LAW ON PUBLIC-PRIVATE PARTNERSHIP IN THE REPUBLIC OF SRPSKA. (Official Gazette of the Republic of Srpska no. 59/09)

Transcription

1 LAW ON PUBLIC-PRIVATE PARTNERSHIP IN THE REPUBLIC OF SRPSKA (Official Gazette of the Republic of Srpska no. 59/09)

2 LAW ON PUBLIC-PRIVATE PARTNERSHIP IN THE REPUBLIC OF SRPSKA Article 1 This Law regulates the scope, principles, manner and forms of public-private partnership, requirements for the establishment of a public-private partnership, elements of a public-private partnership agreement, and other issues relevant to public-private partnerships. Article 2 (1) Public-private partnership is a form of cooperation between the public and the private sector, achieved by pooling of resources, capital and expert knowledge, for the purpose of fulfillment of public needs. (2) Cooperation is established in order to provide financing for construction, rehabilitation, reconstruction, operation or maintenance of infrastructure, providing of services or construction of facilities, for the purpose of fulfillment of public needs. Article 3 (1) The purpose of this Law is to create public and nondiscriminatory legal grounds, and to identify requirements for the establishment of public-private partnerships in the fields set forth in Article 2, paragraph 2 of this Law. (2) Specific objectives to be achieved through a public-private partnership are as follows: a) contracting and implementation of a number of projects, which allow the public partner to better respond to their obligations and to use public revenues in a more effective manner, b) creation of new sources of revenues, new infrastructure and new services, v) natural market allocation of risks between the public and the private sector, g) creation of value added by allocation of resources, knowledge and skills of both private and public sector, d) upgrading of productivity, competition and rational use of the economic capacities of both private and public entities, and đ) transparency in selection and contracting. Article 4 (1) A public-private partnership must be established on the following principles: a) long-term contractual relations between partners, b) preferential reliance on private resources, not necessarily excluding public resources, 4

3 v) identification of construction objectives by the public partner in view of the public interest, and achievement of standards of construction, maintenance and quality of service, including risk allocation in each individual case, g) payment of fee for construction and operation of built infrastructure to the private partner by the public partner, who undertakes to use the built infrastructure for the agreed purpose, or generation of fee by the private partner directly from end users, and d) transfer of built infrastructure to the ownership of public sector upon expiration of the agreed period of use. (2) The public partner must also comply with the following principles: a) public interest protection, which implies the need for minimum financial earmarking by the public partner in the process of improvement of services, b) free competition, which implies encouragement of largest possible participation by bidders, v) equal treatment, which implies avoiding discrimination on any grounds, g) mutual recognition, which implies acceptance of international technical specifications and certificates, d) commensurateness, which implies commensurate ratio between required capacities and agreement scope, đ) transparency, which implies public process of agreement award and establishment of legal protection measures, and e) protection of natural environment and promotion of sustainable development, which imply the need for preservation of natural resources. Article 5 The terms used in this Law shall have the following meanings: a) public need represents provision of services in the field of public sector through facilities such as: airports, ports, railways and railway transport, education and health institutions, canals, water supply, irrigation, and other services provided in the field of public sector, b) construction risk represents events related to the initial phase of property commissioning, such as delays in supply, failure to meet certain standards, additional costs, technical defects, negative external effects (including environmental risk), and compensation payments to third parties, v) availability risk represents cases in which a partner may be called to account during the period of property use due to inadequate management which results in a volume of services lower than provided for by the agreement or in a service quality level below that specified by the agreement, g) demand risk represents demand volatility, i.e. demand higher or lower than expected at the time of signing of the agreement, without consideration of features of the private partner, where change in demand may be caused by both subjective and objective reasons, 5

4 d) financial leasing is a legal transaction where the lessor transfers the right of possession and use of the object of leasing to the lessee for a certain period, imposing on the latter the obligation to pay the agreed leasing fee, and the right to return the object of leasing to the lessor, to purchase it, or to extend the lease agreement, and đ) operational leasing is a type of rental or lease, or a model of financing, whereby the lessor offers only use and operation, not the ownership, of the object of leasing. (1) Eligible public partner shall be: Article 6 a) Republic of Srpska, or Government of the Republic of Srpska (hereinafter: the Government), through a line ministry, b) public institution established by the Government, v) state-owned company, majority-owned by the Republic of Srpska (hereinafter: the Republic), g) local self-governance unit, i.e. municipality or city, d) public institution established by a local self-governance unit, and đ) state-owned company, majority-owned by a local self-governance unit. (2) The share of the public partner may take the form of investment in kind, rights or money paid as a regular fee to the private partner for services provided. (3) The kind and rights representing investment by the public partner may take the following form: rental of land to the private partner, concession, right of construction, right of easement, or project documentation accepted by the private partner, including obligatory compliance with regulations governing the right of use and obligations. (4) In the establishment of a public-private partnership, the private partner shall be a legal person established in accordance with the laws of the Republic, owned by a local and/or foreign legal person, which is a party to the concluded agreement on public-private partnership, and which performs the agreement on public-private partnership in accordance with this Law. (5) For the purpose of performance of a public-private partnership agreement, the private partner may establish a special purpose vehicle in accordance with the regulations of the Republic. Article 7 The object of a public-private partnership may be construction, use, maintenance and operation, or reconstruction, use, maintenance and operation, of property, for the purpose of fulfillment of public needs in the following fields: a) air, road, river and railway transport including supporting infrastructure facilities, b) educational, cultural and sport infrastructure, v) health infrastructure, g) utility infrastructure, d) information communication infrastructure, 6

