ROMANIA OVERALL ASSESSMENT OF THE QUALITY OF THE PPP LEGISLATION AND OF THE EFFECTIVENESS OF ITS IMPLEMENTATION 2011

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1 ROMANIA OVERALL ASSESSMENT OF THE QUALITY OF THE PPP LEGISLATION AND OF THE EFFECTIVENESS OF ITS IMPLEMENTATION 2011 I- PPP Legislative Framework Assessment (LFA) Compliance of the PPP legal framework with PFI Guide recommendations 1 and Best Practice Core Area Rating Assessment 1- PPP Legal Framework Existence of specific PPP law or a comprehensive set of laws regulating 14/18 concessions and other forms of PPP and allowing a workable PPP legal framework 2-Definitions and Scope of the Law Existence of a clear definition of the boundaries and scope of application of the concession legal framework (e.g. definition of "PPP", sectors concerned, competent authorities, eligible Private party) limiting the risk of a challenge to the validity of PPP contracts, irrespective of whether 16/24 3-Selection of the Private Party 4-Project Agreement 5-Security and Support Issues the act is specifically targeted at PPP Mandatory application of a fair and transparent tender selection process. Limited exceptions allowing direct negotiations, competitive rules for unsolicited proposals and the possibility to challenge illegal awards. Flexibility with respect to the content of the provisions of the Project agreements which should allow a proper allocation of risks without unnecessary or unrealistic/not bankable/compulsory requirements/interferences from the Contracting Authority (obligations, tariff, termination, compensation). Availability of reliable security instruments to contractually secure the assets and cash-flow of the Private Party in favour of lenders, including "step in" rights and the possibility of government financial support, or guarantee of, the Contracting Authority s proper fulfilment of its obligations. 35/45 16/30 4/18 1 UNCITRAL Legislative Guide on Privately Financed Infrastructure Projects, 2001 (hereinafter the "PFI Guide")

2 6-Settlement of Disputes and Applicable Laws Possibility to obtain proper remedy for breach under the applicable law through international arbitration and enforcement of arbitral awards. General LFA Rating 64,2% Medium Compliance II-Legal Indicators Survey (LIS) Effectiveness Assessment : How the PPP law works in practice Core Area Rating Legal Indicator Survey 7- Policy Framework Existence of a policy framework for public private partnerships 7/24 8 Institutional Framework Existence of an institutional framework for public private partnerships 9/27 9- PPP Law Enforcement Award and implementation of PPP projects in compliance with the Law 20/27 General LIS Rating 45,3% Low Compliance/ Effectiveness OVERALL RATING 54,8% Medium Compliance/ Effectiveness Local Expert 2 : Gide Loyrette Nouel (Bucharest) 2. 13/15 2 The Local Experts in charge of each country have been consulted for the elaboration of the responses to the Checklist in their capacity of well recognized established law firm in the country but the Local Experts as well as EBRD are in no way responsible for the responses given to any question in this Checlist as the Consultant was free to use any other sources of information for its final determination.

3 3. RATING: Key for assessment of Each Question Yes 3 points Yes, with reservations 2 points No, with Limited compliance / redeeming 1 point features No 0 point N/A Not applicable 0 point/ Not included in total Key for Assessment of Each Core Area and for Overall Assessment > 90% Very High Compliance/Effectiveness 70%-89% High Compliance/ Effectiveness 50%-69% Medium Compliance/ Effectiveness 30%-49% Low Compliance/ Effectiveness < 30% Very low Compliance/ Effectiveness TERMINOLOGY So as to keep answers consistent and avoid ambiguity, we set out below some brief definitions of the terminology used in this questionnaire. Any definition is provided solely to clarify some of the terminology used below. The reader should note that any such definition does not correspond with any given definition under best international practice (which does not provide for any standardised PPP legal definitions recognised worldwide) neither should it be interpreted that we recommend the adoption of such definitions under actual documentation, but they are included in the interests of clarity for the completion of this questionnaire, and we should be grateful if you could adopt such definitions for the purposes of completing the questionnaire.

