Serbia has a Law on Public-Private Partnership and Concessions (the “Law“), enacted in 2011 and amended in December 2016. However, further amendments are expected. Serbia also has a Public Procurement Law (“PPA”). As an EU accession country, its PPA as well as the Law are strongly influenced and predetermined by EU procurement law.
However, the PPA governs additional matters which result in high compliance: additional rules for concession PPPs, a set of rules for unsolicited proposals etc. The general compliance of its legal framework is very high for non-concession PPPs and concession PPPs.
The Law makes a distinction between the award of concessions for which it contains a specific procedure (Article 29–44) and the award of (non-concession) PPPs for which the PPA applies in respect of the procedure for private partner selection – with specific additional rules in the Law (Article 26–28). Such specific rules for non-concession PPPs concern determining the value of the public contract, the manner of making public invitation and the deadlines for submitting bids. All this makes sense because a non-concession PPP not only involves design and construction tasks but also project financing and long-term maintenance, which make the estimation of the contract value complicated and the normal rules insufficient.
Additional publication media are also a good approach to attract as many international investors as possible.
Notably, since previously there was ambiguity about what particular public procurement rules should govern the procedure of selecting a private partner and their interplay with the procedural rules under the Law (for PPP projects), the amendments to the PPP Law adopted in December 2016 now explicitly excluded application of the public procurement rules for (i) method of calculating of the estimated value of the public contract; (ii) joint bid; (iii) sub-contractors; (iv) deadlines for submitting of the bids and applications; (v) deadlines for adopting the decision on the election of the best bid; (vi) deadlines for the conclusion of the contract; and (vii) amendments of the public contract.
Like several other concession laws from former Yugoslavia and the former USSR, the term concession still includes concessions for the exploitation of natural resources and industrial activities. However, the Law explicitly makes a distinction and such exploitation projects play only a minor role on the market.
The rules on project selection are in line with international standards (high compliance for PPP and very high for concession).
Private Party Selection
Serbia is the clear champion when it comes to its procedural rules, legal remedies, rules for contract amendment, securities and other bankability issues. It scores a perfect compliance rate for non-concession PPPs and very high for concession PPPs. However, these rules have not undergone a practice test so far and it still remains to be proved whether they are fully bankable in practice especially for large-scale projects. Taking into account the poor experience with non-concession PPPs and concession PPPs in the past and the small size and volume of the market, the Serbian law maker was well advised to provide for feasible conditions concerning bankability issues.
The compliance with rules about securities are also flawless compared to international standards: 100% for both non-concession and concession PPPs.
Thus the overall compliance is “very high” for non-concession and concession PPPs.
Serbia achieves lower compliance in the following areas of the project agreement (still being highly compliant for non-concession and concession PPPs):
• unclear calculation of termination compensation
• Like many other laws the Serbian non-concession PPP and concession PPP Law does not regulate tariff setting and administrative coordination; these matters are governed by the respective regulatory laws; and
• the actual capacity of the capital market.
The Policy framework is “very high” in its compliance, the institutional framework scores “high”. It does not come as a surprise that the award statistics have also risen up to “high” effectiveness, especially in recent years. This resulted in a significant increase in the number of projects in the transport, energy and non-merchant sectors. Finally, the business environment is also “highly effective”.
Serbia only achieves lower results in the area of actual capacity of the regulators involved.