Developing
a country is a continuous challenge, for either rich country or poor ones.
Developing an attitude can be the key to success. Putting the right attitude at
work will result in a certain chance for a country to become reliable for his
inhabitants to live well.
One of the
major problems of Romania rely in the absence of highways and their link to
European major corridors. Proposed solution (see www.andnet.ro) were made
publicly for debate but the civic expressed feedback was not taken in real
considerations, as political final vote driven by commercial interests were
more important.
Among the
most solicitations expressed by people and private entities are for quick road
movement from Bucharest to European Union either on route Bucharest to Brasov
or on route Bucharest – Sibiu – RO-HU border.
After
several years and many studies done, it has been selected the route
Bucharest-Brasov. Multiple stages of the route have been done or in progress of
construction, but the most complex, highly expensive and disputed part regards
crossing the mountains.
Starting in
2000, the construction of Bucharest-Brasov highway has encountered many
difficulties on selecting the right contractor for the section Comarnic-Brasov
of the road. In 2002 has been launched a PPP announcement for construction of
that sector. In 2004, after a long period of negotiations, the contracts were
cancelled due to political rejection by the newly installed government.
In 2007 a
second attempt for a PPP contract was delivered, based on a concessions frame
awarded throughout a public procurement process. After several negotiations,
the contract didn’t reached to be signed due to financial reasons, partly on
grounds of non-acceptance of terms regarding the financial risks allocation by
the parties.
A third
attempt, also unsuccessful, was done since December 2012 till June 2015. The
same winning Joint Venture got in the phase of signing the contract, but the government
admitted there are some doubts on the potential of the JV to convince the
lenders to finance the project, that lead to cancel the signing of the
contract.
Given the
scale of the challenges to meet the massive demand for roads infrastructures,
the authorities should consider to mobilize and let the experts to do their
best, and only political involvement must be in allocating resources on time.
The
national legislation regarding preparation and procurement of a PPP projects
are not entirely completed but there are experts that can bring valuable
expertise into a strategic unit to manage the key aspects of a PPP framework
and also implementation of contracts. In support for a better understanding of
a PPP, The World Bank Group has developed this Reference Guide which is very useful, among other
interesting publications available for downloads.
Coming back
to the topic of this article, and having gone through a brief course of PPP, I
did noticed that are some errors in the implementing of procedure to apply a
PPP framework on selecting the contractor for this sector of the Romanian
highway, and thus the failure to conclude a PPP contract.
As
Public-Private Partnership is defined as a way of contracting for developing
and maintaining an infrastructure services, using private sector skills to
manage operations, the Romanian authorities have to try to make a right
assessment of investment regarding:
- - economic
fundamentals (make it affordable for populations, financially viable for
private investors, optimizing the cost according to a fair risks allocation,
and also a sound financial impact on public budget),
- - political
support (building a strong involvement of a diverse array of interests from
economic, political, environmental and social stakeholders to foster a sound,
stable and supportive regulatory environment),
- - execution
(a transparent and competitive bid process followed by a mix of local and
global experts well organized and coordinated team for ongoing contract
monitoring, payments and review)
The PPP
project must be also evaluated if it actually represents a better value for money
instead of classical procurement process comparing to the needs it covers.
A third
time rejection of a PPP contract reflects a bad understanding, preparations and
bid process execution of the project proposed for contracting. Financial
difficulties encountered by the winner can only be as a result of a wrong
allocations if risks, responsibilities and financial revenues of the parties.
A simple
and transparent bid process, either in a classical way or as PPP does not
guarantee the success of a PPP contract. Major difficulties come from an
insufficiently clear preparations of PPP projects, therefore are bound to fail
at the first pop up appearance of a problem. Such conclusions are taken the
lessons learned in week 1, 2 and 4 of the World Bank Course on PPP contracts.
Supposing
that a PPP contract is signed based on a well prepared projects and procurement
process, a bad management of a planning and dealing with projects or contracts
changes can lead to a bad result in terms of time and money for both parties.
In such cases, a user manual with basic rules to determine their action in
several day-to-day situations could and must be agreed by all parties involved
in a PPP project.
