Security and support issues.
According to the 2011 PPP assessment, Belarus had no specific PPP legal framework. Now, it has a new PPP Law and a Concession Law. The 2013 Concession Law does not appear to be very different from the provisions previously included in the Investment Code. It is very much oriented to mining, manufactured production and production sharing rather than work and service concessions for public infrastructure. So, the Concession Law is intended to set forth the conditions for two things: (a) the use of state property required for the concession at hand, and (b) the right to carry out a certain kind of activity being the concession object. The concessionaire receives an exclusive right from the state to carry out this activity if it is on the approved list of concession property or activities).
Infrastructure projects are mostly established under the scope of application of the PPP Law. This assessment therefore displays the solutions of both the Concession Law and of the PPP Law, but it only takes the PPP Law provisions into account to determine the compliance and effectiveness score.
Some PPPs under the Belarus PPP Law – in particular those establishing a user-paid model that allocates the demand risk to the private partner – could be considered concessions within the terminology of this assessment. Some works and service concessions within the scope of application of the Concession Law could be considered non-concession PPPs.
The PPP Law in particular
• The way to the new Law
A strategic direction noticeable in Belarus in recent years is the orientation towards PPP. The Belarus legislator has been working on a legislative framework for PPP since at least 2011 by drafting a specific law on PPP and by doing so tried to create an instrument for the private financing of infrastructure. A concept bill for PPP was approved at the meeting of the Presidium of the Council of Ministers of Belarus chaired by Prime Minister Mikhail Myasnikovich on 21 June 2013.
The PPP Law was enacted in 2015 and was followed by a Resolution of the Council of Ministers No. 532 On Measures to Implement Law of the Republic of Belarus of 30 December 2015 On Public-Private Partnership.
• Secondary regulations
In accordance with the Law of the Republic of Belarus of 30 December 2015 On Public-Private Partnership, the Council of Ministers of the Republic of Belarus approved the Regulations on Procedure of Preparation, Examination, and Evaluation of Public-Private Partnership Project Implementation Proposals; the Regulations on Procedure of Arranging and Holding Tenders to Select Private Partner to enter into Public-Private Partnership Agreement; and the Regulations on Procedure of Maintaining State Register of Public-Private Partnership Agreements.
Due to the country’s legal culture, the institutional framework both for concession and non-concession PPP appears to involve too many stakeholders into the review and approval of projects with no reference to – and thus no clear positioning of – the PPP unit. One of the main difficulties of Belarus law is the apparent lack of harmonization between the PPP Law, the Concession Law, the Investment Law and the Public Procurement Law. This potentially creates the risk of mistakes when determining the correct legal basis for the private partner selection. For the sake of clarity of the PPP agreement regime in Belarus, it would have been useful if the draft law had specified/eliminated doubts that the PPP agreements are not subject to Public Procurement regulations or to the Concession Law, or if they are, to specify precisely which rules shall apply when.
The Law also provides for the possibility to pledge or otherwise encumber infrastructural facilities as well as the possibility for Lenders and granting authorities to enter into a direct agreement, thereby granting a step-in right for the lenders (Article 37). It further allows for the possibility of financial support for the public-private partnership agreement on the part of the public partner, for stability of the public-private partnership agreement’s conditions against changes in law, and for state guarantees of private partner’s rights. It also gives the foreign partner discretion to use foreign arbitration. All such provisions are certainly very positive for the private financing of infrastructure.
However, one red flag issue was identified; namely, the Concession Law explicitly prohibits any encumbrance, assignment, lease or transfer of the concessionaire’s rights (and obligations) under the project agreement. This makes project financing in a non-concession model extraordinarily complex.
• Some more clarification and simplification required
All such provisions concerning in particular financial support and security are very much in line with PPP best practices but they still require some clarification as is the case for the implementing rules for preparatory works and project selection, tender process and PPP register.
With the implementation of the new PPP regulation framework, Belarus has opened the way to develop more infrastructure projects through public-private partnerships. The Government is currently building a pipeline of projects.