5 đ) innovation and entrepreneurship infrastructure, e) management of ecological and solid waste, and ž) other fields of interest for the Republic and local self-governance units. Article 8 Agreements in the field of cooperation between the public and the private sector may take two basic forms: a) contractual form of public-private partnership, where the partnership between the public and the private partner is based exclusively on contractual relations, or b) institutional form of public-private partnership, where the partnership between the public and the private sector includes cooperation by the vehicle established for that purpose. Article 9 In the sense of Article 8 of this Law, the following contractual forms shall not be considered the contractual forms of public-private partnership: a) long-term agreements on services, whereby the public sector purchases only services, without any capital investment by the private partner, and b) agreement on design, construction and execution for the public sector. Article 10 (1) The contractual forms of public-private partnership, in the sense of Article 8 point a) of this Law, shall be concessions and private financial initiative. The concession form of the public-private partnership shall be governed by the provisions of the Law on Concessions. (2) Private financial initiative is a contractual form whereby the private partner finances, executes, maintains and operates a public building for the needs of the public sector, and charges fee for its services mostly from the public sector, in accordance with the previously established space and service standards and payment mechanism. (3) Notwithstanding paragraph 1 of this Article, the public partner may propose also another type of contractual form of the public-private partnership which must not prejudice public interest and must comply with the principles of Article 4 of this Law. Article 11 (1) The institutional form of the public-private partnership in the sense of Article 8 point b) of this Law shall imply establishment of a joint enterprise or other organizational form in compliance with the valid regulations. (2) The joint enterprise may exclusively participate in the implementation of public-private partnership projects for the purpose of which it is established. 7

6 (3) Establishment of the institutional form of the public-private partnership shall imply the application of principles given in Article 4 of this Law. (4) Rights and obligations of both public and private partners shall be regulated by agreement between them. Article 12 (1) The public partner shall prepare an economic feasibility or pre-feasibility study for the specific public-private affair, and make the decision on launching of procedure of the private partner selection based on the study and approvals by the Ministry of Finance and line ministry responsible for the field of the public-private partnership about project proposal compliance with budget projections and plans, and fiscal risks and set limitations. (2) The public partner shall issue a public invitation to express interest in the object of the publicprivate partnership, which should include a description of needs and requirements of the public sector, object of the public-private partnership, identification of economic, legal and other requirements relevant to the object. (3) Prior to the issue of the public invitation, the public partner should prepare tender documentation which should include, inter alia: obligatory requirements that need to be fulfilled by the private partner, criteria for bid evaluation, draft agreement, deadlines for submitting of bids, right of objection and appeal by interested private partners, etc. (4) Proposal tender documentation shall be submitted for approval to the Ministry of Finance which shall, when granting approval, make sure that the evaluation criteria, procedure and private partner selection are satisfactorily based on clear, public and generally available principles of nondiscrimination. (5) The private partner shall be selected through negotiation procedure in accordance with the norms of international law. The procedure shall include a phase of pre-qualification and a phase of negotiations and receiving of bids, where the public partner shall hold negotiations with selected bidders, consider all aspects of potential agreements, and provide equal treatment to all selected bidders during the negotiations. (6) The procedure of selection of the private partner shall be regulated in further detail by a regulation to be issued by the Government within three months from the date of entry into force of this Law. Article 13 (1) Agreement on public-private partnership shall regulate working relation between the public and the private partner intended to fulfill a public need. (2) Agreement on public-private partnership may include several main agreements based on relevant legal regulations. (3) Agreement on public-private partnership must include: 8