4 4. "Public Private Partnership" -"PPP" or "PPP project" includes all types of long-term arrangements between public authorities and private institutions, including but not limited to; Concessions, BOT and derived forms, PFI and Institutional PPP. For the purposes of this questionnaire, PPP excludes the sale of public assets or of public company shares which are part of a privatisation process and also excludes public works, services or supply contracts which are subject to public procurement rules. The following types of Public - Private Partnership Agreements may be adopted by a Contracting Authority for undertaking infrastructure projects. These are solely indicative in nature and the Contracting Authority may seek to adopt a combination of the different contractual arrangements, which incorporate some of their elements or combine elements. "BOT" - (Build-Operate-and-Transfer)- and derived forms : a contractual arrangement whereby the Private Party undertakes to finance, design, construct under a turnkey risk basis, operate and maintain an Infrastructure project for a specified period after which period the project facilities are transferred to the Granting Authority usually without payment of any compensation. The Private Party has the right to collect contract or market based tariffs or fees from the users of the infrastructure project, as specified in the PPP agreement, to recover its investment and operating and maintenance expenses for the project. A BOT type of PPP arrangement may provide for all the implementation and operational efficiencies of the private sector, together with new sources of infrastructure capital. Derived forms of BOT contractual arrangements exist such as Build-Own-Operate-and-Transfer (BOOT) similar to the BOT agreement, except that the Private Party owns the Infrastructure project during the specified term before its transfer to the Contracting Authority or its designee, or such as Build-Own-and-Operate (BOO) which is a contractual arrangement similar to the BOT agreement, except that the Private Party owns the Infrastructure project and no transfer of the project to the Contracting Authority or its designee at the end of the fixed period is envisaged. Derived forms incorporating Lease right rather than Ownership or dealing with rehabilitation or extension rather than construction which extent the possible combination which for the purpose of this questionnaire will all be hereafter refferred to as BOT for simplification purpose exept where legal specificcity requires specific treatment. "Concession": is an act attributable to the State whereby a Contracting Authority entrusts to a third party the total or partial management of public services for which that authority would normally be responsible and for which the third party assumes all or part of the risk. "PFI" (Private Finance Initiative) : a form of cooperation and partnership between public authorities and Private Parties which aim to ensure the funding, construction, renovation, management or maintenance of an infrastructure or the provision of service to the infrastructure without the delegation of the public service itself. It is a contractual arrangement whereby the Private Party

5 5. undertakes the financing and the construction of an infrastructure project and after its completion transfer it to the Contracting Authority or its designee. This arrangement may be employed in the construction of a public service facility for which the public service must be operated directly by the contracting authority for whatever reason but the operation and maintenance of the facility remain the responsibility of the Private Party for the entire duration of the PPP agreement. The contracting authority will reimburse the total project investment on the basis of a rent based of an agreed schedule with the payment starting from the date of commencement of operation and pay for the services rendered to the facility on a performance basis. "IPPP"(Institutional PPP): a structural or corporate form of PPP which provide for the cooperation between public authorities and a Private Party through a joint venture or mix (publid- private shareholding) company in which case all reference to the slection process refers to the selection of the Private Party. Other definitions: The "Law" or "PPP Law": a law regulating any form of PPP including but not limited to Concession, BOT, PFI, IPPP and including, for the purpose of this questionnair, the set of rules applicable to any PPP in the absence of a specific PPP law. The Law for the purpose of this questionnaire also includes any implementing regulation and any form of governemental act regulating PPP. "BOT Law" : a law regulating a BOT type of PPP in their multiple forms. "Concession Law": a law regulating a Concession form of PPP. "Contracting Authority": a public authority empowered to award a PPP and enter into Project Agreements "PFI Law": a law regulating a PFI form of PPP. "PPP unit" : specialized institution/agency/ministerial department established to promote and take care of PPP. "Private Party" : Private Party or other entity in the form of a special purpose company to which a Project Agreement in general has been awarded. [The word Private party will be used for the sake of this study even in case the PPP regulation allows PPP business partner to be a mix company or even a public entity.] "Project Agreement": an agreement(s) between the Contracting Authority and the Private Party regulating their respective rights and obligations with respect to the PPP project.

6 6. REFERENCE TO BEST PRACTICE UNCITRAL Legislative Guide on Privately Financed Infrastructure Projects, 2001 (hereinafter the "PFI Guide") and UNCITRAL Model Legislative Provisions on Privately Financed Infrastructure Projects, 2003 (UNCITRAL Model Legislative Provisions). EC - Commission Interpretative Communication on Concessions Under Community Law dated 12 April 2000; together with additional EU major documents/decision /recommendation on concessions including Directives 2004/18/EC and 2004/17 EC of 31 March 2004; Green Paper on Public Private Partnerships and Community Law on Public Contracts and Concessions dated 30 April 2004; Report on the public consultation on the Green Paper (SEC(2005) 629- Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on Public-Private Partnerships and Community Law on Public Procurement and Concessions (Brussels, COM(2005) 569) European Parliament resolution on public-private partnerships and Community law on public procurement and concessions (2006/2043(INI)); European Commission Guidelines for Successful Public-Private Partnerships (2003).Commission Interpretative Communication Brussels, C (2007)6661on the application of Community law on Public Procurement, and Concessions to Institutionalised Public-Private Partnerships (IPPP); EBRD Core Principles for a Modern Concessions Law selection and justification of principles Prepared by the EBRD Legal Transition Team.2005; UNIDO Guidelines for Infrastructure Development through Build Operate Transfer (BOT) Projects, 1996 (UNIDO BOT Guidelines); and OECD Basic Elements of a Law on Concession Agreements,

