assessment summary 2008 - czech republic [ebrd - …. checklist czech republic ws0101.4426138.1...

WS0101.4426138.1

Czech Republic

Core Area Summary of PFI Guide recommendations1 / Best Practice Rating Assessment 1-General Policy and

Concession Legal Framework

Existence of a policy framework for public private partnerships ("PPPs").and existence of specific concession law or of a comprehensive

set of laws regulating concessions and allowing easy access to a clear and stable legal environment for PPPs.

20/24 0,83

High Compliance

2-Definitions and Scope of the Concession Law

Existence of a clear definition of the boundaries and scope of application of the concession legal framework (definition of "concession", sectors concerned, competent authorities, eligible concessionaires) limiting the risk of a challenge to the validity of concession contracts irrespective of

the name given to the act.

23/36 0,64

Medium Compliance

3-Selection of the Concessionaire

Mandatory application of a fair and transparent selection process. Limited exceptions allowing direct negotiations, competitive rules for unsolicited proposals and the possibility to challenge illegal awards.

40/45 0,89

High Compliance

4-Project Agreement Flexibility with respect to the content of the provisions of the concession agreements which should allow a proper allocation of risks without

unnecessary or unrealistic/not bankable/compulsory requirements/interferences from the contracting authority (obligations,

tariff, termination, compensation).

10/27 0,37

Low Compliance

5-Security and Support Issues Availability of reliable security instruments on the assets and cash-flow of the concessionaire in favour of lenders including "step in" rights and

possibility of government financial support or guarantee of the contracting authority’s proper fulfilment of its obligations.

3/18 0,17

Very Low Compliance

6-Settlement of Disputes and Applicable Laws

Possibility to obtain proper sanction for breach under the applicable law through international arbitration and enforcement of arbitral awards.

12/15 0,80

High Compliance

OVERALL RATING 62 % Medium Compliance

1 UNCITRAL Legislative Guide on Privately Financed Infrastructure Projects, 2001 (hereinafter the "PFI Guide") Checklist Czech Republic Local Expert: GLN Prague

2.

Checklist Czech Republic WS0101.4426138.1

OVERALL ASSESSMENT OF THE QUALITY OF CONCESSION LEGISLATION: The Concession Act was introduced with the aim of separating concessions (as a specific type of public private partnership) from the regulation of public procurement, recognizing the specific nature of concessions. Prior to adoption of the Concession Act (see definition below), the Public Procurement Act (see definition below) applied to these relations. Yet the two acts are closely interconnected since the Concession Act is rather concise and makes frequent cross references to the Public Procurement Act. However, the cross reference is sometimes rather vague and therefore the scope of application of the Public Procurement Act on concessions is not always entirely clear. The Concession Act implements the relevant European directives and to a certain extent exceeds the minimum regulation harmonized by these directives. For example, the Concession Act governs not only concessions on public works but also services and regulates activities excluded from the scope of the Directive 2004/18/EC (water management, energy sector, postal services etc.). Some parts of the Concession Act, however, may be seen as unclear (for example identification of the public procurement contracts which are governed by some provisions of the Concession Act). In some cases, the different regulation in the Public Procurement Act and the Concession Act seems ungrounded – for example the possibility to conclude the concession contract with SPV (special purpose vehicle/concession company) of the selected concessionaire or the Contracting Authority, lacking in the Public Procurement Act. Certain situations are not regulated by the Concession Act at all, which may be seen as a deficiency – for example lack of provision enabling direct negotiations for award of additional works. The first amendment to the Concession Act will enter into effect soon, aiming to remedy the first flaws. The practice will surely demand more of such amendments. Yet at this stage the Concession Act provides a more or less clear legal environment for concessions as one type of PPP, while also implementing the European regulation.

3.


Key for assessment of Each Question

Yes 3 points Yes, with reservations 2 points No, with limited compliance / redeeming

features 1 point

No 0 point N/A Not applicable 0 point

Key for Assessment of Each Core Area and for Overall Assessment

> 90% Very High Compliance 3+1 points ≥ 70%-89% High Compliance 3 points 50%-69% Medium Compliance 2 points 30%-49% Low Compliance 1 point

< 30% Very low Compliance 0 point

4.


1.

