Jiří Turek

the Regional Authority of Pardubice Region

www. pardubickykraj.cz

e-mail:

PPP: Sectoral experiences

Abstract of Presentation

„PPP in the Czech Republic and the Pardubice region´s PPP plans“

Content of presentation:

  1. Present experience with PPP in the Czech Republic
  2. New PPP legislation
  3. Institutional background
  4. Pilot projects
  5. Pardubice region´s PPP plans – the Regional Hospital Pardubice
  6. Resume

Ad 1)

experience with PPP in the Czech Republic

Nowadays, PPP in the Czech Republic is in position of quite a new instument of public investment and providing public demands. Till now, most of public demands has been provided in way of traditional public procurements. So, there are currently not many practical experience with PPP in the Czech Republic and appropriate PPP background (legislation, methodics, insitutional background) has been created there until quite recently.

Recent attempts to carry out some major projects – higway D7 and „Internet for schools“ were unsuccesfull, because of misssing appropriate PPP background, hasty and insufficient preparation andnon-transparent tendering process.

On the other hand, there have been succesfully carried out some minor infrastructural projects with features of PPP – e.g. in the area of energetics, water-supplies, sewerages etc. – on the basis of long-term contracts on lease, operation and maintenance.

Ad 2)

New PPP legislation

Recently, there was quite a big difficultyof PPP projects execution in the Cech Republic - absence of appropriate legislation, which would define clear legal frame. The situation has changed since 07/2006, when the „PPP Act“, together with delegated legislation came into legal force. This new Act governs areas such as:

  • legal definition of PPP for the purposes of the Act,
  • tendering process related to PPP,
  • PPP contracts – obligatory content and conditions of their conclusion and approval,
  • projects preparation including feasibility study - obligatory content and conditions of its approval,
  • budgetary supervision of the Ministry of Finance etc.

Ad 3)

Institutional background

For PPP development in the Czech Republic, it is necessary functioning of appropriate institutional support. This is the deal of institutions which are responsible for legislation preparation, methodical support, supervision etc.

Most significant institutions in the area of PPP in the Czech Republic:

  • Ministry of Regional Development ( – responsible for relevant legislation preparation (e.g. PPP Act, Public Procurement Act)
  • Ministry of Finance ( – responsible for budgetary supervision related to PPPs, participates in relevant legislation preparation
  • PPP centrum ( – organisation established by the Ministry of Finance, responsible for methodical support
  • Office for the Protection of Competition ( –responsible for supervision of public procurement process
  • PPP Association ( – association of private subjects, potential private partners, its declared purpose is the development of PPP background in the Czech Republic

Ad 4)

Pilot projects

These are the first major PPP projects in the Czech Republic assumed to be realized in near future, they are approved by Government. They should activate the process of practical PPP implementation in the Czech Republic, in future they will be helpful as typical, model cases and valuable resource of practical information and knowledges.

These are current pilot projects approved by Czech government:

University campus in Ústí nad Labem

Sport center „Ponava“ in Brno

Hospital „Na Homolce“ in Prague

Higway D3

Aircon – railway modernisation

Central Military Hospital in Prague

Prison in Moravia

Halls of Justice in the North Czech

Ad 5)

Pardubice region´s PPP plans – the Regional Hospital Pardubice

In the Czech Republic, regions are operators of regional hospitals. In Pardubice region, there are 5 acute care hospitals and the region is responsible for their operation. One of them is the Regional Hospital Pardubice which has the most significant position between them as main provider of specialized and superspecialized medical care.

Before now, the representatives of Pardubice region and hospital management have realised that the hospital is in the long term under-invested and needs large modernisation to be able to provide medical care on appropriate level. There has been elaborated plan of investment needs, which has shown that the hospital modernisation requires investment of about 2 bilion Czech Crowns.

On the basis of detail analysis, there has been made a conclusion that it would be suitful to use PPP model for the hospital modernisation. So, there have been iniciated project´s preparation works. These works have been intensified after entering cooperation with PPP centrum. Recently, there has been constituted Steering committee of the project, which is responsible for the project´s management. Approximately till the end of 2006, it should be elaborated the project´s draft to enable to start tendering process.

Assumed basic features of the project:

  • main objectives – more efficient providing of medical care, utilization of private sector´s innovative and managerial capabilities, separation of service activities from medical care and their concentration into SPV, transfer of risk which can be better managed by the private partner,
  • complex modernisation – reconstruction+construction of some new buildings, development and innovation of medical technology and infrastructure,
  • investment of about 2 bilion Czech Crowns,
  • character of the project – DBFO – private partner should design the project, ensure the construction, reconstruction and financing, ensure the subsequent operation and maintence of the infrastructure and providing of subsidiary sevices,
  • long term contract (25-30 years),
  • SPV constitution,
  • possible utilization of EU funds,
  • allocation of risks:

Risk / Private sector / Shared risk / Public sector
Medical care demand / *
Ensuring of medical care quality / *
Service availability / *
Project risk / *
Construction risk / *
Operational risk / *
Maintenance, renovation and development / *
Services demand / *
Inflation / *
Political and legislative risk / *

Ad 6)

Resume

Nowadays, there has been established background for PPP implementation in the Czech Republic and nothing constrains from realization of first PPP projects, which are already being prepared.

Most of Czech regions are conscious of these facts and have already been monitoring opportunities for usage of PPP as one of possible ways of providing public needs. Some of them have already been preparing own projects. Pardubice region is one of them and its representatives hope in succesful realization of the Regional Hospital Pardubice´s PPP project. In future, they will surely consider the usage of PPP model in another suitful cases as well.