7 OVERALL ASSESMENT ROMANIA Romanian Law has undergone important changes at the end of 2010 further to the enactment of a new legal framework dedicated to PPPs, comprising the PPP Act No. 178/2010 (the "PPP Act 178/2010") and the Government Decision No. 1239/2010 approving the Norms for the implementation of the PPP Act No. 178/2010, as well as certain measures for the reorganisation of the Central Unit for the Coordination of Public-Private Partnership within the Ministry of Public Finances (the "PPP Norms").Please note that important amendments have been brought to the PPP Act 178/2010 as of 17 October 2011, further to the enactment of Government Emergency Ordinance No. 86/2011, and to the PPP Norms as of 20 October 2011, further to the enactment of Government Decision No. 1000/2011. The amendments brought to the PPP legal framework in October 2011 purport at rendering the procedures for the award of a PPP contract compliant with the European Union Directives on public procurement. Among the important amendments to the PPP regulations, the following should be noted: - contracts awarded for the purposes of carrying out relevant activities in public utility sectors: gas, heat and electricity, water, transport, postal services, exploration and extraction of oil, gas, coal and other solid fuels, ports and airports are expressly included among the PPP contracts; - detailed provisions on the qualification and selection criteria; - provisions on subcontracting: right for Contracting Authorities to ask potential investors, without prejudice to the question of the private investor's liability, to indicate in the offer any share of the contract they intend to subcontract to third parties, as well as any proposed subcontractors; contracts entered into with the subcontractors indicated in the offer must be submitted to the Contracting Authority upon execution of the PPP contract and attached thereto; the replacement of subcontractors throughout the performance of the PPP contract is allowed only subject to the approval of the Contracting Authority and to such replacement not resulting in any modification of the initial technical or financial offer; - possibility of submitting variants (alternative offers) if expressly allowed in the contract notice; - detailed provisions on technical specifications including: definitions of certain technical specifications, rules to be complied with by Contracting Authorities when establishing technical specifications; - the price of the PPP contract may be modified throughout the performance of the contract only in limitative circumstances expressly provided by the PPP Norms; - detailed rules on the publishing and content of notices of award of PPP agreements;

8 - the possibility for the public partner to resort to a negotiated procedure without having published a contract notice only in exceptional circumstances; - enhancement of the role of the Central Unit for the Coordination of Public Private Partnership." - Romania had benefited from a PPP Act which was repealed in 2006 by Government Emergency Ordinance No. 34/2006 implementing the European acquis (i.e. Directives 2004/17/EC, 2004/18/EC, 89/665/EEC and 92/13/EEC). Concessions, regulated as contractual PPPs, thus became the only form of partnership between public authorities and private operators that benefited from a dedicated legal framework. This approach did not have the results expected, as a limited number of Concessions of works and services have been granted under GEO 34/2006. In this context, the enactment of a new legal framework dedicated exclusively to institutionalised PPPs was deemed necessary in 2010 as a possible solution for attracting private funding in the public sector. The new PPP Act did not repeal or amend the pieces of legislation regulating Concessions enacted in As a result, Romanian Law currently includes the following main sets of rules: - Public-Private Partnerships implemented as IPPPs governed by the PPP Act 178/2010 and the PPP Norms; and - Concessions of works and services governed by GEO 34/2006 and the relevant Norms for the implementation thereof. Concessions of assets that are public property are governed by GEO 54/2006 and the Norms of implementation thereof. It is worth mentioning that the legal texts currently in force are the result of several amendments. Thus, the initial version of the PPP Act 178/2010 raised serious doubts as to its compliance with the European Union rules and principles, triggering the risk of infringement procedures being started by the European Commission against Romania. Major amendments have therefore been brought to the PPP legislation in order to render it compliant with the EU legal framework and to enable its implementation. Although these amendments have better defined the scope of the regulation and have considerably detailed the award procedures, the current Romanian legal framework still lacks a certain degree of clarity, in particular as regards the line between PPPs and Concessions, which makes it difficult to determine whether a particular project will be governed by one or the other set of rules. 8.

9 Further difficulties might result from the fact that recent amendments to the PPP Act 178/2010 have included within its scope of application relevant activities that also benefit from sector-specific regulations, among which gas, energy, water, post. The Law is not very clear as to when the general regulation on PPPs and when the sector-specific regulations are applicable. In any case, the current legal framework on PPPs is broad enough to allow the implementation of different types of Public-Private Partnerships, such as Concessions, PFIs, BOTs and its respective forms, in both merchant sectors of the economy and in sectors related to the provision of Government service. The PPP Law provides criteria for identifying the entities having the capacity to act as Contracting Authorities, while both Romanian and foreign investors may have the capacity to act as Private Parties under the PPP legal framework, without discrimination. Selection procedures, governed by basic principles among which transparency, non-discrimination, equal treatment, proportionality are detailed by the relevant regulations, providing for obligations of Contracting Authorities among which: publishing notices in respect of the award procedure, applying the same criteria made public through the contract notice and the relevant documents to all the candidates/bidders, keeping a record of the key stages and information regarding the award procedure. PPP agreements may be awarded without a competitive procedure only in limited circumstances. There is no standard Project Agreement to be complied with; the Law sets forth lists of clauses to be included in the Project Agreement but the content thereof is to be determined in each case based on the requirements of the Contracting Authority and the offer submitted by the Private Party. The Law also provides for the right of the Private Party or the IPPP to collect tariffs or fees for the use of facilities or provision of services. Availability payments are also allowed under the Romanian legislation. Review procedures are provided by the Law granting private investors the possibility to challenge a decision or a failure to act by a Contracting Authority, as well as to obtain appropriate compensation for the damages incurred. The Norms on Concessions expressly refer to the possibility of resorting to arbitration for settling a dispute related to a Concession Agreement. The Law includes very few indications as far as financial and security issues are concerned, it does not provide for step-in rights in favour of lenders or for Government financial support or guarantee for PPP projects. As regards the implementation of the legal framework, official statements of members of the Romanian Government have repeatedly emphasised the importance of PPPs. 9.

