PPP in CEE Forum

Our inaugural PPP in CEE conference in the UK, and the 4th in our PPP series, took place on 13 March 2012 at the Brewery, London. We would like to thank our event sponsors Saritor Group and CMS Cameron McKenna, the event chairman Mr Geoff Haley (IPFA) and all our speakers, panellists and media partners for their support. The event proved to be a great success, with heated debate on the future of PPPs in CEE, offering case study examples from Poland, Romania, Lithuania, Turkey and Ukraine, as well as comparisons with the UK, Hungary and Czech Republic.

Key topics:
•    Risk allocation
•    Need for institutional capacity building
•    Role of EU funds and blended PPPs
•    Understanding legislation
•    Need for social infrastructure vs. economic infrastructure
•    PPPs should not be used as political tools
•    Investment climate and liquidity
•    Addressing corruption
•    Lessons learned from the UK and past failures in CEE
•    Building public confidence in PPPs

The event was opened by Mr Geoff Haley (IPFA), offering an excellent overview of the Global PPP market, placing the CEE in context and touching on some of the key issues surrounding political, economic and contractual risks. This was followed by Mr Kevin Hanlon (Local Partnerships UK) who reviewed the development of the UK PPP/PFI market, stating the importance of PPPs in delivering economic infrastructure, such as roads, rail and telecommunications. This prompted much discussion as members of the audience argued that social infrastructure also provides both direct and indirect economic benefits. Mr Marcel Babczynski (Erste Bank) provided a bankers’ perspective on financing PPPs in CEE, although laden with scepticism, it showed that financiers are willing to finance PPPs, provided the right environment. This included fair risk allocation between the public and private sector, the need for transparency and competitive bid processes. The first session was closed by Ms Susan Goeransson (EBRD) who delivered an excellent presentation on the role of the EBRD in financing municipal PPP projects, with case study examples from Turkey, Poland and Romania. Susan aptly showcased the different financing mechanisms available from the EBRD, including case study examples of equity-based investments in organisations across CEE.

The second session focused on the Polish PPP market and was hosted by Saritor Group. Mr Philip Andrews (Saritor Group) provided an excellent presentation on the maturing PPP market in Poland, discussing past challenges and future opportunities. Philip was optimistic about the Polish market, expecting more PPP projects to be signed off in the coming 18 months, a sentiment echoed by Mr Adam Jedrzejewski (Institute PPP). Mr Krzysztof Przysliwski (Lancut Media Centre) followed with a short case study on the urgent need for investment into the Lancut healthcare system, also highlighting the chronic need for investment across the whole Polish healthcare system. Comments from the audience strongly indicated that PPP was a viable option, as long as the NFZ (Polish national health system) supported such investments. The investment climate in Poland was fittingly described by Mr Aleksander Libera (Embassy of the Republic of Poland), showcasing the complimentary benefits of investing into the Polish market. The session was closed with a panel discussion on the future of PPPs in Poland chaired by Mr Michael Clay (BPCC), with panellists including Philip Andrews, Krzysztof Przysliwski, Adam Jedrzejewski and Pawel Pawlowski (City of Warsaw). The panel discussed many pertinent issues regarding the development of the PPP market in Poland. Importantly, the Polish central government needs to show greater leadership in ensuring PPPs are implemented, and in the right way. Too often PPPs are used for the wrong reasons, such as politicians promising a PPP projects prior to elections. These projects are often forgotten or fail and should have never been announced. The panel agreed it was important for professional, often international advisors, to aide municipalities and central government in deciding which projects were suitable for the PPP method. Ultimately, the Polish market is showing good signs of development, however there is an urgent need to build capacity both at a national and municipal level.

The final session of the day investigated the potential of PPPs in emerging markets, with showcase presentations from Romania, Ukraine, Turkey and Lithuania. His Excellency Ambassador Dr Ion Jinga (Embassy of Romania in UK) provided a broad overview of the investment climate in Romania and the potential for PPPs, with notable opportunities in transport infrastructure. Mr Daniel Bilak (CMS Cameron McKenna) assessed the feasibility of PPPs in Ukraine, with an honest and frank presentation. There appears to be serious problems in regards to corruption in Ukraine, however there are positive signs from the government in regards to promoting PPPs, with an optimistic target for the coming 5 years. Mr John Seed (Mott MacDonald) dissected the Turkish PPP market, and like the Ukraine the government is extremely optimistic about the potential of PPP projects, however there are questions on the availability of finance. Lithuania in comparison has a much smaller market, however it is shown to have a steady pipeline of projects with excellent support from national government and realistic approach to risk allocation and procurement processes (provided by Mr Tadas Jagminas, Invest Lithuania). Mr Peter Snelson (PS-PPP) closed the final session with a presentation on a PPP maintenance in Romania, highlighting the difficulties of working with pessimistic municipal governments, who have little trust for the private sector.

The event promoted much discussion regarding the future of PPPs in CEE, offering an excellent forum for UK based firms interested in this growing market. If you are interested in finding out more and would like to download the presentations, please complete the conference documentation request form, available to download from this page.

If you are interested in the CEE, SEE and Turkish PPP markets then please contact our PPP and investment team for more information. We are running three other PPP-focused events in 2012, which can be found on our upcoming events page. Please contact Aga Pawlowska or Tom Popple for more information. We look forward to welcoming you at another EEL Events Forum.

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