GENERAL POLICY AND CONCESSION FRAMEWORK

QUESTION

ANSWER

ARTICLE

COMMENTARY

1. Is there a general/national policy framework (explicit or implicit) for PPPs in infrastructure or public services?

PPPs are understood in this context as different forms of cooperation between public authorities and the world of business which aim to ensure the funding, construction, renovation, management or maintenance of infrastructure or the provision of a public service.

At the initiative of the Ministry of Finance, the Czech Government adopted the decision n° 7/2004, dated 7 January 2004, as a policy paper on PPP.

2. If the answer to 1 is yes, is PPPs policy framework distinct from that for privatisation?

5.


3. If the answer to 1. is yes, is such policy framework supported by:

3.1. certain policy framework documents? 3.2. certain institutions (a "task force" or other institution specialised in the promotion and development of PPPs)? For information, are there:

• reference to PPPs in the Constitution?

• sector-specific policy frameworks dealing with

PPPs?

• municipal policy frameworks dealing with

PPPs?

No

No

No

• Policy framework documents: decision of the Czech government n° 7/2004 – policy paper on PPP.

• Institutions: PPP Centrum a.s. (joint stock

company) was formed on the 1 July 2004 by a government decree. PPP Centrum’s sole shareholder is the Ministry of Finance of the Czech Republic (MF CR). PPP Centrum was established to speed up the preparation of legal environment and methodological procedures in relation to PPP in the Czech Republic. Its public mission is to apply the best practice knowledge in governance and preparation of PPP projects. PPP Centrum currently acts as a knowledge centre for the implementation of PPP projects.

• The Constitution does not specifically address

the issue of licensing or concessions. See Comment to question no. 6. •

• For example, the Energy Management Act refers to "National Energy Policy" and "Territorial Energy Policies"; these policies concern energy management plans at national and regional level.

6.


If the Country's legal or institutional framework contains undesirable restrictions on PPPs in infrastructure or public services, please mention these.

7.


QUESTION

ANSWER

ARTICLE

COMMENTARY

4. Does the country have a concessions or a PPPs law (the "Law") or if the answer is no, do the Constitution or other general laws (ex: the Civil Code, sectorial law) recognise the basic principles of concessions and regulate the granting of concessions in such a way that concessions are legally possible in the country?

[For the purpose of this questionnaire, the set of rules applicable to concessions in the absence of a specific concession law will also be referred to as the Law] .For information, is a new concessions/PPP law or amendments to the existing Law being prepared?

Act No. 139/2006 Coll., on Concession Contracts and Concession Procedures ("Concessions Act", "CA"). The only amendment to the Concession Act was adopted through the Act no. 30/2008, which will become effective on 27 February 2008.

5. If the country has a Public Procurement Law, is it clear to what extent the Public Procurement Law applies or not to the granting of concessions?

There is a specific law regulating public procurement – Act no. 137/2006 Coll., on Public Procurement ("Public Procurement Act", "PPA"). Prior to adoption of the Concession Act, concessions were regulated by the Public Procurement Act. The Concession Act was adopted in order to provide specific regulation for concession agreements. However, the Concession Act is rather concise and makes cross references to the Public Procurement Act in various and rather numerous cases. Therefore the Public Procurement Law applies to

8.


For information:

• is the application of the Public Procurement

Law specifically excluded?

• does it apply for certain types of concessions

only?

• is it applicable to the selection of the

No

No

Yes

1, 6/3, 8/3 etc. 12/4 14,15

concessions only when the Concession Act makes a reference to it. For example, the provisions of the Public Procurement Law apply to concessions in case of evaluation of qualification, concession documentation, tender negotiations, competition dialogue, assessment and evaluation of tenders etc. However, the scope of the cross-reference is not always entirely clear and it may be subject to discussion as to which provisions of the Public Procurement Act apply to concessions as well.

• No. However, as the Concession Act provides specific regulation of concessions, the Public Procurement Act applies only when so indicated by the Concession Act.

• No. • Yes, to a certain extent. For example, the Public

Procurement law applies to ruling on objections to the selection.

9.


concessionaire?

• is it applicable to all or some sub-contracts to

be entered into by the concessionaire?

No • No.

6. If the country has sector-specific laws regulating the granting of concessions in specific sectors, is it clear which law is applicable to a particular sector and/or infrastructure and/or services?