10 Strategies involving the partnership between the public sector and the private sector have been enacted in several sectors among which energy, infrastructure and municipal services. Furthermore, in April 2011, the Romanian Government has announced a list of 17 projects to be carried out on a PPP basis under the PPP Act 178/2010 in sectors among which: infrastructure, energy, health, housing, prisons. Entities acting as Central PPP Units have been set up with key functions of promoting PPPs and providing counsel and guidance to both Contracting Authorities and private investors, especially the newly reorganized Central Unit for Coordinating Public Private Partnership. However, as a general remark, the Romanian experience in implementing successful PPPs is very limited. Thus, to this day, the Electronic Public Procurement System (SEAP) has published a number of 194 notices for the award of Concessions of works and services, the vast majority thereof being awarded by local and county authorities in the field of municipal services. Nevertheless, in absence of official statistics, it is difficult to assess how many of them have been implemented successfully. No award procedure has been started yet under the PPP Act 178/2010. Among possible obstacles, we could note: insufficient training of civil servants, insufficient awareness as regards the PPPs, lack of clarity of the legal framework, no clear lenders' rights. 10.

11 11. ASSESSMENT & LEGAL INDICATOR SURVEY 1. LEGAL FRAMEWORK 1.1 Existence of different forms of PPP legal framework QUESTION ANSWER ARTICLE COMMENTARY 1. Does the country have a single act dealing specifically with Concessions or a generalised act incorporating the legal framework for PPP, including Concessions? Romanian legal framework includes several pieces of legislation regulating different types of long-term arrangements between public authorities and private entities. Thus, Public-Private Partnerships established as IPPPs are regulated by recently enacted pieces of legislation: the PPP Act No. 178/2010 (the "PPP Act 178/2010") and the Norms for the implementation thereof approved by Government Decision No. 1239/2010 (the "PPP Norms"). The concept of Concessions under Romanian law is regulated under two Government Emergency Ordinances enacted in 2006 with the purpose of implementing the relevant EU regulations, as follows:

12 12. concessions of works and services are governed by of Government Emergency Ordinance No. 34/2006 on the ublic procurement contracts, of public works concession services concession contracts (the "GEO 34/2006") and the e implementation thereof approved by Government Decision the "Concession Norms"); concessions of assets that are public property are Government Emergency Ordinance No. 54/2006 on the legal oncession contracts for assets that are public property (the 06") and the Norms for the implementation thereof approved nt Decision No. 168/2007. Furthermore, the Local Public Administration Act No. 215/2001 provides for the possibility for county/local public authorities to associate with private partners, under the terms and conditions provided by the law, for the purposes of financing and carrying out activities, works, services and projects of county/local interest. No further details are provided regarding the procedure to be complied with for selecting the Private Party. As a general remark on the Romanian legal framework, although recent amendments to the PPP Act 178/2010 and the PPP Norms have provided further details as regards the scope of these regulations and have clarified to a certain extent the procedures to be complied with for the award of a PPP contract, the line between the scope of the different regulations is not very clearly drawn in all cases. A specific project may qualify either as a PPP or as a Concession and there are no clear guidelines on the choice among the set of rules that should be complied with.

13 Does the country have an act that allows BOT or derived forms such as BOOT, BOO or other forms either as part of a specific act or as part of a general PPP Law? Despite the absence of express references thereto in the relevant pieces of legislation, BOTs and derived forms thereof may be implemented within the framework of Public-Private Partnerships. 3. Does the country have an act that allows PFI, either as part of a specific act or as part of a general PPP Law? 4. If the answer is No to any of the three first questions concerning a specific form of PPP does the Constitution or other general act (ex: the Civil Code, sectoral law) recognise the basic principles of the concerned PPP and regulate its granting? N/A Despite the absence of express references thereto in the relevant pieces of legislation, PFIs may be implemented within the framework of Public-Private Partnerships. For our general information: Is a new PPP Law or an amendment to the existing Law being prepared, or considered, in the country? If so, at what stage of the legislative process is such new PPP Law or amendment to the existing Law?