7 a) rights and obligations of both public and private partner as contracting parties, including obligation to provide guaranteed service to users as per standards set forth by the public partner, b) purpose and scope of the agreement, v) clear risk identification and risk allocation between the public and the private partner, g) manner and conditions for providing of financial construction of the project, as well as conditions under which financial institutions may take part in the project, d) minimum standards to be applied during design, standards of space, service quality, and other requirements for project implementation, đ) manner of payment, and conditions for setting and adjusting fees, e) settlement of tax liabilities, ž) full transparency and obligation of the public partner to publish information related to the management of the public-private partnership project, z) supervisory power of the public partner during project implementation and agreement performance, i) period of duration, and requirements for renewal of the agreement, j) identification of ownership after expiration of the agreement, k) sanctions and fees in case of failure by a contracting party to fulfill its obligations, l) agreement termination including right of partners to terminate the agreement, and procedure in case of agreement termination prior to the date of expiration set forth in the agreement, lj) manner of dispute resolution, m) measures to facilitate project financing, n) description of events considered force majeure, nj) other elements relevant to the object of the public-private partnership, and o) obligation to contract a review of the agreement after certain period. Article 14 (1) The contracting parties may execute an agreement with a third party whereby the private partner would transfer the whole of the agreement or some of the obligations to the said third party. (2) Any change of the private partner shall become effective only upon approval by the public partner. Article 15 Each party to the agreement on public-private partnership must act in accordance with the principle of conscientiousness and fairness; this obligation may not be excluded or limited. 9

8 Article 16 Protection of the public partner shall imply minimum insurance in the following fields: a) physical damage to the facility, b) claim by a third party, v) reliability of employer, g) obstructions for business, d) hidden defects, đ) right of service beneficiary to request compensation from the private partner for suffered damage, and e) allowing the Public Sector Audit Service of the Republic of Srpska to control public-private partnership projects. Protection of the private partner shall imply: Article 17 a) equal treatment of all participants in public invitation, b) contractual arrangements for risk allocation and mitigation, v) providing of compensation to the private partner if, due to a public interest, agreement is amended, modified or terminated upon request of the public partner, g) equal status in dispute resolution, d) right to introduce a creditor in case of failure by the private partner to fulfill an obligation, including right to replace the contractor, and đ) disallowing expropriation, save for the declaration of public interest in which case payment of full compensation would be ensured. Article 18 (1) In cases where the public partner is the Republic, i.e. the Government by virtue of a line ministry, a public institution established by the Government or a state-owned company majority-owned by the Republic, execution of the agreement shall be subject to approval by the Government. (2) Prior to obtaining of the approval, the public partner described in paragraph 1 of this Article shall prepare project analysis in terms of efficiency and risk distribution, which must include the following: a) economic and financial project indicators, including a comparative cost-benefit analysis of the application of public-private partnership and application of other forms of provision of public services, b) necessary financing by the budget of the Republic or local self-governance units, v) legal status of ownership, and 10

9 g) risks associated with project implementation, with particular emphasis on investment impact on debt level of the budget of the concerned level of government. (3) In cases where the public partner is a local self-governance unit, a public institution established by a local self-governance unit or a state-owned company majority-owned by a local selfgovernance unit, execution of the agreement on public-private partnership shall be subject to approval by the Ministry of Finance and line ministry, based on the analysis described in paragraph 2 of this Article. Article 19 (1) In a public-private partnership, it is obligatory to establish allocation of basic risks, as follows: a) construction risk relevant to the activities regarding the initial state of the property object of the agreement, b) availability risk relevant to the cases where the private partner is called to account during the management of property due to providing services below the set standard or services not in compliance with the standards specified by the agreement, and v) demand risk relevant to volatility of demand compared to that expected at the time of signing of the agreement, regardless of engagement of the private partner, i.e. the usual risk borne by the private party in a market economy. (2) Allocation of other risks, such as initiation of bankruptcy proceedings or liquidation of the private partner, and others that arise from a public-private partnership, may be identified in the agreement between the public and the private partner. Article 20 (1) Project value shall be registered as an investment by the public sector, and property shall be entered in the accounting records of the public sector, if the public sector: is the contracting authority for the investment, bears the construction risk and availability risk or demand risk. (2) Project value shall not be registered as an investment by the public sector and shall not be entered in the accounting records of the public sector in case the private partner bears the construction risk and at least one more of the remaining two risks mentioned in paragraph 1 of this Article. (3) In case described in paragraph 1 of this Article, the value of public-private partnership investment shall debit the budget of the Republic and be considered financial leasing. (4) In case described in paragraph 2 of this Article, the agreement shall be considered operational leasing by the public sector and be recorded in the budget as purchase of services from the public partner. (5) Instruction on entry of property into accounting records shall be issued by the minister of finance within one year from the date of entry into force of this Law. 11

