/ / Municipal private partnership: definition, agreement, law

Municipal private partnership: definition, agreement, law

ФЗ №244 "О государственно-частном партнерстве, of July 13, 2015, aimed at creating conditions for enhancing the investment attractiveness of the domestic economy, quality of services, products and works, which are under the jurisdiction of state authorities and local structures. The document identifies key aspects of the legal regulation of relevant relations, powers of responsible institutions. The law "On municipal private partnership" establishes guarantees for the realization of the interests of the parties to the transactions. Consider further the key aspects of ativnost act.

municipal private partnership

Regulations on municipal private partnership

MOs enter into contracts for the supply of productsproduction of works and provision of services for their needs. The order of their conclusion is determined by the regulations of the Russian Federation. Contracts financed exclusively by the local budget are not municipal-private partnership contracts. This is due to the fact that they, in fact, contain only a unilateral obligation to provide a service, perform work, or deliver products at a specific time for an agreed price. Municipal private partnership is a relationship in which co-financing of contracts is provided by the business and establishes the corresponding obligations for the municipality. In domestic practice, such transactions are considered as investment.

Lease Relationship

What could be a municipal privatepartnership? This attitude is based on different transactions. For example, an enterprise may use property on the right of lease. Meanwhile, not every such transaction will act as a municipal private partnership. An example is the following. The company leases a building, uses it in production needs. The municipality, transferring the building of the company, aims to replenish the local budget by paying for the operation. Such relationships do not act as a municipal private partnership. The definition of the institution under consideration contains an indication of co-financing the realization of the needs of the Moscow Region. In other words, an enterprise rents an object on specific terms for solving its socially significant tasks. In this case, some benefits for the company may be prescribed in the contract. Municipal private partnership based on rental relations can be used to solve the problems of socio-economic development of the territory. This could be the improvement of the services sector for citizens, the expansion of medium and small businesses, the social support of certain segments of the population, the formation of new jobs and so on.

Municipal private partnership: position

By signing the contract, the parties stipulate theirduties and rights, guided by the Civil Code. One of the advantages of such relations is the presence of regulatory support, the preservation of control over the exploitation of property by the owner. Accordingly, the municipal private partnership allows the owner to monitor the proper execution of the contract. At the same time, the Ministry of Defense carries relatively low risks and does not spend budget funds if existing facilities are transferred for use. The Regulation on Municipal Private Partnership provides for the possibility for the lessee to invest in the property he uses.

about public private partnership municipal private partnership

Concessions

This form of cooperation is considered today.most popular. As part of the concession contract, various municipal-private partnership projects are being implemented. The most relevant include contracts in the field of public transport, housing and communal services, waste collection and disposal. In the Russian Federation, there is a separate law regulating the conclusion of concession contracts.

Equity participation

Municipal private partnership in Russia canimplemented as a result of privatization of enterprises or the formation of a business entity. Thus, a unitary organization can be re-incorporated, then a share of securities can be sold. Regulatory regulation is carried out in this case in accordance with the Federal Law "On Privatization of Municipal and State Property".

Еще один вариант – учреждение хозяйственного of society. It will have a mixed ownership. In it parts or shares of securities will belong to MO, and the rest - to investors. Economic activity in this case is carried out at the expense of the participants. They are, respectively, private investors and the municipality. They manage the created society jointly. Such a municipal private partnership implies a proportional distribution of risks in accordance with the size of the share of participants in the capital. The balance of interests will be determined by those who own blocking and controlling stakes. Unlike other forms, the municipal private partnership of this type involves the constant participation of government representatives in the economic activities of the company. Accordingly, the business has less autonomy and freedom in making management decisions.

Mixed forms

Public-private, municipal partnershipnot delimited in the regulations. In this regard, in practice, various mixed forms of cooperation can be realized. In addition, there may be projects that are difficult to attribute to any of the above partnership options.

Municipal private partnership in Russia

Advantages for MO

Municipal private partnership canexist only with mutual benefit for the participants. Its presence acts as a prerequisite for cooperation. At the same time, the benefits for the parties may have different, and in some cases opposite, grounds. In this regard, in order to correctly formulate the terms of cooperation, it is necessary to understand the nature of the benefits for each participant individually. The advantages for MO are as follows:

  1. Attracting investment in the field of socio-economic development. The flow of funds contributes to the effectiveness of their own finances MO.
  2. Reducing the timing of development programs.
  3. Reducing your own costs.
  4. Improving the quality of services, reducing their cost.
  5. Attraction of technologies that were previously inaccessible.
  6. Multiplier effect.
  7. Attracting skilled workers.

Meanwhile, it would be wrong to say thatThese benefits appear by themselves and always accompany the relationship. These advantages must first be discovered, convincing in their reality of those who make management decisions.

