There is no concession law in the Czech Republic, thus current private sector participation (PSP) in the country is based on leasing contracts, with private companies owning a share in operations either solely (as in Prague) or together with municipalities. The share holding of both the private multinationals and the municipalities is changing over time, with the multinationals increasing their share of the market as shares become available.
Box 2. Summary of the PPP legal framework in the Czech Republic |
❖ Public Procurement Act (PPA) |
The Czech government adopted a general policy on PPP for the Czech Republic in January 2004. An inter-sectoral team has been established, comprising workers from individual public sectors and the National Property Fund. In spite of the fact that the legal environment in the Czech Republic has not been prepared for PPP implementation, some PPP projects have already been introduced, for example by the municipalities of Prague, Pardubice and Olomouc. Nevertheless, it is still too early to evaluate the results of such projects as nobody can make a qualified assessment of the proficiency of analyses and comparisons made on the advantages of individual forms of project funding and whether those projects will be cheaper ultimately or excessively burdensome for local budgets. Adjustments to legislation are necessary for central government to be able to intervene in the affairs of local administrations.
Existing PPP projects in the Czech Republic include: waste management, water supply projects, transportation systems (construction and maintenance of roads and railways), information technology, public lighting in Prague and education.
The only current legislation in the Czech Republic that specifically enables PPP projects is the Land Communication Act (No.13/1997 Coll., as amended), which allows transport infrastructure to be developed by granting operators concessions to build highways and then operate them for up to 35 years, while the state retains ownership. This was used most notably in the aborted D-47 project in Moravia.
However, momentum for a broader range of PPP projects has been building through a number of recent developments:
❖ The approval of a policy document by the Czech government in August 2004, which sets out what PPPs are, what legislation exists to support them and what further legislative and other steps are necessary to further enable PPPs. It includes proposals for a new act, scheduled to come into force in May 2006, involving concession agreements between the public and private sectors working together as equal partners. Presently the new Act on Concessions is close to receiving approval in Parliament
❖ The founding of a special department within the Ministry for Local Development to support and co-ordinate PPPs alongside other governmental bodies and agencies.
❖ The founding of the PPP Centrum, modelled on the British Partnership UK, to help bring about new legislation, introduce new methodologies and assist public sector bodies with the implementation of PPP projects. The Czech Ministry of Finance set up the PPP Centrum on the recommendation of the World Bank.
❖ The announcement of the first wave of pilot projects (decree No.791), including: the modernization, operation and maintenance of a high-speed rail link connecting the centre of Prague with Ruzyne Airport and the town of Kladno; and the construction of a dormitory and car park on the premises of the Central Military Hospital in Prague.
A second wave of projects has also been announced, including:
➢ A 30km-stretch of D3 motorway from Tabor in Southern Bohemia towards the Austrian border;
➢ Various projects for the Ministry of Justice, such as the construction and operation of prison facilities and several new regional courts;
➢ Construction of a student dormitory on the Masaryk University campus in Brno; and
➢ Construction of a ring road around the city of Brno.
The most interesting of the local municipal projects under discussion is the commissioning of a ring road by the City of Prague.
The current draft of the act on concession agreements is far from ideal and has attracted a lot of criticism. However, many experts welcome it in spite of its weaknesses, as it signals the arrival of the day when PPP projects are no longer just a hot topic for discussion, but will finally start to happen.