10 Article 21 (1) The public partner must monitor the implementation of the public-private partnership project during its application. (2) Once a year, line ministry shall submit technical and financial statements to the Government concerning implementation of each individual public-private partnership agreement, including assessment of project success. (3) Once a year, the Government of the Republic of Srpska shall submit to the National Assembly of the Republic of Srpska a report about overall effects of the implementation of the Law on Public- Private Partnership. Article 22 The public partner shall enable the public to become acquainted with the concluded agreements on public-private partnership, and to inspect documents, forms and reports. Article 23 (1) The agreements on public-private partnership shall be entered into the Registry of Public- Private Partnerships of the Republic (hereinafter: the Registry), kept by the Ministry of Finance. (2) Entry into the Registry mentioned in paragraph 1 of this Article shall include public and private partners and all data set forth in this Law and the Rulebook on Contents and Manner of Keeping of the Registry of Public-Private Partnerships, to be issued by the minister of finance within 90 days from the date of entry into force of this Law. Article 24 (1) Line ministry shall prepare the procedure of implementation and monitoring of public-private partnership projects, as well as the rules for monitoring criteria and mechanisms. (2) Supervision of the application of this Law shall be performed by the Ministry of Finance, line inspection bodies and Public Sector Audit General Service. Article 25 This Law shall apply also to the public-private partnership projects approved prior to the entry into force of this Law, if the procedure of selection of the private partner has not been completed by the date of entry into force of this Law. Article 26 This Law shall enter into force on the eighth day from the date of its publication in the Official Gazette of the Republic of Srpska. 12

11 REGULATION ON THE PROCEDURE OF IMPLEMENTATION OF PUBLIC-PRIVATE PARTNERSHIP PROJECTS IN THE REPUBLIC OF SRPSKA (Official Gazette of the Republic of Srpska no. 104/09)

12 REGULATION ON THE PROCEDURE OF IMPLEMENTATION OF PUBLIC-PRIVATE PARTNERSHIP PROJECTS IN THE REPUBLIC OF SRPSKA I BASIC PROVISIONS Article 1 This Regulation regulates the procedure of implementation of public-private partnership projects (hereinafter: PPP), which includes evaluation and approval of project proposal, contents of the economic feasibility or pre-feasibility study, procedure of selection of the private partner, contents of the PPP agreement, and monitoring of the implementation of PPP projects. Article 2 The terms used in this Regulation shall have the following meanings: a) economic feasibility or pre-feasibility study provides a systematic overview of all key parameters and analysis thereof in an acceptable form, clarifies the risks and return on invested funds, by comparing various alternatives and options for project implementation, b) costs of implementation procedure comprise total costs related to the procedure of PPP implementation, which include: preparation of study, recruitment of human resources, costs of issue of public invitation, costs of selection procedure etc., v) total value of investment means any investment of money or real property during the period of PPP project, g) internal rate of return is defined as a discount rate which makes the net present value equal to zero, and is calculated using a mathematical formula, d) net present value represents the value obtained by discounting, separately for each year, the difference between all cash outflows and inflows during the project at a fixed discount rate set in advance, đ) positive value for money is a difference between the costs borne by the public sector for the total project duration in case of a classic (budget financing) and the costs borne by the public sector in case of application of the PPP model, where the costs of classic financing exceed the costs incurred by the application of the PPP model, e) competitive dialogue is a procedure of selection in which each interested private partner may request participation, and where the public partner involves in a dialogue with the private partner who had met the qualification criteria in order to develop one or more acceptable solutions that can meet their demands, ž) general information about the procedure comprise all information given in tender documentation which enable the private partner to prepare the bid in best possible fashion, and 14

13 z) fair fee represents actual total costs, presented in market prices, incurred by the private partner during the procedure of project implementation. II PROCEDURE INITIATION AND STUDY CONTENTS Article 3 (1) The public partner shall initiate the PPP procedure by submitting project proposal to the Ministry of Finance (hereinafter: the Ministry) and responsible line ministry, including documentation set forth in Article 4 of this Regulation. (2) In case the public partner is a local self-governance unit or a state-owned company, the procedure of PPP project implementation may be conducted only when the estimated annual fee to the private partner, under all PPP agreements, does not exceed the level of 20% of own revenues of the public partner during the past fiscal year. (3) The level of costs of preparation of necessary documentation and costs of procedure of PPP implementation should not exceed 2% of the total value of investment. (4) Exceptionally, costs of preparation of necessary documentation may exceed the amount given in paragraph 3 of this Article, if the Ministry deems them essential. Project proposal must include: a) information about the public partner, b) name and title of responsible person, v) name and title of contact person, g) project title, d) project description and objective, Article 4 đ) economic feasibility or pre-feasibility study in accordance with Article 5 of this Regulation, signed by the responsible person of the line ministry, for projects proposed by a line ministry, e) proposal model for project implementation in accordance with Article 10 of the Law on Public-Private Partnership in the Republic of Srpska (hereinafter: the Law), ž) requirements and criteria for selection and minimum level of skills required for selection of the private partner, z) model of risk allocation between the public and the private partner, i) legal status of ownership, and j) evidence of project proposal compliance with the relevant strategic or development documents for the concerned field. (2) The Ministry may request submitting of other documentation it deems relevant for project proposal. 15