Business benefits

What are the benefits of the agreement? Municipal private partnership can provide an enterprise:

  1. High guarantees in achieving the estimated profitability, return on investment, extracting the planned income.
  2. Obtaining a number of benefits to reduce costs and improve the economic performance of business activities.
  3. The presence of a certain range of consumers or a guaranteed market for sales.
  4. Higher availability of credit.
  5. Guaranteed financing, if the terms of the transaction involve the participation of funds MO.
  6. The possibility of signing contracts with joint liability for certain risks.
  7. Receiving a number of competitive, including reputational, advantages due to the presence of stable and long-term incomes, due to participation in projects of great public importance.

municipal private partnership law

Power risks

Municipal private partnership is always accompanied by the probability of loss. For the government, the potential risks may be as follows:

  1. The need to provide additionalfinancing, if it is stipulated by the terms of the contract or there is a delay in the implementation of the program until it is completely abandoned. The latter is likely in the event of an error in the economic justification of the project or when the market conditions change.
  2. Delaying the implementation of the contractor.
  3. Increase in the amount of own expenses
  4. Decrease in the quality of services or increase in their cost with low preparedness or bad faith of a partner.
  5. Reputational losses due to the failure of the project or failure to achieve goals.

Potential losses for the enterprise

Business risks can be:

  1. Adjusting the conditions of activity under the terms of the agreement due to changes in certain political factors (regulatory, priorities of power structures, and so on).
  2. The impossibility of achieving the estimated profitability indicators or reducing its level. Such a situation may arise as a result of market, economic, political factors.
  3. Changing consumer preferences.
  4. Reduction of estimated income during the execution of the agreement.
  5. Failure to comply with the contract of joint liability.
  6. Reputational losses in case of project failure or failure to achieve goals.

Investments

Although municipalities receivestable non-tax and tax revenues, their item of expenditure is quite voluminous. As practice shows, the costs only in rare cases can be covered entirely by their own profit MO. Usually, most of the expenses are repaid due to receipts from budgets of higher levels. At the same time, MOs are significantly limited in their ability to cover the deficit through borrowing. The way out of the situation can be a municipal private partnership. The law allows for partial or full financing of the implementation of tasks on the part of the business, the transfer of a part of the assets of municipal enterprises to enterprises. At the same time, the funds invested by third-party companies can be recouped at the expense of consumers, or this process will be extended in time if the purchaser of services is local government.

In practice, the MoD is forced to attractadditional resources for solving urgent problems of socio-economic development of the territory. As for business, the law "On municipal private partnership" provides a number of guarantees for enterprises. First of all, they relate to the procedure for the return of invested funds, as well as the extraction of the estimated income. However, it should be borne in mind that there are always potential risks. The larger the project, the higher they will be.

municipal private partnership example

Property use

Municipal-private partnership projects,based on rental and concession relations, involve the transfer of certain objects owned by local authorities to commercial enterprises. In this case, the MO is exempt from the obligation to maintain the property, and the business, in turn, saves money on its creation. Despite the obvious benefits, when implementing specific projects, the benefits may not be so pronounced. Objects, especially related to the housing sector, are often in a dilapidated state. In this regard, to assess the risk associated with the need for reconstruction or overhaul can be difficult. After the end of the concession or lease period, the user must return the object to the municipality. In this case, there is also a risk of wear and the need to carry out the restoration of fixed assets.

Efficiency of management

In the theory of market economics, there is the thesis thatthat private enterprise is more efficient than public management. Meanwhile, this opinion is valid for competitive economic conditions, developed institutions of civil law and the normative regulation of relations, as well as a high management culture. Only with a combination of these factors, the interest of commercial companies in reducing costs and making a profit is transformed into increased responsibility towards buyers. Accordingly, enterprises strive to improve the quality of services and products, apply new technologies, constantly improve production. To this end, within the framework of a municipal-private partnership, conditions should be established under which the activities will be managed by competent persons. At the same time, they can be representatives of both the authorities and the enterprises themselves.

municipal private partnership agreement

conclusions

Municipal-private partnership is inherently andlegal content is practically no different from the state. The difference is only in the scale of transactions and the volume of tasks to be implemented. Usually, the state takes part in the implementation of large projects for the development of individual regions or sectors of the national economic complex. MOs are interested in smaller programs.

Между тем указанные отличия не меняют принципов preparation and subsequent implementation of projects. From the scale of the program will depend only on the choice of the model or form of implementation. The state, being an interested party in large transactions, in their implementation in some cases cannot do without the participation of municipalities in them. This is due to the fact that in some situations it is necessary to coordinate with the local authorities documents on territorial planning, land acquisition, the granting of permits for the construction of facilities and the resolution of other issues related to the competence of self-government bodies. In this regard, almost all major public-private partnership programs are implemented in close cooperation with representatives of municipalities.

It should also be noted that in many casesThe local authorities show great interest in attracting investments into their territory. However, the municipalities are significantly limited in their capabilities in comparison with the state. Accordingly, they can use only some tools of motivation of commercial societies. This, in turn, indicates the need to formulate a specific policy for attracting financial resources in relation to not only business representatives, but also government bodies in the region.

municipal private partnership definition

Conclusion

Municipal private, likepublic-private partnership aims to improve the attractiveness of the economy for representatives of the business community. The current regulatory framework allows implementing both large and small development programs. At the same time, public-private partnership, attracting investors, seeks to solve larger problems concerning the region or sector of the economy. At the same time, government agencies authorized to conclude contracts often cannot do without the participation of local authorities. Municipalities, in turn, enter into agreements with private partners to address the most pressing issues of territorial significance. As a rule, cooperation is carried out in the field of consumer services, housing and communal services. Of particular importance is the participation of private investors in the field of transport services and social support to needy categories of citizens.

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