Czech Republic: Public-Private Partnerships

Public private partnerships have already received the go-ahead in the Czech Republic even though the legislative framework is not yet in place.

There is nothing in Czech law to prevent PPP projects; all that is required is for partners to take an innovative approach, relying on the experience and technical expertise of advisors such as CMS Cameron McKenna gained through our involvement in numerous landmark PPP projects around the world.

The only current legislation in the Czech Republic that specifically enables PPP projects is the Land Communication Act (No. 13/1997 Coll., as amended), which allows the transport infrastructure to be developed by granting operators concessions to build highways and then operate them for up to 35 years, while the State retains ownership. This has been used most notably in the aborted D-47 project in Moravia.

However, momentum for a broader range of PPP projects has been building through a number of recent developments:

• the approval of a policy document by the Czech government in August 2004 which sets out what PPPs are, what legislation exists to support them and what further legislative and other steps are necessary. It includes proposals for a new Act scheduled to come into force in January 2006, involving concession agreements between the public and private sector working together as two equal partners.
• the founding of a special department within the Ministry for Local Development to support and coordinate PPPs alongside other governmental bodies and agencies.
• the founding of the PPP Centrum, modelled on the British Partnership UK, to help bring about new legislation, introduce new methodologies and assist public sector bodies with the implementation of PPP projects. The PPP Centrum was set up by the Czech Ministry of Finance on the recommendation of the World Bank.
• the announcement of the first wave of pilot projects (decree No. 791), including the modernisation, operation and maintenance of a high-speed rail link connecting the centre of Prague with Ruzyne Airport and the town of Kladno; and construction of a dormitory and car park on the premises of the Central Military Hospital in Prague.

A second wave of projects has also been announced, including:

• a 30 km stretch of D3 motorway from Tabor in Southern Bohemia towards the Austrian border
• various projects for the Ministry of Justice such as the construction and operation of prison facilities and several new regional courts
• construction of a student dormitory on the Masaryk University campus in Brno;
• construction of a ring road around the city of Brno.

The most interesting of the local municipal projects under discussion is the commissioning of a ring road by the City of Prague.

The current draft of the Act on concession agreements is far from ideal and has attracted a lot of criticism. However, it should be welcomed in spite of its weaknesses as it signals the arrival of the day when PPP projects are not just a 'sexy' topic for discussion but will finally start to happen.

For more information or advice on PPP projects in the Czech Republic, please contact Jan Kotik at [email protected] or on: +420 221 098 892.