1, 3 Article 1 of the Concessions Act states that specific legislation applies in priority and gives Act No 13/1997 Coll., on Roads as an example. Article 3 lists the types of contracts not subject to the Concessions Act and lists the following laws: • Act no. 219/2000 Coll., on the property of the

Czech Republic and its representation in legal relations, as amended;

• Act no. 250/2000 Coll., on territorial budgetary rules, as amended;

• Act no. 148/1998 Coll., on protection of classified matters and amending certain other legislation, as amended;

• Act. no. 239/2000 Coll., on the integrated rescue system and amending certain other legislation, as amended;

• Act no. 240/2000 Coll., on crisis management and amending certain other legislation (the Crisis Act), as amended;

• Act no. 241/2000 Coll., on economic measures for crisis situations and amending certain other legislation, as amended;

• Act no.153/1994 Coll., on the activities of Czech intelligence services, as amended;

• Act. no. 110/1998 Coll., on security of the Czech

10.


Republic, as amended by Constitutional Act no. 300/2000 Coll.;

• Act No. 222/1999 Coll., on defence of the Czech Republic, as amended;

• Act no. 6/1993 Coll., on the Czech National Bank, as amended.

7. If the country has a "local public services" law (i.e. law regulating basic legal framework for municipalities using PPPs for the construction of "local infrastructure" and/or the provision of "local utility" services) is it clear which law is applicable to a particular infrastructure and/or services?

Act No. 128/2000 Coll. on Municipalities Act No. 129/2000 Coll. on Regions

Laws regulating self-government in the Czech Republic do not specifically address the issue of concessions. Municipalities and regions are free to conclude concession-type agreements with the private sector, subject to general conditions of these self-government regulating laws.

11.


2.

DEFINITIONS AND SCOPE OF THE CONCESSION LAW

2.1 Concession definition 2

QUESTION

ANSWER

ARTICLE

COMMENTARY

8. Does the Law define one or several term(s) (ie: "PPP", "concession", "BOT", others) for the arrangements to be regulated by the Law which specify the limits of application of the Law?

For information, please provide the given definition, if any. (Irrespective of the name given in the Law the word

1(3), 16 No definition of Concession or PPP is given by the law. We understand from Article 1(1) that the Concession law applies to the Contracting Authority when concluding concession contracts within the framework of cooperation (not defined) between such Contracting Authority and other entities. Article 16 of the Concession Act provides for mandatory characteristics of a concession contract,

2 For further information on concession definition please refer to: PFI Guide, Consolidated Legislative Recommendations, Recommendation 3 and Commission Interpretative Communication on Concessions Under Community Law dated 12 April 2000;together with additional EU major documents/decision /recommendation on concessions including Directives 2004/18/EC and 2004/17 EC of 31 March 2004; Green Paper on Public Private Partnerships and Community Law on Public Contracts and Concessions dated 30 April 2004; Report on the public consultation on the Green Paper (SEC(2005) 629- Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on Public-Private Partnerships and Community Law on Public Procurement and Concessions (Brussels, 15.11.2005. COM(2005) 569) European Parliament resolution on public-private partnerships and Community law on public procurement and concessions (2006/2043(INI))

12.


concession will be used for all types of defined agreements for purposes of this questionnaire)

such as: (i) the concessionaire performs services or works, (ii) (part of) the remuneration is in the form of proceeds from the works/services (iii) a substantial part of risks deriving from use of the performed work is borne by the concessionaire, etc.

9. Does the Law provide that it applies to all contracts entering into the definition of concession irrespective of the name given to such contract (concession, licence, usufruct right, lease, etc.)?

No. However, a general principal of "content prevailing form" of Czech law applies; therefore a contract will be governed by the Concession Act if it meets the definition criteria of a concession contract, regardless of how the contract in question is titled.

10. Does the Law make a clear distinction between concessions and public procurement contracts (i.e.: public works, supply or services) whereby the distinguishing criterion is the transfer of risks inherent to the exploitation?

