Summary Report

MOLDOVA

Overview

PPPs are governed by the Law No 179-XVI dated 10 July 2008 on Public-Private Partnership (“PPP Law“). Several regulations are issued on the basis of the PPP Law. The Government Decree No 476 dated 4 July 2012 on “Approving the Regulation on Standard Procedures and Conditions for Selection of the Private Partner” (“PPP Decree No 476“) is the most comprehensive regulation; it provides for clarifications regarding the selection of a project, selection of the private party, and contains some provisions concerning a project agreement.

The Law No 131 dated 3 July 2015 on Public Procurement (“Public Procurement Law“) also applies to PPP projects, pursuant to Article 2(5) of the mentioned Law. Article 18(5) of the PPP Law stipulates that the implementation of PPPs through a concession agreement is governed by the concession legislation.

Concessions are governed by the Law No 534-XIII dated 13 July 1995 concessions (“Concession Law“). The Public Procurement Law also applies to concessions for public works, pursuant to Article 2(5) of the mentioned Law.

Project Models

The PPP Law expressly provides for BOT and other derived forms. Although BOO is not expressly allowed, the PPP Law provides for any other forms that are not prohibited by law.

There is no reference in the PPP Law to unsolicited proposals and it is unclear whether there are some rules on unsolicited proposals in the Concession Law.

A PPP agreement is to be negotiated within maximum 30 calendar days following the day it was received by the winning tenderer. Additionally, according to the PPP Decree No 476, during negotiations of the terms of the agreement, additional terms can be agreed by the parties, as long as these do not deviate from the essential terms/conditions set out in the tender documentation and the winning tender.

Content of Contract

The Concession Law provides for an exhaustive list of grounds for termination and the possibility of early termination is only open to the Concession grantor. Compensation of the private party for losses incurred as a result of early termination may be sought pursuant to the provisions of the Moldovan Civil Code, as the Concession Law provides no rules for such compensation.

Both the PPP Law and the Concession Law stipulate that the public partner assists the private partner in obtaining certain permits, authorisations and other documents related to the fulfilment of the PPP/concession agreement. It is a useful provision, but in practice, some permits/licenses are difficult to obtain.

Securities and Government Support

With regard to bankability, the PPP Law provides for the preliminary feasibility study of a PPP project. The Ministry of Finance (i) examines the proposals on state budget participation in implementation of PPP projects, initiated and approved by the Government, and (ii) monitors the process of state budget expenditure by the public partner.

As for the security interests, the private party may create security interests or other valuable guarantees over the object of a PPP only with the consent of the contracting authority. On the other hand, the concession Law explicitly prohibits the transfer of the object of the concession agreement entirely or partially to third persons. Under the PPP Law, should the contracting authority authorise the private party, the latter may pledge or assign by way of a security the following: the proceeds and receivables arising out of the PPP, its property (e.g. equipment or bank accounts at which receivables are paid), shares in the project company, or the project agreement by way of an assignment.

Furthermore, the PPP/concession Law does not provide the possibility for the public party to enter into a “Direct Agreement”. In practice, the step-in rights process may face various challenges due to the lack of regulation. The lenders may not be allowed to step-in without a new tender.

The possibility of settling disputes via international arbitration can be inferred from the provisions of the PPP/Concession Law providing for the possibility of arbitration, although there is no explicit reference to international arbitration.

Moldova also ratified the New York Convention on Recognition and Enforcement of Foreign Arbitral Awards (1958) (“New York Convention“). Moldova made a declaration on reciprocity whereby the New York Convention will be applied only to recognise and enforce awards made in the territory of another contracting state.

Institutional Framework

With regard to institutional framework, the National Council on PPP and the Inter-Ministerial Network on PPP have been established to deal with the PPP strategies. A PPP unit has been established within the Public Property Agency, which is a public authority that is empowered to perform PPP state policy.

There are no specific facilitation mechanisms, i.e. no project funds or specific banking facilities that would facilitate the development of PPP/concession.

Reform

On 17 May 2017, the Government submitted for Parliamentary review and voting a draft Law on concession of Works and Services (“Draft Concession Law“). The Draft Concession Law is intended to transpose the EU Directive 2014/23 on the award of concession contracts. It shall apply to concessions of works or services provided for a term between 5-35 years, the value of which is equal to or higher than MDL 5M for concessions of works, and MDL 1M for concession of services. The Draft Concession Law prescribes that it shall not apply to sectors where the state holds exclusive prerogatives, such as the police force, justice, defence, etc. It is envisaged that the new Law will repeal the current Concession Law as well as Article 2(5) of the Public Procurement Law (meaning that the Public Procurement Law would no longer apply to concessions for public works).

The Draft Concession Law explicitly states that it is guided by the principles of non-discrimination, equal treatment, mutual recognition, transparency, legality, predictability, proportionality and liability. Alongside the general principle of transparency, the Draft Concession Law contains more elaborate provisions on the publication of a notice on the award procedure and the notice on an award, which further contributes to the transparency of the award of concession agreements.

Since there is no reference to the value for money criteria in the concession Law, it is a positive improvement that the Draft Concession Law introduces additional provisions regarding the preliminary feasibility study as well as the provisions on criteria for determining whether the project should be implemented as a concession, or as general public procurement. Those criteria, however, should be further elaborated.

Unlike the current Concession Law, the Draft Concession Law explicitly provides for the possibility of using sub-contractors by the concessionaire. Moreover, the Draft Concession Law provides the rules regarding the concessionaire's choice of sub-contractors.

The Draft Concession Law also introduces the competitive dialogue. That is, the Draft Concession Law stipulates that the concession agreement can be granted either via public tender or via competitive dialogue.

Some To-Dos remain

Besides the above-mentioned positive improvements introduced by the Draft Concession Law, it still lacks some important provisions and clarifica-tions regarding the direct agreements, step-in rights, security rights, the possibility of inter-national arbitration etc. The Draft Concession Law also seems to contain fewer provisions on the rights and obligations of the contracting authority and the concessionaire, which may lead to legal uncertainty.

According to information on the Parliament of the Republic of Moldova website, the Parliament was examining the Draft Concession Law at the end of 2017 so that the outcome of such examination was still unknown.