Draft Law on Public-Private Partnership of the Federation of BiH Adopted

(Patria) - The Government of the Federation of Bosnia and Herzegovina today, at a session in Sarajevo, upon the proposal of the Federal Ministry of Energy, Mining and Industry, adopted the Draft Law on Public-Private Partnership of the FBiH and sent it to the Parliament of the FBiH for adoption.

In the reasons for adopting this law, the proposer emphasizes the need to create a transparent, non-discriminatory, and clear legal framework for determining the conditions under which domestic and foreign legal entities can invest in the construction, reconstruction, maintenance, and management of public infrastructure facilities or public infrastructure for the purpose of providing public services, and meeting public needs within the jurisdiction of the public partner.

Furthermore, the proposed legal framework should contribute to stimulating domestic and foreign capital investment in the public sector to ensure a higher level of quality of public services in the FBiH. The legal basis for adopting this law is contained in the obligation of our country and public authorities at all levels, upon accession to the Stabilization and Association Agreement, to ensure the gradual harmonization of their existing laws, as well as future legislation, with the acquis communautaire of the EU.

It was explained that this draft law aims to contribute to creating opportunities for better provision of public services in the FBiH. The primary goal is to strategically determine which public investment projects can be subject to PPP, and how to implement the procedure for selecting a private partner in the most efficient and transparent manner.

In addition, mechanisms are foreseen for determining the list of projects that can be subject to partnership, and for creating a register of existing and potential projects. In this regard, the proposed solutions aim to create a more favorable environment that would attract serious foreign and domestic investors. It was noted that the provisions of the proposed law are fully harmonized with other regulations in our country that govern the area of public procurement, business companies, misdemeanors, etc.

It was also emphasized that the economic justification for adopting this regulation is primarily based on the proposer's intention to facilitate the implementation of PPP projects through a more regulated and transparent system. It is added that this regulates an area that was not sufficiently regulated, and which will contribute to reducing infrastructural deficiencies and strengthening economic growth in the Federation of BiH. The solutions provided by this law, as stated in the explanation, are harmonized with the best international practices, especially considering the financial justification and bankability of projects.

The proposed text gives public authorities the opportunity to provide better and more adequate public services that will not create an additional fiscal burden on the public sector. It was also emphasized that this Draft Law has no additional fiscal effects, nor does it involve the employment of new personnel, except for the foreseen improvement of knowledge and skills of existing employees in the field of PPP, and better coordination of institutions at the level of the Federation of BiH.

It was explained that primarily representatives of the Government of the FBiH participated in the "Public-Private Partnership" Project with the aim of establishing a functional framework aligned with EU legislation, European standards, and best European practices. To this end, technical support was received from the International Finance Corporation during the preparation of the law.

By analyzing the guidelines for the successful application of PPP, the advantages at the FBiH level highlighted include, among others, accelerated construction of public infrastructure, reduction of total project life costs, better risk sharing, and stimulation of contractors to improve the management and execution of each awarded project.

Additional reasons for public-private partnership projects also emphasized budget constraints of the public sector, demands for improving the quality of public sector services based on the knowledge and work methods of the private sector, and the necessary change in the role of the state in the economy and service sector, as well as increasing efficiency in infrastructure utilization.

This law regulates the concept and subject of public-private partnership (PPP), then models, definitions, principles, and risks of PPP, as well as competencies for PPP projects, and special purpose legal entities.

It also regulates the planning and preparation of PPP projects, the procedure for proposing, approving, and implementing these PPP projects, as well as the procedure for selecting a private partner, the rights and obligations of public and private partners, and the legal protection procedure. It also regulates the Register of PPP contracts, the competence for the procedure of evaluating and approving proposals for these projects, as well as tender documentation and PPP contract proposals, and misdemeanor provisions and other matters of significance for PPP.