1(2), 16 7 PPA

The Concession Act does not contain a clear definition of a concession. However, Article 16 of the Concession Act provides for the mandatory characteristics of a concession contract, such as: (i) the concessionaire performs services or works, (ii) (part of) the remuneration is in the form of proceeds from the works/services (iii) a substantial part of risks deriving from use of the performed work is borne by the concessionaire, etc. Public Procurement Law contains a definition of public procurement in Article 7 stating that "public procurement is a procurement performed based on a contract between the awarding entity and one or more suppliers, the subject-matter of which are works or services rendered for consideration". Transfer of risk inherent to the exploitation may

13.


therefore be regarded as one of the distinction criteria of concession contract. Yet, article 1(2) of the Concessions Act specifies that certain provisions of the Concession Act apply to above-the-threshold public procurement contracts under the Public Procurement Law (in practice referred to as "quasi-concessions") if (i) the duration is at least 5 years and (ii) the suppliers bear certain economic risks associated with the performance of such public contract that are usually borne by contracting entities.

11. Does the Law make a clear distinction between concession/PPPs and licence (i.e an authorisation to operate granted automatically by a public authority when certain criteria are met)?

The Concession Act does not use the term "concession", only "concession contract". Indeed "concession" is already defined in Czech law as a public authorization/trade licence required for operating various types of business activities, not necessarily related to public procurement or concession contracts.

2.2 Application of the Law

QUESTION

ANSWER

ARTICLE

COMMENTARY

12. Does the Law provide that it prevails over any

sector-specific law or other laws dealing with concession?

1(1) Article 1(1) of the Concessions Act specifies that where special legislation exists, it does not apply.

14.


2.3

Entities involved 3

2.3.1 Public Authorities

QUESTION

ANSWER

ARTICLE

COMMENTARY

13. Does the Law identify (or allow identification by reference to other laws or regulations) the public authorities that are empowered to award concessions and enter into project agreements ("Contracting Authority")?

If yes, for information, which of the following

authorities are identified?

• national authorities (e.g.: the government, ministries, independent agencies)?

• provincial authorities?

• local or municipal authorities?

• public enterprises?

Yes

Yes

Yes

Yes

2

14. Is there a specialised agency established to take care of concessions (which consent or

22, 23, 30 Depending on who is the awarding entity, the consent of some superior entity is required either with the

3 For further information on the entities involved, please refer to: PFI Guide, Consolidated Legislative Recommendations, Recommendation 2, 6 and 42.

15.


recommendation is necessary for the granting of a concession, ex: Concession / PPPs Agency)?

concession project (Article 22) or with the concession agreement (Article 23). For example, concession contracts concluded by the Czech Republic must be approved by the government. This, however, applies only to "significant concession contracts", i.e. contracts where the estimated revenue of the concessionaire exceeds certain amounts. Prior approval of the Ministry of Finance is required for the conclusion of certain defined concession contracts (e.g. those concluded by regional authorities) (Article 30). Article 24 of the Concessions Act states that the Office for Protection of Economic Competition supervises compliance with the Concession Act. Generally, the Ministry of Regional Development is in charge of the legal environment for concessions, while the Ministry of Finance is regarded as the "regulator" (i.e. supervises the individual projects and compliance with concession legislation). As mentioned above, the Ministry of Finance set up the special governmental agency – PPP Centrum a.s. – for coordination of regulation of concessions, creation of methodological guidelines, assistance to Contracting Authorities, etc.

15. Is the division of power between different public authorities involved in the concessions granting process simple and coordinated (ex: one stop shop)?

There is no one stop shop.

2.3.2 Concessionaire and Project Company

16.


QUESTION

ANSWER

ARTICLE

COMMENTARY

16. Can concession be granted to a domestic and/or foreign person or to a domestic person with a foreign shareholders can the shareholders of the concessionaire be domestic and/or foreign persons (without discrimination)?

There is no discrimination between domestic and foreign persons (or persons with foreign shareholders) in granting concessions, supposing the foreign person fulfils all general requirements in order to be able to carry out business activity in the Czech Republic (such as registration of a branch).

For information only, can concession be granted to public entities or to entities jointly owned by private and public entities?

13 Generally not provided for, but not prohibited. The Concession Act allows the Contracting Authority to conclude the concession contract with an entity which did not participate in the concession proceedings if, inter alia, this entity is directly or indirectly controlled by the Contracting Authority.

2.4 Concerned sectors4

QUESTION

ANSWER

ARTICLE

COMMENTARY

17. Does the Law identify (or allow identification by reference to other law or regulations) the sectors and/or types of infrastructure and/or services in respect of which concessions may or may not be granted?

