The 1994 Concession Law makes no mention of institutional arrangements, risk-allocation guidelines or procurement. PPPs are therefore largely governed by general public procurement and investment laws, the Civil Code and, where relevant, by sector-specific regulations. There is no defined process for choosing a PPP over other procurement modes. Ministries are responsible for setting the long-term policy direction in their sectors (not specific to PPPs) and either procuring authorities or external donors establish the criteria for project identification and evaluation.
Thus, despite the existence of numerous positive elements, the Law does not constitute a sufficiently solid legal basis for the development of PPP. The compliance of the legal framework is low.
A Policy Paper for improving the legal environment and promoting PPP was adopted in Georgia in 2016. Moreover, a draft PPP Law is, with the assistance of EBRD and ADB and together with the preparation of secondary legislation, under discussion/preparation at the government level during 2017. The pending draft Law under preparation takes into account the EU Accession Agreement of Georgia, which entered into force in 2016. The Agreement requires that the process harmonising public procurement and concessions with EU Directives begins. The new Law should cover all types of PPP, in compliance with the PPP Policy Paper.
Policy paper fosters optimism for PPP framework
These efforts are expected to result in a significantly improved legal framework (and scores). We were informed that the award process for PPPs will be fixed by reference to the Public Procurement Law, but that this does not apply to concessions.
Project and Private Party Selection
The compliance of project selection and of private party selection processes with international standards is low. The framework for project agreements, securities and government support are slightly better but still low.
According to the PPP Knowledge Lab, Georgian PPPs have not been a priority in Georgia and, over the last decade, most infrastructure has been developed either through full privatisation or through traditional public procurement that has been funded by overseas development agencies and IFIs. The 2014 EIU Asia-Pacific Infrascope placed Georgia last in terms of PPP readiness in the region.
However, at least two successful PPPs have been implemented in Georgia (including the Tbilisi International Airport and the Dariali hydro power project). Some other projects were carried out in a manner that is at least comparable to PPP (water housing, energy). Further PPPs in the health sector are in the pipeline.
The existing Georgian Concession Law (Law of Georgia “On the Procedure for Granting Concessions to Foreign Countries and Companies“), adopted in 1994, is not used in practice. Thus, in practice concession PPP projects (as well as non-concession PPPs) are handled under Civil Law and the Public Procurement Act. Therefore, the scoring of non-concession PPP was taken into account for concessions as well and were (in most parts of this assessment) not scored individually.