14 We are not aware of any amendment to existing regulations being prepared or of any new regulation being proposed as regards PPPs in Romania. Please note that important amendments have been brought to the PPP Act 178/2010 as of 17 October 2011, further to the enactment of Government Emergency Ordinance No. 86/2011, and to the PPP Norms as of 20 October 2011, further to the enactment of Government Decision No. 1000/ Specificity and integration of PPP the legal framework 5. If the country has a Public Procurement Law, is it clear to what extent does the Public Procurement Law apply or not to the granting of a PPP? The Romanian Public Procurement Law is represented by the chapters dedicated to the procurement of goods/works/services included in GEO 34/2006 (implementing the European Directives 2004/17/EC and 2004/18/EC) and the relevant norms for the implementation thereof. The Romanian Public Procurement Law includes provisions indicating which texts of the Public Procurement Law also apply to the granting of Concessions. 6. If the country has sectoral laws regulating PPP in specific sectors, is it clear which law is applicable to the granting of PPP for each particular sector? In addition to the above-mentioned general texts, the Romanian legal framework also includes numerous sector-specific texts providing for the option of using PPPs for carrying out a public service; some of these regulations also provide for specific rules for the award of the PPP. Romanian law allows special norms derogating from general norms. However, general principles should be

15 15. complied with and both the general and the specific regulation should be clear enough as regards their respective scopes in order to avoid the risk of overlapping and confusion. Among the sectors where specific pieces of legislation provide for PPPs, we note the following: oil: Oil Act No. 238/2004 and the Norms on the implementation thereof approved by Government Decision No. 2075/2004; mining: Mining Act No. 85/2003 and the Norms on the implementation thereof approved by Government Decision No. 1208/2003; electricity: Electricity Act No. 13/2007; natural gas: Gas Act No. 351/2004; municipal services: a framework regulation: the Municipal Services Act No. 51/2006 and relevant regulations for each category of municipal services governed thereby: - Act No. 325/2006 on the organisation and functioning of the public services of thermal energy supply; - Act No. 101/2006 on sanitation services; - Act No. 241/2006 on the organisation and functioning of the public services of water supply and sewage; - Act No. 230/2006 on public lighting services; - Act No. 92/2007 on local public transportation services; - Government Ordinance No. 71/2002 regarding the

16 16. organisation and operation of public services of management of the local public and private domain. The Law is not clear as to when the general regulation and when the sector-specific regulations are applicable. 7. Does the country have a Law allowing the Institutional form of PPP (IPPP) which regulates IPPP participation to PPP? PPP Norms Art.1 (2) Under the PPP Act 178/2010 Public-Private Partnerships may be implemented only by setting-up an IPPP whose purpose is to carry out the Public-Private Partnership Project. Concession Norms Art 16 The Contracting Authority and the Private Party may set up an IPPP in view of carrying out a Concession.

17 DEFINITIONS AND SCOPE OF THE PPP LAW(S) 2.1 PPP definition 3 QUESTION ANSWER ARTICLE COMMENTARY 1. Does the Law define one or several term(s) (i.e. "PPP", "Concession", "BOT", "Partnership" etc. and/or respective agreements) for the arrangements to be regulated by the Law which specify the limits of application of the Law? For our general information: please provide the given definition(s), if any. PPP Act 178/2010 Art. 4, d), g), t), ţ), u) Various types of arrangements are defined by the Law. However, the limits of application of the Law cannot be clearly determined. A. Public Private- Partnership A public-private project is the project that is fully or partially completed with the financial resources of an investor or with financial resources obtained by the investor (i.e. the Private Party), based on a publicprivate partnership model, from which a public asset or service results; A Public-Private Partnership agreement or project 3 PFI Guide, Consolidated Legislative Recommendations, Recommendation 3and Commission Interpretative Communication on Concessions Under Community Law dated 12 April 2000; together with additional EU major documents/decision /recommendation on concessions including Directives 2004/18/EC and 2004/17 EC of 31 March 2004; Green Paper on Public Private Partnerships and Community Law on Public Contracts and Concessions dated 30 April 2004; Report on the public consultation on the Green Paper (SEC(2005) 629- Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on Public-Private Partnerships and Community Law on Public Procurement and Concessions (Brussels, COM(2005) 569) European Parliament resolution on public-private partnerships and Community law on public procurement and concessions (2006/2043(INI))

18 18. agreement is the legal document that stipulates the rights and obligations of the public partner (i.e. the Contracting Authority) and of the private partner (i.e. the Private Party), throughout the entire duration of the Public-Private Partnership, covering one or several stages of the Public-Private Partnership project, for a definite term; PPP Act 178/2010 also defines each type of Public- Private Partnership agreement, as follows: PPP works agreements are partnership agreements ither: (i) only the performance or the design and the of works related to one of the activities listed in of GEO 34/2006 or (ii) the carrying out, through any works meeting the requirements indicated by the Authority in the contract notice or in the accompanying ereof. "Works" are defined as the result of construction lic works, meant to fulfil itself an economic or technical PPP goods agreements are partnership agreements, PP works agreements (as defined above) concerning the oods corresponding to the necessities specified by the Authority in the contract notice and in the accompanying ereof. A PPP agreement concerning the supply of goods ddition, covers the installation works, is considered to be agreement. PPP services agreements are partnership other than PPP works agreements and PPP goods as defined above) concerning the provision of services endix 2 of GEO 34/2006. A PPP agreement concerning