1,3 CA 4, 18 PPA

No such list of sector and/or types of infrastructure and/or services in respect of which the concession may be granted exists. The Concession Act applies generally to all concession contracts fulfilling the given definition. Certain sectors are excluded from the application of the

4 For further information on the concerned sectors please refer to: PFI Guide, Consolidated Legislative Recommendations, Recommendation 3 and 4.

17.


Concession Act – see above commentary to question no. 6.

18. Do the sectors eligible for concessions correspond to a large extent to those listed below, or if not, is the list of eligible sectors an open-ended one (as opposed to being exhaustive) allowing (or at least not preventing) concessions to be granted in numerous sectors”?

For information:

a) does it include the transportation sector?

• is the railway system included? • are rail transport services included? • are ports included? • are airports included? • are public roads included?

b) does it include the electricity sector?

• is the generation of electricity included? • is the transmission of electricity included? • is the distribution of electricity included?

c) does it include the water and wastewater sector?

• is water production included? • is water treatment included? • is wastewater treatment included? • is water distribution included? • is wastewater collection (sewerage) included?

Yes

A of sector and/or types of infrastructure and/or services in respect of which the concession may be granted, exists. The Concession Act applies generally to all concession contracts fulfilling the given definition.

18.


d) does it include solid waste collection, transfer or

disposal?

e) does it include the oil, gas and mineral sector?

f) does it include other public services such as

education, health care and prisons?

g) Does it include any other sectors or infrastructure

(please specify)?

Any other sector which is not excluded from the application of the Concession Act, for example gas and heat generation, postal services, financial services, logistics services, etc.

19.


3.

SELECTION OF THE CONCESSIONAIRE5

3.1 General Considerations

QUESTION

ANSWER

ARTICLE

COMMENTARY

19. Does the Law require in principle the Contracting Authority to select a concessionaire through competitive procedures?

7

20. Is there reference in the Law to the principles of transparency, equal treatment and proportionality.

For information, please specify if a reference is made to the principle of mutual recognition.

7,11 CA6 PPA

Observance of the principles of transparency, equal treatment and prohibition of discrimination is guaranteed by cross references to the Public Procurement Law. No reference is made to the principle of mutual recognition.

21. Is there a provision in the Law concerning the publication of information related to the competitive procedures in the Country media and in the international media (for large projects)?

31 CA, 146, 147, 148, 149

PPA

Announcements are published in the public tenders database operated by the Ministry of Regional Development, and announcements concerning "above-the-threshold works concession contracts" are also published in the EU Official Journal.

5 For further information on the selection of the concessionaire, please refer to: PFI Guide, Consolidated Legislative Recommendations, Recommendations 14 to 39 included.

20.


22. Are there provisions of the Law, regulations or special manual, recommendation governing in detail the selection of the concessionaire ("Regulations") (i.e.: the pre-selection of bidders, the procedure for requesting proposals, other procedure such as competitive dialogue/two stage procedure) ?

4 - 13, Title Two of PPA

Apart from the quoted provisions of the Concession Act and Public Procurement Act, there are also internal manuals, guidelines, recommendations and other public non-binding documents issued by the relevant Ministries.

23. Does the Law / Regulations provide that, if the

Contracting Authority rejects an applicant at the time of preselection or disqualified a bidder , it must make public the reasons for the decision (or inform the rejected bidder thereof explaining the reasons for rejection)?

7/3 CA 60 PPA

The rejected supplier must be informed in writing without delay, specifying the reasons for rejection.

3.2 Award of concession

QUESTION

ANSWER

ARTICLE

COMMENTARY

24. Does the Law / Regulations provide that all proposals are ranked solely on the basis of the evaluation criteria set forth in the pre-selection documents/ request for proposals?

7/1, 11 CA, 79 PPA

The Concession Act provides that the only criterion for evaluation of the proposals is their economic advantages. Depending on the type of selection procedure, the Contracting Authority must state in the announcement either (i) the particular criteria for evaluation or (ii) the preliminary particular criteria of evaluation (concession dialogue).

25. Does the Law / Regulations provide that a notice of the award of the project, identifying

31, 32 CA 83, 85 PPA

Concession Contracts Register contains details of the concessionaire and the essential terms of the project

21.


the concessionaire and including a summary of the essential terms of the project agreement is to be published?

agreement.

