Concessions and the other forms of PPPs by Dr Lorenc Gordani, 11th March 2017

In Albania, the concession concept is to an extent more developed than public-private partnerships, given that it has been earlier regulated by the legislation, whilst the PPP concept has only recently been introduced in the Albanian legislation. For this reason, concession contracts have a more consolidated background and have been used more often by the public administration. Instead, based also on business practices, during recent years, a broader concept of public private partnership has been used.

There is no universally recognized definition of public-private partnerships and governments across the world describe them in varying ways. A useful contribution to the discussion in Albania may be the World Bank definition, which reflects some commonly understood aspects, and describes PPPs as, “a mechanism for government to procure and implement public infrastructure and/or services using the resources and expertise of the private sector.”.

In accordance with definitions and provisions of the actual PPP Law, “On concessions and public private partnerships”, the distinctive characteristics of concessions compared to public private partnerships can be assessed, focused on clarification of the definition, and nature of these concepts. In regard, it is important to be aware that public private partnership projects can be implemented through various contractual types, one of which is a concession contract.

The distinct elements of 4 types of PPP contracts are outlined by the provisions of law, depends on the private public partnership remuneration tools as well as on the normal main risk sharing. In summary, the concessionaire is entitled to use public works or public services, and in specific cases can benefit payments. For the completion of the contract object, the concessionaire undertakes a considerable part of the contract operational risk.

Next to concession contracts, private public partnerships may also be performed through the contracts of public works or services. The legislation in the field of PPP contract types remains open, granting to contracting authorities some discretionary rights regarding the selection among various types of contracts and the determination of their content.

Some core characteristics of private public partnerships and cases when projects have to fulfill to qualify as private public partnerships are: long-term cooperation forms, provision of a public service (hence, for this purpose it is useful or necessary that contracting authorities are ultimately responsible), obligations of a private partner, risk transfer, the remuneration of the private partner as provided by the contract.

Thus, private public partnerships can be set forth through different types of contracts based on the needs of contracting authorities and private partners, in compliance with specificities of actual cooperation projects between them. The general principle is the contracting authority must try to achieve their needs toward the performance of public projects in the most profitable and most feasible manner aiming to fulfil their purposes and naturally in line with the binding provisions of the legislation in force.

On the other hand, the contractual freedom is an advantage also to private partners, which benefit from the necessary space to negotiate their rights and obligations in contracts they enter into with public partners. Based on best practices, and examples of the most developed countries, private public partnerships may be performed through a variety of contracts, which may differ from one another and have different contents, according to contracting authorities’ needs in accordance with the specificities of concrete cooperation cases between them.

Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author at the “lorenc_gordani@albaniaenergy.org”.

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