14 (3) A PPP project proposal should be submitted in the prescribed template (Appendix 1 which constitutes an integral part of this Regulation), including information requested in paragraph 1 of this Article. Article 5 Economic feasibility or pre-feasibility study must include: a) basic information, b) identification of needs, v) project description, g) project relation to development plans and programs, d) identification of project objectives, đ) basic project concept, e) market analysis, ž) analysis of economic and financial aspects of project, investment, costs, revenue projection, z) technical and economic features of the project, i) locations, physical planning aspects, j) legal and institutional framework, k) environmental impact assessment, l) sensitivity and risk analysis, lj) analysis of alternatives and exit strategies, m) comparative overview of project proposal under PPP and classic form of financing (budget financing), and n) conclusion about investment justification. (2) Contents of the elements listed in paragraph 1 of this Article are given in the Appendix 2 which constitutes an integral part of this Regulation. Article 6 The Ministry may accept a previously prepared feasibility or pre-feasibility study for the project as part of a PPP project proposal, in case the above studies had been prepared in compliance with international standards and methodology. Article 7 (1) The Ministry shall grant additional 15 days to the project proponent for the public partner to submit the required documentation given in Article 4 of this Regulation, in case some of the documents are missing or in case the Ministry deems additional documentation necessary. 16

15 (2) Should the public partner fail to abide by the previous paragraph of this Article, the Ministry shall suspend further procedure of granting of approval of project proposal. Article 8 (1) The Ministry shall evaluate project proposal in accordance with the criteria set forth in this Regulation. (2) In evaluating project proposal, the Ministry shall take into account: a) project justification, and b) justification of the proposed public-private partnership model. Article 9 Upon inspection of the submitted economic feasibility or pre-feasibility study, the Ministry shall evaluate and approve project justification based on the following criteria: a) existence of legal authority of the public partner to implement the proposed project, b) existence of public interest, or need for providing of public service, the fulfillment of which would enable the public partner to improve meeting of their obligations, use public revenues in a more effective manner, and create new sources of revenue, new infrastructure and new services, v) compliance of project proposal with sectoral development plans and strategies, or regulations (obtained opinion of the responsible line ministry), g) compliance of project proposal with budget projections and plans, and fiscal risks and set limitations (opinion of the Ministry), d) internal rate of return at which net present value equals zero, đ) natural market distribution of risks between the public and the private sector, e) creation of value added through allocation of resources, knowledge and skills of the private and public sectors, and ž) increase in productivity, competition and rational use of the economic capacities of both private and public entities. Article 10 Justification of use of the public-private partnership model proposed by the public partner shall be evaluated based on the following criteria: a) long-term relations between the public and the private partner (agreement duration not less than 10 years or longer than 40), b) distribution of obligations between the public and the private partner in the following manner: 17

16 1) private partner, in addition to the obligation to perform construction and/or reconstruction, shall undertake one or more obligations such as financing or operation and maintenance, for the purpose of providing public services which fall within the responsibility of the public partner to end users, or for the purpose of creation of necessary preconditions for the public partner to provide public services which fall within their responsibility, or 2) private partner shall undertake the obligation to provide public services which fall within the responsibility of the public sector to end users, v) private partner, in undertaking the construction risk relevant to the activities regarding the initial state of the property object of the agreement, shall undertake also at least one of the following two risks: risk of availability of built or reconstructed building or market risk of demand for provided services, and g) positive value for money, calculated using the method of comparison of public sector costs throughout the proposed agreement duration, which implies comparison between all planned costs of the public sector in case of use of the public-private partnership model for the implementation of the proposed project, with the planned costs which the public sector would have in the implementation of the same project during the same period in case of classic (budget) financing of those costs, including costs of construction and/or reconstruction and all other costs borne by the private partner in the public-private partnership model, such as costs of operation and maintenance of facility or costs of occurrence of risk events. Article 11 (1) In particularly complex projects, the Ministry may propose to the Government of the Republic of Srpska (hereinafter: the Government) to establish an expert working group, for the purpose of evaluation of project proposal in accordance with Article 8 of this Regulation. (2) In evaluating the criteria given in Articles 9 and 10 of this Regulation, the Ministry may request that the public partner, which had submitted the project proposal, remedy defects in the proposed project, provide additional explanations or amend the submitted documentation within 15 days. Article 12 (1) In complying with the provisions of the Law, the line ministry and the Ministry may, upon own assessment, request opinions from other ministries not directly responsible for the object of project proposal. (2) The line ministry and the Ministry may request opinion about the compliance of project proposal with development policy plans from the responsible local self-governance unit body. (3) The Ministry shall prepare information in order to advise the Government about the publicprivate partnership project proposal. 18

