Definition of PPP
Public-private partnership is a way to develop public infrastructure based on long-term interaction between the state and business, in which the private party is involved not only in the design, financing, construction or reconstruction of the infrastructure facility, but also in its subsequent operation (provision of services at the created facility) and/or maintenance.
The purpose of PPP is from an economic point of view to stimulate the attraction of private investments in production of services, works and consumer goods, which should be ensured by public entities through related budgets, and to reduce the state participation in economic activity when the same tasks can be more effectively fulfilled by business.
From the legal point of view, it is about relations between public (Russian Federation, Russian region, municipality) and private entities. These relations are based on a public-private partnership agreement or concession agreement concluded between them, which are civil law contracts by their legal nature.
Basic Principles of PPP Project Implementation in Moscow:
- variety of PPP forms used;
- imposing commercial risks on the investor (disclaimer of sales guarantee or revenue volume);
- sharing unknown risks between the city and the investor;
- non-interference in investor’s operations;
- thorough assessment of future risks and detailed project structuring.