Starting from January 1, 2016, Federal Law No.224-FZ “On public-private partnership…” enters into effect. This law requires individual regulatory acts concerning the preparation, assessment and monitoring of PPP projects and holding tenders.

Currently, drafts of such regulatory acts are published on the web at https://regulation.gov.ru/ and specify the following:

-          Additional requirements for the proposal on project implementation that can be submitted to an authorized body by the private partner;

-          Procedures for forwarding the proposal from the private partner and the consideration of such proposal;

-        Procedure for preliminary negotiations between public and private partners during consideration of the proposal submitted by the private partner;

-          Procedure for assessing projects;

-          Procedure for pre-qualification of tender participants;

-          Procedure for the public partner carrying out monitoring and control activities.

Pursuant to the draft regulatory acts, if a private investor submits the proposal for PPP project implementation to the authorized body, preliminary negotiations between public and private partners are allowed to be held:

-          On the initiative of the private investor before submitting the proposal on project implementation, and

-          On the initiative of the public partner after receiving the proposal on project implementation.

The private partner can propose a list of issues for preliminary negotiations, which is limited to matters concerning the compliance of the proposed project with requirements set forth by the Federal Law “On public-private partnership…” (principles of PPP, availability of public funds for project implementation, the public partner’s ownership title to the object, etc.). At the same time, the public partner has a right to initiate negotiations on any issue connected with the substance of the submitted proposal on project implementation.

It should be noted particularly that the draft act on regulation of the procedure for assessing projects stipulates 2 criteria of project efficiency: financial efficiency and socioeconomic effect from project implementation. If the project is considered effective under both criteria, the authorized body carries out an assessment as to the benefits of using state budget monies in implementing the project on PPP basis rather than based on a state contract. Such assessment also includes an independent technological, technical and financial expert examination and risk assessment.

Furthermore, when the proposal for project implementation is submitted to the public partner, the private investor must provide a bank guarantee in the amount of at least 5% of the expected financing volume, the financial model, and if the design is to be elaborated by the private partner, then the project design documentation or technical assignment must also be submitted.

Pavel Karpunin   Partner   St. Petersburg    pkarpunin@cls.ru   Tel.: +7 (812) 346 79 90

Rimma Tolmacheva   Senior Associate    St. Petersburg    rtolmacheva@cls.ru   Tel.: +7 (812) 346 79 90

Additional notes

Should any questions arise in connection with the above or if you need any additional materials, please contact Pavel Karpunin or Rimma Tolmacheva, St. Petersburg Office of Capital Legal Services.

This Information letter keeps the clients of Capital Legal Services and other interested parties abreast of information that may, to any extent, affect their activity or cater to their particular interests. The opinions and commentaries expressed in this information letter shall not be deemed as legal opinions and do not cancel the need to obtain legal advice or legal opinion on separate issues.