17 Article 13 (1) If all the criteria given in Articles 9 and 10 of this Regulation are fulfilled, the responsible ministry and the Ministry shall, within 90 days from the date of receipt of project proposal and complete supporting documentation, grant approvals of project proposal, subject to previous adoption of information by the Government. (2) The responsible ministry and the Ministry shall not grant approval of project proposal if the criteria given in Articles 9 and 10 of this Regulation are not fulfilled, and shall state the reasons for refusal of the PPP project implementation. (3) The public partner shall issue a decision on the initiation of procedure of selection of the private partner. Article 14 If the PPP project proposal provides for a possibility for the private partner, in addition to undertaking of all usual obligations given in Article 9, paragraphs b) and v) of this Regulation, to perform also economic activity within project implementation, the Ministry shall, upon fulfillment of all requirements given in Articles 9 and 10 of this Regulation, approve the proposed project only if that economic activity is connected to the purpose and objective of the proposed project and if it is not possible to provide the required level of profitability of participation in the PPP project and return on invested funds to the private partner in another manner. III PROCEDURE OF PRIVATE PARTNER SELECTION Article 15 (1) Prior to the initiation of procedure of selection of the private partner, in accordance with Article 12, paragraph 3 of the Law, the public partner shall submit to the Ministry for evaluation and approval the proposal tender documentation including all appendixes. (2) Tender documentation shall include: a) application for participation, b) invitation to bid, v) general information about the procedure, g) information about the contracting authority, d) object of PPP, đ) instruction to private partners, e) requirements to be fulfilled by the private partner, ž) criteria for bid evaluation, z) information about protection of the private partner, i) table of risk allocation, and 19

18 j) information about tender documentation. (3) In addition to the items given in paragraph 2 of this Article, the proposal tender documentation shall include also: a) basic elements of the agreement, b) detailed information about the standards and levels to be achieved by services, v) payment mechanism, g) measures for agreement supervision and management, and d) information about location availability. (4) In addition to tender documentation, the public partner must also submit a copy of decision by the public partner about the initiation of procedure of selection of the private partner, issued based on the obtained approval of the PPP project proposal. (5) Decision on the initiation of procedure of selection of the private partner shall include: a) information about the public partner, b) object of procurement, v) net present value, g) source of planned funds, and d) duration of PPP agreement. (6) Tender documentation shall be submitted with the accompanying letter signed by the authorized representative of the public partner. (7) If the tender documentation does not include all listed in paragraphs 2 and 3 of this Article, the public partner shall, upon written request of the Ministry, amend the documentation and submit it to the Ministry within 15 days. (8) If the public partner fails to abide by paragraph 7 of this Article, the Ministry shall suspend the procedure of assessment and approval of tender documentation. Article 16 (1) In order to verify completeness, reliability and capacity of the private partner to implement the PPP project, the public partner shall set forth the minimum requirements given in Article 15 paragraph 1, point e) of this Regulation, identified in tender documentation, regarding personal situation, capacity to perform professional activity, economic and financial standing and technical or professional capacity of the private partner. (2) The requested minimum qualification requirements regarding personal situation of the private partner shall be as follows: a) they are not bankrupt or undergoing bankruptcy proceedings, not undergoing liquidation proceedings, or not undergoing the procedure of suspension of business activity, b) they are not convicted by a final verdict in criminal proceedings for an act of organized crime, corruption, fraud or money laundering, 20

