Anatoly Golomolzin: public-private partnership projects can and must be efficient

To achieve optimal performance of the authorities, infrastructure operators and interested persons there should be a multi-factor approach covering legal, economic, environmental, technological and other aspects. Typically, multilateral negotiations are required.

Deputy Head of FAS Anatoly Golomolzin made this statement commenting the outcome of the II OECD Forum on state control over infrastructure and the 10^th annual meeting of OECD network on 21 March 2017 on important public-private partnership projects (PPP) with the authorized authorities and officials.

He emphasized: “Failed PPP projects were determined by obsolete, 20-year old approaches of the first generation. Since then the world has changed dramatically, which required changes to PPP approaches: transition to the 2^nd generation approaches. They are characterized by special requirements not only and not so much to individual projects but rather to the work of the system in general and it is oriented towards the relevant institutions”.

In the opinion of Deputy Head of FAS, it is necessary to move from the “grants or nothing” approaches to the use of a package of financial tools on implementing the projects, use of standard procedures, standard risk-management mechanisms. Anatoly Golomolzin pointed out: “Although decision-making takes place under limited resources, the issue is not money – the quality of project progress tracking is the guarantee of their financing. As the world experience shows, it is feasible to move from effective performance of 50% PPP projects, which was typical for the 1^st generation approaches, to the level when 95% PPP projects are efficient and ensure return on investments”.

Economic regulators (typically, tariff regulators and those providing control over infrastructure access) are an integral part of the overall system of government infrastructure control. The role of multi-sector regulator as well as regulators exercising other functions of economic regulators increases. Regarding FAS, these are the competences of the antimonopoly body, the body controlling public procurement, procurement by companies with state participation and natural monopolies.

“Some of the most interesting items of discussions were new trends and developing approaches to infrastructure control. At the next OECD conferences we will discuss relations between the structures of natural monopolies and their competitive environment and, accordingly, economic regulators, competition authorities, and interested departments.  There is a demand for further refining the tools of control over sustainable infrastructure development”, said Anatoly Golomolzin.

To achieve optimal performance of the authorities, infrastructure operators and interested persons there should be a multi-factor approach covering legal, economic, environmental, technological and other aspects. Typically, multilateral negotiations are required.

Deputy Head of FAS Anatoly Golomolzin made this statement commenting the outcome of the II OECD Forum on state control over infrastructure and the 10^th annual meeting of OECD network on 21 March 2017 on important public-private partnership projects (PPP) with the authorized authorities and officials.

He emphasized: “Failed PPP projects were determined by obsolete, 20-year old approaches of the first generation. Since then the world has changed dramatically, which required changes to PPP approaches: transition to the 2^nd generation approaches. They are characterized by special requirements not only and not so much to individual projects but rather to the work of the system in general and it is oriented towards the relevant institutions”.

In the opinion of Deputy Head of FAS, it is necessary to move from the “grants or nothing” approaches to the use of a package of financial tools on implementing the projects, use of standard procedures, standard risk-management mechanisms. Anatoly Golomolzin pointed out: “Although decision-making takes place under limited resources, the issue is not money – the quality of project progress tracking is the guarantee of their financing. As the world experience shows, it is feasible to move from effective performance of 50% PPP projects, which was typical for the 1^st generation approaches, to the level when 95% PPP projects are efficient and ensure return on investments”.

Economic regulators (typically, tariff regulators and those providing control over infrastructure access) are an integral part of the overall system of government infrastructure control. The role of multi-sector regulator as well as regulators exercising other functions of economic regulators increases. Regarding FAS, these are the competences of the antimonopoly body, the body controlling public procurement, procurement by companies with state participation and natural monopolies.

“Some of the most interesting items of discussions were new trends and developing approaches to infrastructure control. At the next OECD conferences we will discuss relations between the structures of natural monopolies and their competitive environment and, accordingly, economic regulators, competition authorities, and interested departments.  There is a demand for further refining the tools of control over sustainable infrastructure development”, said Anatoly Golomolzin.