Public Private Partnership in the Czech Republic
A few days ago, the Czech National Property Fund introduced a new project to establish a legal framework for Public Private Partnership. In this week's Economics Report, we discuss this alternative method of government procurement with the chairman of the executive committee of the National Property Fund, Jan Juchelka.
Public Private Partnership recognises that both the public sector and the private sector have certain advantages in the performance of specific tasks. It therefore combines the best of the public and private sectors to deliver quality public services in the most economically efficient manner.
The Czech Republic has used PPP before, but without any rules defined. The government has therefore charged the National Property Fund with working out a strategy for implementing PPP and proposing necessary legislative changes, learning from the experience of other countries. The National Property Fund is supposed to present the Public Private Partnership strategy to the government by the end of October, necessary legislative changes are expected to be adopted in the first half of 2004.
I spoke to Jan Juchelka, the head of the National Property Fund executive committee:
"It is not completely new but this is the first time when the public sector is going to establish a clear regulatory framework. We can say that several projects have already been finalised, some of them successfully, some of them unsuccessfully. But generally speaking, so far it lacked any regulation."
Are there any specific areas where PPP can be applied?
"PPP projects are applied in the areas of health, defence, transportation and several other areas."
What are the main advantages of this way of financing public assets?
"The main advantage as are: first, sharing of risks stemming from these types of projects between the public and private sectors. Also, there is clear cooperation between the public sector which is perfectly able to define its objectives, and the innovative approach and effectiveness of the private sector."
Are there any dangers for the public sector?
"There is a number of risks which have to be treated seriously. For instance, when the state is starting a PPP project, it is a fully off-balance sheet operation, but in the future, it will have to be accounted for in the state's books. Other risks are connected with the project financing, but - and this one of the advantages I have mentioned - these risks are shared between the public and private sectors."
When creating this regulatory framework for Public Private Partnership, have you learned from the experience of other countries?
"We have studied a number of materials, a number of sources, and we have met representatives of Partnership UK from Great Britain as well as people responsible for PPP projects in Ireland. We have talked to people from New Zealand, South Africa, North America, etc. We are trying to collect their experience and transfer it to the Czech Republic, to adopt the best practice for our institutional and legislative framework."
Is it possible to take experience from abroad and implement it in the Czech Republic or is this country specific in some way?
"I think there is no general form of PP projects. We have to take into account the specifics of each country, including the Czech Republic. What we can do is to seek inspiration abroad, learn from their mistakes and try to eliminate potential risks."
Will the public sector now push for PPP to be more widely used in public contracts or will it be just an additional instrument of financing of public assets?
"I think it will be one of the most important instruments but there will still be the good old conservative approach of the public sector to this type of services and projects."