19 19. nd services listed in Appendix 2 of GEO 34/2006 will PPP services agreement inasmuch as the value of the erned exceeds the value of the goods. A PPP agreement ervices listed in Appendix 2 of GEO 34/2006 and, only activities listed in Appendix 1 to GEO 34/2006 will be a PPP services agreement depending of the main object B. Concessions The Law does not include a definition of Concession, as such, but it defines concession agreements. GEO 34/2006 Art. 3, g), h) Concession Norms Art. 3 Agreements for concession of public works and services are defined by reference to public works or services agreements. Thus, Concession agreements have the same characteristics as the corresponding public procurement agreements, the difference consisting in the fact that, as regards concession agreements, the consideration for works performed or services rendered by the concessionaire consists either solely of the right to operate the construction/services (thus the Private Party undertaking the most important part of the risks related to the performance and operation thereof), or in that right together with payment of a predetermined amount by the Contracting Authority. Under GEO 54/2006, a Concession agreement is the agreement concluded in written form whereby a Contracting Authority, acting as conceding authority, transfers, for a limited period of time, to a Private Party,

20 20. GEO 54/2006 Art 1 (2) acting as concessionaire, acting on its own risk and responsibility, the right and obligation to operate a public property asset in return for the payment of a royalty. 2. Does the Law apply to all contracts entered into that fall under the definition(s) given above, irrespective of the name given to such contract (concession, license, usufruct right, lease, etc.)? PPP Act 178/2010 Art GEO 34/2006 Art. 220 Yes, subject to the exceptions explicitly provided in the relevant regulations, where they are not applicable. 3. Does the Law make a clear distinction between a PPP agreement (such as a Concession) and a license (i.e. an authorisation to operate by a public authority)? The Law does not include express provisions in this respect. Nevertheless, a distinction between the authorisation to operate granted by a relevant regulatory authority by issuing a licence and the authorisation to perform a public service granted by a Contracting Authority by entering into a PPP agreement can be inferred further to the analysis of the legal provisions in force. In any case, both are required for a Private Party to duly perform a public service within the framework of a PPP in a regulated sector.

21 Contracting Authority QUESTION ANSWER ARTICLE COMMENTARY 4. Does the Law identify (or allow clear identification by reference to other laws or regulations) the public authorities ("Contracting Authorities") that are empowered to select projects, prepare for, and award PPPs and enter into Project Agreements? PPP Act 178/2010 Art. 4, j), Art. 7, Art. 8 GEO 34/2006 Art. 8 The following entities may act as Contracting Authorities to implement Public- Private Partnerships, either as PPPs under PPP Act 178/2010 or as Concessions: any State body, public authority or institution, acting at a central, regional or local level; any body, other than those indicated above, having legal personality, which was set-up in view of satisfying general interest needs without a commercial or industrial nature and that is financed mostly by a public entity (i.e.: a State body, public authority or institution, acting at a central, regional or local level) or by a body governed by the public law; any body, other than those indicated above, having legal personality, which was set-up in view of satisfying general interest needs without a commercial or industrial nature and that is either subordinated to or subject to the control (for Concessions) or subject to supervision or management (for PPPs) of a public entity (i.e.: a State body, public authority or institution, acting at a central, regional or local level) or another

22 22. body governed by public law; any body, other than those indicated above, having legal personality, which was set-up in view of satisfying general interest needs without a commercial or industrial nature and whose board of directors/management or supervisory body comprises more than half of its members, appointed by a public entity (i.e.: a State body, public authority or institution, acting at a central, regional or local level) or by another body governed by public law; any association formed of entities falling under the scope of the above mentioned categories. In addition to the above, the following entities may equally act as Contracting Authorities under the PPP Act 178/2010: - any association formed of one or more entities qualifying as Contracting Authorities as defined above, on the one hand, and authorities, public institutions and public companies of Member States of the European Union, irrespective of their activity, on the other hand; - any public company operating one of the activities mentioned under Art of PPP Act 178/2010 (i.e.: relevant activities), on which an entity qualifying as Contracting Authority as defined above has, either directly

23 23. or indirectly, a dominant influence, as a result of a property right, a financial participation or of norms governing it. The dominant influence is presumed when the entity qualifying as a Contracting Authority as defined above, either directly or indirectly: - owns the majority of the company's subscribed share capital; or - controls the majority of the votes associated to shares issued by the company; or - can nominate more than half of the members of the administrative/management/supervisory body. - any legal entities that do not qualify as Contracting Authorities as defined above, as defined above, but carry out, as one of their activities, one or several activity(s) defined under Art of PPP Act 178/2010 (i.e.: relevant activities) or any combination thereof and benefit from special or exclusive rights granted by a relevant authority; special or exclusive rights are defined as rights granted by a relevant authority of a Member State by means of a legal/regulatory/administrative provision having as effect the limitation of the carrying out of activities defined under Art of PPP Act 178/2010 (i.e.: relevant activities) to one or several entities and which affect in a substantial manner the capacity of other entities to perform

24 24. such activity. GEO 54/2006 Art. 5 Under GEO 54/2006, the following entities may act as Contracting Authority, on behalf of the State, the county or the municipality: (i) Ministries or other specialised bodies of the central public administration for assets that are public property of the State; and (ii) county councils, local councils, public institutions of local interest for assets that are public property of the county or the municipality. For our general information: If yes, which of the following authorities are identified: National authorities (e.g.: the government, ministries, and independent agencies); Regional/state-level authorities; Local or municipal authorities; or State owned companies? Public authorities at all levels (State level, county level, municipality level) may act as Contracting Authorities under Romanian law. Further, State owned companies may equally qualify as Contracting Authorities, inasmuch as they fall under one of the categories indicated above.