19 v) they have fulfilled the liabilities arising from payments of direct and indirect taxes, in accordance with the valid regulations in BiH or regulations of the country of registration, and g) they have fulfilled the liabilities arising from payment of contributions for pension and disability insurance and health insurance, in accordance with the valid regulations in BiH or regulations of the country of registration. (3) The private partner must submit documentation regarding fulfillment of the requirements given in paragraph 2 of this Article, comprising the following: a) certificate by competent court or administrative body of registration of the private partner, to certify that they are not bankrupt or undergoing bankruptcy proceedings, not undergoing liquidation proceedings, or not undergoing the procedure of suspension of business activity, b) certificate by a court to prove that no final verdict was made in criminal proceedings convicting them for an act of participation in a criminal organization, corruption, fraud or money laundering, v) certificates by responsible institutions that the private partner has settled the mature liabilities arising from payment of direct and indirect taxes, and g) certificates by responsible institutions to confirm that the private partner has settled the mature liabilities arising from contributions for pension and disability insurance and health insurance. (4) Documentation given in paragraph 3, points a) and b) of this Article may not be older than three months, to be counted from the date of issue of certificate until the deadline for submitting of application for participation. Documentation given in paragraph 3, points v) and g) of this Article may not be older than three months, to be counted from the date of settlement of liability until the deadline for submitting of application for participation, and must be in the form of original or certified copy. (5) Capacity to perform professional activity as a qualification requirement shall be proven by registration with relevant professional or other adequate official registries of the country of registration of the private partner. (6) Qualification requirements regarding economic and financial eligibility, as well as technical and professional capacity, shall be set by the public partner in accordance with the standards applied in the field of public procurement, taking care that they should commensurate to the type, object and value of the PPP project, and that they must not have limiting effect on competition, and must be reasonable, precise and clear. (7) Information used by the private partner to prove qualification capacity may not be the criteria for assessment and selection of the private partner, but should rather only represent a necessary condition for the private partner to proceed with the selection procedure. Article 17 (1) The Ministry shall assess compliance of tender documentation with the approved project proposal. (2) The decision on compliance of tender documentation with the approved project proposal shall be issued by the Minister of Finance (hereinafter: the Minister) within 15 days from the date of receipt of complete documentation. 21

20 (3) Should all criteria of this Article not be fulfilled, the Ministry shall issue a decision not approving tender documentation and stating the reasons for refusal. (4) The Ministry may approve tender documentation even if it is not in full compliance with the approved project proposal, if the changes are due to justified reasons which must be credibly explained and under a condition that financial sustainability of the project is not impaired and that no public interest is jeopardized. Article 18 (1) The public partner shall issue a public invitation for the implementation of a PPP project in the Official Gazette of the Republic of Srpska, on the web page of the Government and in papers with international circulation, which must include also a summary in the English language. The public invitation shall provide sufficient information to all interested private partners, which shall allow them to decide whether they wish to take part in the implementation of the PPP project. (2) The public invitation shall include: information about the public partner, object of the PPP, net present value, duration of agreement, qualification requirements, criteria for bid selection and evaluation, deadline for submitting application for participation, which may not be shorter than 37 days and may not be shortened even in cases of emergency or previous information notification. A template of the public invitation is given in the Appendix 3, which constitutes an integral part of this Regulation. (3) The public partner shall appoint a commission for selection of the private partner with the authority identical to that of the commission for selection of most favorable bid in negotiation procedure, including issue of a notification of procurement, in accordance with the Law on Public Procurement of BiH. (4) The procedure of selection of the private partner shall be conducted through competitive dialogue, which includes a qualification phase, a phase of receiving qualified initial bids, a phase of negotiations, and a phase of submitting final bids. (5) According to the method of selection of the private partner, tender documentation must be prepared in two parts which correspond to the qualification phase (application for participation) and the phase of receiving qualified bids (invitation to bid), which shall be subject of information for applicants included in the public invitation. (6) After receipt of applications for participation from the interested private partners, the public partner shall perform selection based on the set qualification requirements given in tender documentation. The selection must be conducted in transparent conditions, based on objective criteria regarding personal standing of applicants, their economic and financial eligibility, and technical and professional capacity. (7) The public partner shall send a conclusion on failure to meet the participation requirements to the interested private partners not invited to take part in the procedure of selection, not later than seven days from the date of its issue. The decision on failure to meet the participation requirements must include reasons for inadmissibility for participation. (8) At the same time, the public partner shall send an invitation to submit bids in writing to the qualified private partners to submit initial bids. The deadline for submitting initial bids shall be 40 days. 22

