The law on public-private partnership amended and supplemented

A public-private partnership seeks the realization of a public good. A project normally involves a benefit or right to carry on an activity which belongs to the public partner and which is intended for the provision or operation of a public service.

The Ordinance expands upon the notion of public partner and private partner so that any private investor may participate to the award procedure, not only legal persons and associations of legal persons as it was in the old regulation.

The terms of a project are also changed:
• “Works concession contract” and “service concession contract” are replaced by “public-private partnership contract”;
• “Concedent” is replaced by “public partner”;
• “Concessionaire” is replaced by “private partner”;
• “Concession notice” is replaced by “invitation to tender”;
• “Study to substantiate the concession decision” is replaced by “substantiation study.”

According to the new amendments, the forms of public-private partnership, either contractual or institutional, will be based on long-term contracts that enable the private partner to recover the costs of its investment and the costs related to the exploitation along with a reasonable profit.

The new Ordinance defines the public-private contractual partnership, the partnership which is based on a long-term contract between the public partner, the private partner, and a project company whose share capital is wholly owned by the private partner. Also, the Ordinance define the institutional public-private partnership as the partnership which is on the basis of a long-term contract between the public partner and the private partner, through which a new company is created, owned by the public partner and the private partner, who will act as a project company and acquires the status as a party to the public-private partnership contract.
Both in the case of a public-private contractual partnership and in the institutional public-private partnership, if the public partner is subject to a reorganization measure required by law, the new entity assumes the attributes and activities of the prior public entity in the public-private partnership contract. Consequently, private partners are now protected if the public partner is subject to a reorganization. Before these amendments to the Law on Public-Private Partnership, if the public partner was subject to reorganization, the private partner had difficulties in imposing in practice the attributes and activities of the prior public entity in the public-private partnership contract upon the new public entity.

Another major change is found concerning failures by the public partner. If the public partner fails to fulfill its obligations, it violates the law and can be fined with amounts starting from 10.000 lei (approx. 2.154 Euros) and 30.000 lei (approx. 6.464 Euros). For example, the public partner must send a certified copy corresponding to the original of the public-private partnership contract within 30 days of signing to the National Statistics Institute. If the public partner fails to do this, the fine is between 10.000 lei (approx. 2.154 Euros) to 30.000 lei (approx. 6.464 Euros). Before the recent amendments to the Law on Public Private Partnership, the public partner was not considered an offender and could not be sanctioned.

The changes became effective on 28 December 2017 except for the provisions regarding the new contraventions applicable to the public partner, which will take effect 60 days after publication in the Official Gazette of the Government’s Emergency Ordinance no. 104/2017 amending the law in the field of public-private partnership .i.e. 60 days from 28 December 2017, when the Official Gazette published the Emergency Ordinance.

Stratulat Albulescu - Attorneys at law