25 Private Party and Project Company QUESTION ANSWER ARTICLE COMMENTARY 5. Is it possible for a PPP be awarded to a foreign company, a Private Party or to a domestic company with foreign participation in the share capital and/or management (without discrimination)? PPP Law 178/2011 Art. 3 1, 3² 4, e) Concession Norms Art. 6(2) GEO 54/2006 Art. 6 PPPs may be awarded to foreign companies, or to domestic companies with foreign participation in the share capital and/or management thereof. The Law does not include restrictions in this respect. On the contrary, non-discrimination of private investors, regardless of their nationality or citizenship, is one of the basic principles of the award of PPPs and the Law expressly provides that both Romanian and foreign legal persons or associations may act as a Private Party. For our general information: can a PPP be awarded to public entities or to entities jointly owned by private and public entities (IPPP)? Are there restrictions imposed on such contracts? According to the Law, in principle, PPPs may be awarded to both public entities and IPPPs formed of a private partner and a public partner.

26 Concerned sectors 4 QUESTION ANSWER ARTICLE COMMENTARY 6. Does the Law identify (or allow identification by reference to other laws or regulations) the sectors and/or types of infrastructure and/or services in respect of which a PPP may or may not be granted? PPP Act 178/2010 Art. 2, 4 1 5² -5 6 GEO 34/2006 Appendix 1, 2A and 2B Under Romanian law PPPs may be granted in a large number of sectors. The sectors where PPPs may be granted are defined by reference to the lists of works and services included in Appendix 1, 2A and 2B to GEO 34/2006 implementing the EU Directives on public procurement. 7. Do the list of sectors eligible for PPP correspond to an open-ended one (as opposed to being exhaustive) allowing (or at least not preventing) PPP to be granted in numerous sectors? It can be argued that a wide variety of sectors may be eligible for PPPs. 4 For further information on the concerned sectors please refer to:pfi Guide, Consolidated Legislative Recommendations, Recommendation 3 and 4.

27 Do the sectors eligible for PPP includes non commercial activities such as the provision of government services (such as schools, hospitals, prisons, defence and housing) in addition to the merchant sectors of the economy (energy, transport, water, oil and gas). The sectors where PPPs may be carried out includes both non commercial sectors and merchant sectors of the economy. Moreover, education, health and social services are expressly listed in Appendix 2B of GEO 34/2006. For our general information: Please indicate the restrictions if any imposed by the Law on the sectors eligible for PPP: The Law does not impose specific restrictions, but provides that it does not apply to the following: - agreements concerning the acquisition or lease of land, buildings, other immovable assets or rights thereon; - agreements concerning the acquisition, development, production or coproduction of programs to be broadcasted by radio or television; - agreements concerning arbitration and conciliation services; - agreements concerning financial services related to the issuance, the acquisition, the selling, the transfer of securities or other financial instruments or to the provision by the National Bank of Romania of services specific to a central bank; - employment agreements; - agreements concerning the provision of research-development services, other than those exclusively for the benefit of a Contracting Authority, provided that the service rendered is fully paid by the Contracting Authority; - agreements in the fields of defence and security governed by Directive 2009/81/EC; - agreements further to the execution of which the Contracting Authority may make available or operate public telecommunication networks or may provide the public with one or several telecommunication services; - agreements that have been declared secret by the relevant authorities; - where the protection of essential State interests requires it; - where the performance of the agreement requires imposing special safety and national security measures; - agreements executed further to an international convention concerning the stationing of troops and only if a specific procedure was mentioned in such international convention; - agreements executed further to an international convention entered into according to the provisions of the EU Treaty with one or several States that are not members of the EU concerning the provision of goods or performance of works

28 28. in view of implementing or operating a joint project and only if a specific procedure was mentioned in such international convention; - agreements awarded further to a specific procedure of an international organisation.

29 SELECTION OF THE PRIVATE PARTY General Considerations QUESTION ANSWER ARTICLE COMMENTARY 1. Does the Law require, in principle, the Contracting Authority to select Private Parties through a competitive tender process? PPP Act 178/2010 Art. 4 letters r) and s) Art. 14 (1) letter b) Art. 18(1) The Law provides for competitive tender procedures for the award of PPPs. Under the PPP Act 178/2010, in principle, a Contracting Authority is entitled to use either an open procedure or a competitive dialogue procedure for the purposes of selecting the Private Party. GEO 34/2006 Art Concessions of public works and services may be awarded by a Contracting Authority by using one of the following award procedures: open tender, restricted tender or competitive dialogue. Concession Norms Art.26 As a general rule, Concession over an asset that is public property is to be granted further to a tender procedure. 5 For further information on the selection of the Private Party, please refer to:pfi Guide, Consolidated Legislative Recommendations, Recommendations 14 to 39 included.