21 bid: (9) The public partner shall include, inter alia, the following information in the public invitation to a) number of qualified applicants to receive the invitation to submit bids, and b) weighing/ranking or order of significance of selection criteria from the most important to the least important, if they are not included in the issued public invitation. (10) Completion of the procedure of selection of the private partner requires minimum three applicants who meet the qualification criteria. (11) If the number of applicants meeting the selection criteria and minimum levels of skill is below the minimum number, the public partner may pursue the procedure by inviting one or more applicants with required capacities. (12) The public partner shall involve in a discussion with the selected applicants pending final identification of solution for concerned needs. During the dialogue, the basic principles of equal treatment must be observed and no benefits may be offered to some bidders. The public partner may not disclose, without an explicit clarification, the proposed solution or other confidential information received from a bidder to other participants. (13) The dialogue may take place in several subsequent phases, with a decreasing number of applicants, and all aspects of the future agreement (technical, legal, administrative, financial and economic) may be subject to negotiations. (14) If the contracting authority takes the possibility to use the phased dialogue, then the number of solutions being discussed in one phase may be reduced based on selection criteria as given in the public invitation or tender documentation. The public partner shall provide for that possibility in the public invitation or tender documentation. The public partner shall send to the applicant the decision not accepting a solution in a phase of the dialogue, stating also the reasons, by registered mail or other means which enable proving, not later than fifteen days after the date of completion of the phase. (15) The contracting authority may proceed with the dialogue procedure pending finding of solution or solutions best suited to the fulfillment of their needs and requirements. (16) The contracting authority shall send a notification about the conclusion of a dialogue phase, including statement of outlines of the selected solution or solutions, within 15 days to all participants in the dialogue, by registered mail or other means which enable proving. (17) The dialogue shall conclude by invitation to submit final bids, and the public partner shall invite the remaining applicant or applicants to submit their final bids based on the outlines of the solution or solutions selected in the dialogue phase. In that invitation, the contracting authority shall state the deadline for receipt of the bids and the address to which the bids are to be sent. (18) The bid shall comprise all necessary elements in accordance with the needs and requirements of the object of the PPP. (19) Following submitting of the final bid, the bid may be clarified or refined upon request of the public partner, or the private partner may explain, specify or supplement their bid if that would not alter the basic elements of the bid, but not in the manner which might be contrary to the principles of market competition or have a discriminatory effect. (20) Selection of the private partner shall be based on objective and nondiscriminatory criteria, previously published in the public invitation or tender documentation. Following the selection of the 23

22 private partner, the public partner shall issue a decision about the selection of the private partner. The notification of selection of the private partner shall be sent to all applicants who submitted final bids (overview of the procedure of selection of the private partner is presented in a flowchart in the Appendix 4, which constitutes an integral part of this Regulation). (21) Decisions issued by the public partner in the procedure of selection of the private partner shall be final in administrative proceedings and only administrative litigation may be initiated against them before the competent district court. (22) In selecting the private partner, general conditions governing the procedure of public procurement shall have subsidiary application. IV AGREEMENT EXECUTION AND CONTENTS Article 19 (1) The agreement is a legal act between two parties, concluded between the public and the private partner, and governs the rights and obligations of the contracting parties in the implementation of a public-private partnership project, in accordance with Law of Contracts and Torts. (2) The agreement, the object of which is providing of public services within the responsibility of the public partner to end users, in accordance with Article 13, paragraph 3 of the Law, shall include the following provisions: a) preamble, b) contracting parties, v) definitions of terms, g) purpose and object of agreement, d) rights and obligations of the public and the private partner as contracting parties, đ) period for which the agreement is executed, e) property ownership rights of contracting parties, ž) clear risk identification and risk allocation between the public and the private partner, z) manner and conditions for providing of financial construction of the project, as well as conditions under which financial institutions may take part in the project, i) financial guarantees, j) manner and terms of payment, k) potentially harmful events and manner of action by contracting parties in case of their occurrence, l) settlement of tax liabilities, lj) consequences of failure to meet obligations arising from the agreement, m) definition of ownership upon expiration of the agreement, 24

23 n) minimum standards to be applied in design, and standards of space and service quality, nj) supervisory power of the public partner, o) force majeure, p) termination of the agreement, r) liquidated damages, s) environmental protection, t) sending of notifications throughout agreement duration, ć) protection of intellectual property, trade secret and data secrecy, u) subcontracting, f) resolution of disputes arising from the agreement, h) severance provision, c) entry of the agreement into force, and č) obligation to contract a review of the agreement after certain period. (3) Integral parts of the agreement shall also be the following: a) decision on selection of the private partner, b) excerpt from the court registry, act of association or statute of the private partner, v) guarantee for performance of the agreement, and g) business plan of the private partner. (4) The contents of the elements given paragraphs 2 and 3 of this Article are provided in the Appendix 5, which constitutes an integral part of this Regulation. Article 20 (1) After issue of the decision on selection of the private partner, the public partner shall submit to the responsible body, in accordance with Article 18, paragraph 1 or paragraph 3 of the Law, the final draft agreement including all annexes, as well as all other existing agreements related to the final draft agreement. (2) In addition to the final draft agreement, the public partner shall submit complete documentation concerning the conducted procedure of selection of the private partner. (3) The public partner shall obtain the opinion of the Attorney General of the Republic of Srpska about the final draft agreement. Article 21 (1) Within 30 days from the date of receipt of the final draft agreement and documentation given in Article 20 of this Regulation, the Government or the Ministry shall issue a decision on compliance of the final draft agreement with the PPP project proposal, tender documentation and provisions of this Regulation concerning the contents of the agreement on public-private partnership. 25