for the entry into economic circulation of the Peterhof State Museum-Reserve “Ropshinsky Palace” on public-private partnership terms
- Joint work aimed at ensuring constructive interaction between government agencies, business and public organizations and support for interregional investment projects implemented on the basis of PPP
- Preparation of the Concept for the implementation of an investment project involving the construction and operation of a social-services facility on the basis of PPP
- Formulation of legal arguments for the implementation of a recreational project on the basis of PPP
- Support for a project involving the design, construction, operation and maintenance of road infrastructure in Moscow Region
- Advising the Lipetsk region public authorities on the regional legislation improvement
- Advising the Slantsevsky municipal district’s governing bodies within the stadium construction project with the PPP mechanism application
- Advising the Slantsevsky municipal district’s governing bodies on the improvement of municipal legal and regulatory framework
- Legal advice to KIT Finance holdings on construction of chain of boarding houses with medical treatment for elderly people
- Legal support to the project on creation a large landscape and leisure park located in the Moscow region
- Advising a large food manufacturer in frameworks of acquiring state co-funding to a project to be fulfilled in Volga region (factory erection)
- Anti-corruption expertise of the existing laws and draft laws and subordinate acts of the Republic of Tatarstan (Volga Federal District of the Russian Federation)
- Advising the government of the Leningrad region on the review of regional PPP legislation
- Expert review and development of recommendations on improvement of draft law on Public Private Partnership of Sakha Republic (Yakutia)
- Advising on a PPP project involving comprehensive repair of the city lightning networks fulfilled in one of Ural region major cities
- Comprehensive support for a project involving the creation of a “Regional Medical Rehabilitation Center” in Leningrad Region on the basis of PPP
- Participation in expert review and development of the draft federal law on PPP of the Russian Federation
- Expert review of draft law on Public Private Partnership of Udmurt Republic (Volga Federal District of the Russian Federation)
- Legal support of a PPP project on water utilities
- Advising the City of St. Petersburg authorities on the PPP project implementation