26. Does the Law / Regulations provide that the Contracting Authority or any other public authority maintain records of key information pertaining to the selection and award proceedings?

32, 33 CA 155 PPA

All documents and records relating to concession procedure must be kept by the Contracting Authority for 5 years. For Concession Contract Register, see commentary to question n° 25.

27. If the answer to 27 is yes, does the Law provide that such record is accessible for public or at least to interested parties?

32 The Concession Contracts Register is accessible to the public.

3.3 Final negotiations

QUESTION

ANSWER

ARTICLE

COMMENTARY

28. Does the Law /Regulations contain provisions regulating final negotiations (i.e. post contract award) so that transparency, equal treatment and competition are preserved?

23/4 There are no specific provisions regulating the post contract award stage, with the exception of provision stating that approvals by relevant authorities must be granted with all amendments of concession contracts increasing the concessionaire's estimated income by 20% or over certain thresholds. Similarly, it may be expected, even though not expressly stated so in the Concession Act, that all concessions which will, after being awarded, exceed the CZK 20,000,000 threshold (see commentary to

22.


question no.30), will have to be subject to concession proceedings.

29. Does the Law / Regulations provide that the Contracting Authority has the authority to terminate negotiations with the invited bidder when it becomes apparent that the bid will not result in an agreement and start negotiations with the second ranked candidate?

12/5 CA 82(3) PPA

The Contracting Authority may do so only if the selected bidder refuses to conclude the concession agreement or if it does not cooperate sufficiently with the Contracting Authority.

3.4 Concession Award without competitive procedure

QUESTION

ANSWER

ARTICLE

COMMENTARY

30. According to the Law / Regulations, does the Contracting Authority have the authority to award a concession without competitive procedures only in limited exceptional circumstances such as the ones listed below?

For information, which of the following conditions

3, 5/2, 13

For those sectors which are excluded from the application of the Concession Act, see commentary in 6. The Contracting Authority does not need to comply with the Concession Act's regulation of the concession proceedings if the estimated income of the concessionaire amounts to less than CZK 20,000,000 free of value added tax. However, this does not relieve the Contracting Authority from complying with other provisions of the Concession Act, such as the principles of transparency and non-discrimination, mandatory characteristics of the concession contract, etc. The Contracting Authority may also conclude the concession contract with an entity which did not participate in the concession proceedings, if, inter alia, the selected concessionaire expressly allows so in its

23.


allowing direct negotiations are provided for?

• when there is an urgent need for ensuring continuity of the provision of service and engaging in a competitive selection procedure would be impractical?

• for projects of short duration and with an anticipated initial investment value not exceeding a specified minimal amount (or with an anticipated turnover not exceeding a specified minimal amount)?

• reasons of national defence or national security?

• cases when there is only one source capable of providing the required service (e.g.: in the case of patented technology or unique know-how)?

• when an invitation to the pre-selection proceedings or a request for proposals has been issued but no applications or proposals were submitted or all proposals failed to meet the evaluation criteria?

• others (please specify)?

No

Yes

Yes

No

Yes

5/2

3/a

6/2 CA, 84 PPA

proposal and this entity is controlled by the selected concessionaire or the Contracting Authority.

31. According to the Law / Regulations, is there a procedure (rules) to be respected for the award of a concession without competitive procedures?

5/2, 13 Where the Contracting Authority does not need to comply with the Concession Act's regulation of the concession proceedings (see above commentary to question no. 30) it still needs to comply with other provisions of the Concession Act, such as the principles of transparency and non-discrimination, mandatory characteristics of the concession contract, etc.

24.


3.5

Special case of unsolicited proposals

QUESTION

ANSWER

ARTICLE

COMMENTARY

32. Does the Law / Regulations provide for the adequate framework for the Contracting Authority to handle unsolicited proposals/private initiative concessions (proposal relating to the implementation of a concession that is not submitted in response to a request or solicitation by the Contracting Authority) that ensure transparency and equal treatment and do not distort competition?

3.6 Review procedures

QUESTION

ANSWER

ARTICLE

COMMENTARY

33. Does the Law allow the bidders who claim to have suffered or that may suffer loss or injury, to seek review of the Contracting Authority’s acts or failures to act?