30 30. GEO 54/2006 Art Is there reference in the Law to the principles of transparency, equal treatment and proportionality? PPP Act 178/2010 Art. 3 GEO 34/2006 Art. 217, Art. 2 (2) Yes, non-discrimination, equal treatment, transparency and proportionality are expressly indicated in the Law as the basic principles that must be complied with for the award of PPPs. GEO 54/2006 Art Is there a provision in the Law concerning the publication of information related to the competitive procedures in the country media and in the international media (for large projects)? In view of ensuring the transparency of the award procedures, the Law provides for the obligation of Contracting Authorities to publish notices regarding the competitive procedures for the award of PPP, and indicates the information to be included in such notices. Such notices must be published in the Electronic System of Public Procurement (SEAP), which is a public utility electronic system available online and, where certain thresholds are met, in the Official Journal of the European Union, as well. For PPPs governed by the PPP Act 178/2010, SEAP

31 31. GEO 34/2006 Art. 21, Art. 222, 223 Concession Norms Art should provide Contracting Authorities with a new specialized information flow. Such new specialized information flow has not yet been implemented and we are not aware of the progress of such implementation. If the value of the PPP project exceeds the thresholds below, the contract notice should be published in the Official Journal of the European Union, as well. PPP Act 178/2010 Art. 24 PPP Norms Art. 40, 41 Type of contract Goods and services Thresholds 6 (VAT excluded) Euro Publication SEAP > Euro SEAP and OJEU Works Euro SEAP > Euro SEAP and OJEU Contract notices regarding Concessions of works of a 6 Equivalent in RON;

32 32. value exceeding the equivalent in RON of EUR 4,845,000 must also be published in the Official Journal of the European Union. GEO 54/2006 Art. 21 Finally, GEO 54/2006 provides that contract notices must be published in the Official Gazette, in a national newspaper and in a local newspaper. 4. Are there provisions within the Law or any special manual or recommendations governing in detail the selection of the Private Party (i.e.: the pre-selection of bidders, the procedure for requesting proposals or other procedure such as competitive dialogue/two stage procedure)? The Law regulates in detail the selection of the Private Party. 5. Does the Law provide that if the Contracting Authority rejects an applicant at the time of preselection or disqualifies a bidder, it must make public the reasons for the decision (or inform the rejected bidder thereof explaining the reasons for rejection)? PPP Act 178/2010 Art. 18 (2) letter k), (7) letter r) GEO 34/2006 Art. 207 (2), (a), (b) Concession Norms Art. 46 GEO 54/2006 Art. 41 The Contracting Authority is under a legal obligation to send a letter indicating the reasons of its decision to disqualified bidders / rejected applicants.

33 Award of PPP QUESTION ANSWER ARTICLE COMMENTARY 6. Does the Law provide that all proposals are ranked solely on the basis of a predefined evaluation criteria set forth in the pre-selection documents/ request for proposals? PPP Act 178/2010 Art. 3 letter (b), 4 letter (m) Proposals submitted by all the candidates/bidders must be assessed by using the same criteria set out in the preselection documents/request for proposals. GD 71/2007, Art. 17, 18 GEO 54/2006 Art Does the Law provide for the publication of a notice of the award of the project, identifying the Private Party and including a summary of the essential terms of the project agreement? PPP Act 178/2010 Art. 18(2) (k 1 ), 18(7) (r 1 ), 24(2), (3) PPP Norms Art (8) The Law provides for the obligation of Contracting Authorities to publish notices of award of a PPP project and indicates the information to be included in such notices. Such notices must include information on the selected Private Party and basic information on the PPP agreement, including the value thereof and a brief description of the works/services/products subject of

34 34. Concession Norms Art. 56 the agreement, and where applicable, the royalty to be received by the Contracting Authority or the financial contribution to be paid by the Contracting Authority. 8. Does the Law provide that the Contracting Authority or any other public authority maintain records of key information pertaining to the selection and award proceedings? PPP Act 178/2010 Art GEO 34/2006 Art. 213, 214 GEO 54/2006 Art. 60 The PPP Act 178/2010 provides for the obligation of Contracting Authorities to prepare, for each PPP agreement awarded, a Minutes including the following information: name and address of the Contracting Authority, object and value of the PPP contract; names of the private investors selected and the reasons for the decision; names of the private investors rejected and reasons for the decision, reasons for the rejection of offers considered abnormally low; name of the winning party and reasons for the selection of its offer, as well as (if applicable) the part of the contract to be subcontracted to third parties; for competitive dialogue procedures, circumstances justifying the choice of the procedure in question; and, if applicable, the reasons for which the Contracting Authority has decided not to award the PPP. As regards the award of Concessions, Contracting Authorities are under an obligation to prepare, for each award procedure, the file of the award procedure including information and documents among which: the contract notice, the request for proposals, the requests for clarifications and clarifications issued by the Contracting Authority, the report of the award procedure (including essential terms such as: name and