State (Public) Private Partnership

The advisory service related to public and private partnership projects (hereinafter PPP) is today one of the priorities in PRUDENS's profile. Our experience in this area along with the support of clients' real projects covers elaboration of a regulatory framework for implementation of such projects as, inter alia, the draft Law On Public and Private Partnership, amendments to the Law On Concessions.

PRUDENS offers a comprehensive service, which ensures support for clients in a PPP project from the stage of generating a concept and preliminary negotiations to a direct fulfillment of the signed agreements within the PPP

AT THE PROJECT PREPARATION STAGE WE SERVE THE FUNCTIONS AS FOLLOWS:

1) Representation of a private partner's (investor's) interests at the stage of preliminary negotiations with property owner representatives and clarification of the parties' positions.

At this stage it is essential to clarify the parties' understanding on a number of key aspects of a potential public and private partnership, identify potential risks of the project implementation, agree upon a fair sharing of the risks, determine an effective form of the project implementation, define a particular object of the partnership based on the parties' interests ( партнерства исходя из интересов сторон (real assets, an integral property complex or entitlement to perform a certain activity),

2) Express analysis of a potential partnership object.

An importance of the express analysis is primarily governed by a necessity to identify all risks of the prior activity of the potential partnership object, and by a necessity to effect arrangements intended to eliminate the discovered risks prior to the agreement conclusion.

3) Scheduling of implementation arrangements related to each particular project.

The schedule is compiled based on analysis results of legislative requirements to the procedures, which are required to conclude the chosen civil law contract, and on the express analysis results of a potential partnership object. This schedule provides the obligatoriness, sequence and period of making an inventory, appraisal of the property, proper registration of title to the partnership object and ground areas, which are essential for the partnership implementation, obtaining required approvals and permissions from governmental authorities and the labor collective, etc. This schedule covers a list of the required resolutions and acts of governmental and local authorities.

4) Appraisal of the property transferred to a private partner.

In most cases, the appraisal is a must and intended to define an actual market value of the assets. In some cases, the appraised value determines a fee for the use of the assets.

5) Raising of funds for the project (this service is provided with engagement of financial advisor companies, which are PRUDENS's partners)

6) Support of preparation, bid offering and holding of a tender to select a private partner to the private partner's benefit, including:

cooperation with the local authorities in preparation of regulatory enactments, resolutions of sessions required for the implementation of the project
cooperation with the local authorities in preparation of bid documentation and terms and conditions of bidding
support of the private partner in preparation of general, economic and legal sections of the bid
on behalf of the private partner, control over the procedure of submission, exposure and appraisal of the bids, as well as over awarding of a bid winner to secure interests of the private partner
preparation of complaints and claims in case of violations of the client's rights during the tender, representation of the client's interests in consideration proceedings of the complaints and claims.

7) Drafting a contract, representing of the private partner's interests in negotiating the contract with a public partner and during its signing.

AT THE PROJECT IMPLEMENTATION STAGE WE SERVE THE FUNCTIONS AS FOLLOWS:

1) Representing of the private partner's interests during obtaining of all required licenses and approvals.

It covers our support in processing of the documents required to be licensed, to obtain an economic concentration permission of the Anti-Monopoly Committee and other acknowledgement letters, as well as representing the applicant's interests during processing of the documents.

2) Advisory services for the private partner during the contract execution, including:

during performing the contractual activities, advising the private partner on matters of Ukraine's applicable legislation, inter alia, land, fiscal, currency, license, tariff laws, etc
identifying of the most efficient tax setups for the business
representing of the private partner's interests during cooperation of the parties in executing the contract (fulfillment by each party its contractual obligations, granting by the public partner of permits for disposal of particular assets, etc.).

3) Representing of the private partner's interests in litigations related to implementation of PPP projects.

THE PROJECTS:

2003

Our first project in РРР area was the project for establishment of the Ukrainian-Russian consortium for natural gas transportation. A concession model was one of the options for organization of the consortium's operations. PRUDENS represented interests of the Ukrainian party during analysis and study of potential implementation mechanisms of this model.

2006

Further, our Company was actively involved in lawmaking related to creation of the regulatory and legal framework in the area of PPP.

In 2006, PRUDENS's representatives were in a working group of the Ministry of Cultural Affairs, which was engaged in the Project for Development of Methods to Attract Investments into the Culture.

2008-2010

In 2008-2009, we made the expert analysis of drafts of the regulatory legal acts intended to regulate the legal relations directed to attract a private partner into the national economy sector of water services, water removal, heat supply and natural gas distribution by concluding contracts of lease and concession.

Additionally, in this period, by orders of a number of private companies, we worked at the implementation concept of the public and private partnership into the natural gas distribution industry of Ukraine. Within this work, we researched Ukraine's tariff policy for the services of supply and transportation of natural gas via the distribution network to determine compliance of the current tariffication system to the objectives of attracting long-term private investments into the natural gas distribution industry of Ukraine. Based on the results of this research, the reformation concept of the tariffication system in the natural gas distribution area has been developed.

Early in 2009, PRUDENS's partners, Mrs. Yana Bugromova and Mr. Ruslan Kalnitskiy were engaged as legal experts of a working group of the Committee on Industrial and Regulatory Policy and Entrepreneurship of the Verkhovna Rada of Ukraine. The working group had the objective to elaborate a draft law of Ukraine on Public Private Partnership. The draft has been elaborated and submitted to the Verkhovna Rada of Ukraine. It is expected to be passed shortly.

In 2009, PRUDENS acted as an advisor of the Municipal Council of Kharkiv in the project for transfer to concession of Kharkiv water supply, water removal and heating utility companies.

At that time and currently we support a private partner in implementation of one of the first major PPP projects in Ukraine in the area of housing and utilities, namely concession of Lugansk water utility system.

Further, we currently provide a legal support in preparation of a number of PPP projects in the area of housing, representing interests of private partners.