25 CA Title Five

PPA

The authority supervising compliance with the Concession Act is the Office for Protection of Competition. The Office shall (i) decide whether the Contracting Authority complied with the Concession Act, (ii) order corrective measures and (iii) impose penalties for non-compliance with the Concession Act. The Office for Protection of Competition may cancel any act of the Contracting Authority (if undertaken in breach of law) only until the concession contract is concluded.

25.


Once concluded, the Office may only impose fines on the breaching entity. Also, the bidder may submit its objections to the Contracting Authority should it deem any of its rights under the Concession Act violated by the Contracting Authority's conduct.

26.


4.

PROJECT AGREEMENT6

QUESTION

ANSWER

ARTICLE

COMMENTARY

34. Does the Law contain (or refer to) a model concession/PPP agreement which use is optional (for guidance only as opposed to being mandatory) or a mandatory list of provisions to be included in the agreement (the content of such provisions being left for negotiation) ?

16 - 19 There is no model agreement. There are some mandatory provisions that must be included. PPP Centrum a.s. (the special governmental agency) published on its Internet web site a Template Concession Agreement, which is, however, not binding on any entity and is for facilitation purposes only.

4.1 Duration and extension of the project agreement

QUESTION

ANSWER

ARTICLE

COMMENTARY

35. Does the Law provide that the concession duration should depend on the length of time taken for the amortization of the private investment and an appropriate return on the capital?

For information, please provide the given duration (if any) and relevant information in the Law with respect

6 For further information on the project agreement definition, please refer to: PFI Guide, Consolidated Legislative Recommendations, Recommendations 12 and 40 to 68 included.

27.


to the conditions for extension. 4.2 Termination of the project agreement

QUESTION

ANSWER

ARTICLE

COMMENTARY

36. Does the Law provide for a restrictive list of termination events (such as those listed below)?

• material breach by the other party;

• if performance is made impossible by the

occurrence of circumstances beyond either

party’s control;

• mutual consent .

16/3,a In most cases, general provisions on termination of the contract stipulated by the Commercial Code 513/1991 Coll. are applicable. The list of termination events is a mandatory provision in any concession contract, according to the concession Act.

28.


37. Does the Law provide for (or does not prevent ) compensation of the concessionaire:

37.1. in case of termination for public interest?

37.2. for losses incurred as a result of public authorities acts? 37.3. in all cases of early termination (including in case of serious breach or failure by the concessionaire), for the non-depreciated value of assets financed by the concessionaire-?

Not provided for, but not prohibited. Not provided for, but not prohibited. Not provided for, but not prohibited.

4.3 Tariff setting, service standards

QUESTION

ANSWER

ARTICLE

COMMENTARY

38. Does the Law provide for clear guidance for all aspects of interaction between the bodies that have the power to award concessions and the bodies that regulate tariffs and service standards?

4.4 Financial responsibilities of concessionaire and Contracting Authority

QUESTION

ANSWER

ARTICLE

COMMENTARY

39. Does the Law provide that the concessionaire 18

29.


can collect tariffs or fees for the use of the facility or its services?

40. Does the Law provide the possibility for fixed

and/or consumption-based payments to the concessionaire by the public authorities?

16/1 Part of the remuneration of the concessionaire may be provided by the Contracting Authority by way of fixed payment.

5. SECURITY AND SUPPORT ISSUES7

5.1 Security Interests

QUESTION

ANSWER

ARTICLE

COMMENTARY

41. Does the Law provide for the possibility for (or not specifically prevent) a concessionaire to create security interests on the project assets and proceeds or other valuable guarantees related to the project?

Not provided for, but not prohibited.

7 For further information on support and financial securities, please refer to:

PFI Guide, Consolidated Legislative Recommendations, Recommendations 13, 49, 57 and 60.

30.


42. If the answer to 42 is yes, does the Law clearly

state which types of security can be provided and includes some of the most common type of guarantees in project financing (such as those listed below)?

For information, can a concessionaire pledge or assign:

• the proceeds and receivables arising out of the

concession?

• the assets for which it has rights of use under a

project agreement?

• its property?

• shares of the Project Company?

• the project agreement?

• or obtain other valuable guarantees (please

specify)?

N/A

5.2 Government support

QUESTION

ANSWER

ARTICLE

COMMENTARY

43. Does the Law provide for the possibility (or not Article 38 of Generally, there are several public authorities involved

31.


specifically prevent) the public authorities to provide support to the Contracting Authority and guarantee for the proper implementation of concessions by the Contracting Authority?

