PPP in Germany

PPP projects in Germany are usually being implemented in the construction, modernization or reconstruction of various infrastructure objects, as well as other social properties.

PPP in Germany can also be viewed as a kind of deal between the government authorities and representatives of the private sector, whereas not the right of ownership of state (municipal) property is transmitted to private sector, rather the right of management is transmitted. This type of cooperation between the federal, state and local government with the business is practised in various shperes, among which are a public service of the population (the removal and recycling of waste, water supply, street lighting) and energy (production and distribution of electricity, heat, natural gas to the consumers).

The areas of joint efforts of government and business also are: the construction and operation of a variety of real estate - office buildings, points of public order, police, courts, prisons, hospitals and specialized medical centers, nursing homes , kindergartens, schools, universities, sports, entertainment and recreational facilities, museums, exhibition centers, industrial areas, etc.

Among the new areas of PPP recently added the rendering of various "public services", including telecommunications and information technologies spheres (in particular, actively growing business involvement in the creation of the "electronic government" - running websites of government agencies).

Taking into account the diversity of PPP projects, they use wide range of legal decisions - models. Depending on the agreement both parties are responsible for economical risks to some extent. It is the redistribution of risk between the private investor and the state customer is one of the distinguishing features of the institution of government and business cooperation and which distinguishes it from other traditional forms of cooperation of public and private sector.

Another distinguishing feature of the PPP in Germany is a multi-stage algorithm development, and also the stages of preparation and implementation of the project: cost efficiency and the decision to make it more attractive PPP model rather than traditional contracting and public management of the economy, the choice of model for the interaction of the customer and the contractor, organization and conduct of the contest, in fact the project and monitoring of compliance with the specified conditions for its implementation.

Recently conducted analysis of 91th implemented project by German scientists (in the stage after the agreement between the State or the municipality and the private agent) showed an average efficiency of PPP in comparison to traditional forms of cooperation of the state and business at the level of 14.6%. It was established a pattern of change of the level of efficiency of different projects depending on the size and scale of investment, which allows to choose the optimal size of investment for the PPP projects. Thus, with total investment cost of less than 10 million euros government save 12% of the funds, for projects within the 10-25 million data rate was in average 14.4%, in the range of 25-50 million euros, 13.2 %, and, finally, for large projects, worth over 50 million euros - about 16.2% (thus, for larger projects achieved the highest economic effect).

Until recently, in Germany for a number of reasons (conservative governance, inadequate regulation of taxation and transfer of rights between the parties, etc.) PPP projects were not widespread. Only in the early 2000s there has been a definite change. On the background of deficit budgets at various levels, the growth of state and municipal debt and, as a consequence, the decline in investment in fixed assets increased the use of PPP tool. As of mid-2010, in various stages of implementation there were 153 such projects worth 5.85 billion euros (3.95 billion euros in the construction of the so-called land and 1.9 billion euros in the road, civil engineering and construction of engineering communications).

The government has consistently pursued a policy of supporting private initiatives in the public sector, which also match common EU policy. A special program to support PPP was established. Under the latest program, in September 2005, which was accepted and joined the federal law to promote PPP and improve regulatory framework to improve the conditions in the field. This legal act simplifies the taxation of PPP projects, regulates in detail the procedure of transferring property rights, regulates the establishment and operation of organizations uniting small and medium enterprises in their framework to implement PPP projects.

Since 2004, in Germany operates a non-profit organization - the Institute for Public-Private Partnerships. Its members are political organizations, educational and research institutions, private companies (banks, insurance and leasing companies), consulting firms, and independent experts. Among the objectives of the Institute is coordination of sectored structure performance and an appropriate ground for the interaction of specialists in different fields of activity, the collection and processing of information, the creation of an open data base on core issues, promotion of PPP advisory services to interested individuals and entities.

In December 2007, with a decision of the government of Germany was established a public-private consulting company Partnerschaften Deutschland («Partnershaften Deutschland", "PD"), which, in close collaboration with the Ministry of Finance and the Ministry of Transport, Building and Urban Development with the participation of German development bank "Credit Institution Wiederaufbau »(KfW) and a number of private consulting, real estate and other relevant German and international companies and credit institutions specialized in providing consulting services to potential federal, state, and municipal customers on the feasibility of PPP forms.

It is assumed that one of the important functions entrusted to such company, will be a general promotion of the PPP market and the expansion of the use of different types of public-private cooperation, including through the generalization of the practice of PPP projects, the introduction of uniform standards and standard forms of interaction between public and private institutions, measures to reduce organizational costs at all stages of implementation of the project.