Public Private Partnership in the Czech Republic to get a legal framework

This week, the Czech National Property Fund, that manages state owned property, has introduced a new project to establish a legal framework for Public Private Partnership. In essence, Public Private Partnership is a partnership between the public and private sectors to develop public infrastructure. Although this type of financing of public assets is not completely new in the Czech Republic, there is a lot the country can learn from the experience of others.

Public Private Partnership in the Czech Republic to get a legal framework

Logo of Czech National Property Fund

A Public Private Partnership (or PPP) is a partnership between the public and private sectors for the purpose of delivering a project or service traditionally provided by the public sector. It is a common way of financing public assets in many countries around the world, most prominently in Great Britain. Public Private Partnership has been used successfully in long-term projects in areas as diverse as health care, defence and education.

The Czech Republic has tried to use PPP before, with mixed results. It has been the less successful projects that have attracted the most media attention, such as the infamous D47 motorway in North Moravia and the Internet for Schools project. So far, all such initiatives have been one-off projects, with no clear rules defined. Now the government has 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.

Jan Juchelka is 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."

Public Private Partnership recognises that both the public sector and the private sector have certain advantages in the performance of specific tasks. In ideal conditions it should combine the best of the public and private sectors with an emphasis on value for money and delivering quality public services, and doing so in the most economically efficient manner. Mr. Juchelka specified the main advantages of PPP:

"The main advantages include, first, the sharing of risks connected with this type of projects between the public and private sector. 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."

The National Property Fund is 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 asked Mr. Juchelka what role Public Private Partnership will then play in financing 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."