How to make PPP work in Russia: 2012 Overview
40% of respondents consider that the existing regulatory framework is a major hindrance to project realization and requires fundamental transformation.
Seventy-five percent of those surveyed think that Russian law must be substantially revised to meet the current needs of PPP projects.
The list of proposals is extensive:
- Revision of Law 115-FZ “On Concessions Agreements”
- A greater number of possible types of PPP under federal law
- Amendments to the Budget Code to make it possible for long-term liabilities relating to PPP projects to be included in the budget
- Amendments to the Tax Code to eliminate adverse tax implications of contractual PPP schemes
- Amendments to the Land Code to eliminate ambiguities in the legal regulation of land relations in connection with PPP projects
- Amendments to the procedure for forming tariffs as well as the possibility of setting fixed tariffs for the long term
- Development of specialized sectoral legislation on PPPs
- Legal and regulatory support making it possible to accelerate the initiation and preparation of PPP projects
- Wider powers for constituent entities of the Russian Federation, allowing them to independently regulate regional PPP projects
- The possibility of using resources of the Investment Fund of the Russian Federation for infrastructure projects carried out under regional PPP laws
- Federal guarantees that regional PPP projects will be protected against discriminatory amendments to federal laws.
Evaluation of the regulatory framework
Not a single respondent thought that the rights of investors and creditors were adequately protected in Russia.
The current mechanisms for protecting the rights of investors and creditors are rated lower by foreign companies than by their Russian colleagues.
Assessment of mechanisms for protecting investors’ rights
Representatives of credit institutions indicated a need for law enforcement practice in connection with Russian PPP projects (including judicial decisions in favor of private investors). This could help to improve the investment climate and increase private investors’ confidence in the legal protection offered to them.