Act no. 128/2000 Coll.

On Municipalities, Article 17 of

Act no. 129/2000 Coll., on Regions,

Article 56 of Act 219/2000

Coll., on Property of the

Czech Republic

in the preparation and implementation of the concession environment in the Czech Republic – see commentary to question no. 14. The possibility of public authorities to provide guarantees for obligations of the Contracting Authority may be limited. For example the Regions and the Municipalities may not provide such guarantee, with the exception of, inter alia, obligations of those persons founded by a Region, Municipality or the State. The State is not automatically guaranteeing for obligations of the Regions or the Municipalities, unless it accepts to provide such guarantee contractually. The State may also provide a guarantee for obligations of the governmental agencies (including ministries and other public authorities, courts, specialized agencies etc.)

44. Does the Law provide for the possibility (or not specifically prevent) the public authorities to provide financial or economic support for the implementation of concessions?

Not provided for, but not prohibited. General conditions for disposals of property of the public authorities are regulated by the specific laws governing the particular authority (Act on Regions, Act on Municipalities).

45. If the answer to 44 is yes, does the Law clearly state which public authorities may provide such support and which types of support can be provided?

For information, are the following types of support

provided for:

N/A

32.


• interest-free or low interest public loans?

• loan guarantees?

• direct or indirect equity participation by the

government in the project?

• subsidies for operations in non-profitable

sectors?

• direct subsidies?

• pro-poor subsidies?

• tax and customs benefits?

• foreign exchange protection (convertibility and

transfer guarantees)?

• protection from competition?

5.3 Lenders’ rights

QUESTION

ANSWER

ARTICLE

COMMENTARY

46. Does the Law provide for the possibility for the lenders to “step-in” or substitute a qualified new concessionaire in case of concessionaire defaults without a new tender?

33.


6. SETTLEMENT OF DISPUTES AND APPLICABLE LAWS8

6.1 Settlement of disputes

QUESTION

ANSWER

ARTICLE

COMMENTARY

47. Does the Law permit the Contracting Authority to enter into concession agreement that is subject to international arbitration?

Not specified. Not forbidden.

48. Has the government of the country ratified the following international conventions? 48.1. the Washington Convention on the Settlement of Investment Disputes (ICSID) (1965)? 48.2. the New York Convention on recognition and enforcement of foreign arbitral awards (1958)?

6.2 Applicable laws

QUESTION

ANSWER

ARTICLE

COMMENTARY

8 For further information on the settlement of disputes, please refer to: PFI Guide, Consolidated legislative Recommendations, Recommendations 57, 69 and 71.

34.


49. Does the Law permit the Contracting Authority to enter into concession agreement that is governed in whole or in part by foreign law or at least allow the concessionaire to enter into financing and construction agreements governed by foreign law?

16(6) The concession contract will be governed by the Czech Commercial Code. Financing and construction agreements concluded by the Contracting Authority could be governed by foreign law.

50. Has the country ratified any international convention for the protection of foreign investments?

Bilateral agreements with more than 70 countries.

EFECTIVENESS ASSESSMENT: HOW THE LAW WORKS IN PRACTICE: As of February 2008, there are several large scale PPP projects in the Czech Republic in different stages of preparation (OBC studies being drafted, approval of concession project by the relevant authority, commencement of the concession proceedings etc.), ranging in value from CZK 820 million to CZK 18 billion. These include projects for the construction of an airport railway connection, construction of a highway, refurbishment of hospitals, and construction of a sports centre, hotel-type dormitory attached to a hospital, prison and a law court. Some of the concessions are to be granted at the State level, some by municipalities. Concession agreements have already been concluded for some smaller projects, concluded by municipalities as the Contracting Authorities. The government, through the PPP Centrum, is actively supporting the conclusion of concession agreements, even though in two cases the relevant ministries dismissed the PPP form of project as unfeasible. The government has issued several internal guidelines, recommendations and supporting documents (such as the template concession agreements, analysis of "pilot" projects) in order to facilitate preparation and implementation of the projects. Since the concession-specific regulation is rather recent and concession contracts either in pre-signing stage or just recently signed, there is not much experience with implementation of the concession agreements.

assessment summary 2008 - czech republic [ebrd - …. checklist czech republic ws0101.4426138.1...

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