PUBLIC-PRIVATE PARTNERSHIPS
FOR PROMOTING SUSTAINABLE
DEVELOPMENT GOALS
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PUBLIC -PRIVATE PARTNERSHIPS FOR PROMOTING SUSTAINABLE DEVELOPMENT GOALS
“ PPP structure can help foster economic
growth and social development in ways that
promote the Sustainable Development Goals,
leading to a better and more sustainable
future for all. ”
ALEXEI ZVEREV
SENIOR COUNSEL, EBRD
[email protected]
CHRIS TASSIS
ASSOCIATE, EBRD
[email protected]
ZEYNEP BOBA
ASSOCIATE, EBRD
[email protected]
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FINANCE AND GOVERNANCE
Achieving the UN’s Sustainable Development Goals (SDGs) requires long term investment.
PPPs can provide some of this investment by utilising private sector skills, know-how
and finance to implement long-term public infrastructure projects. For longitudinal project
partnerships to be attractive to private investors, there needs to be a stable and
predictable legislative and regulatory framework in place for PPPs. To facilitate the
development of effective PPP frameworks, the EBRD has produced the PPP Regulatory
Guidelines Collection for policymakers and practitioners to use to create legal
environments that are conducive to PPPs, in line with international best practice.
NEED TO FINANCE THE SUSTAINABLE
DEVELOPMENT GOALS
The SDGs are a set of 17 goals that aim to end
poverty, protect the planet and ensure prosperity PPPs have many benefits.
for all by 2030. Achieving the common objectives When properly structured
enshrined in the SDGs – also known as the Global
Goals – is a long-term endeavour, with sufficient
and implemented, PPPs can
and targeted financing being a catalyst. fulfil a range of valuable
The value of capitalising on private sector financing purposes and objectives for
for the SDGs has been recognised since 2015 in the benefit of society and the
the United Nations Addis Ababa Action Agenda of common good.
the Third International Conference on Financing
for Development. It was further highlighted in the
document From Billions to Trillions: Transforming
Development Finance Post-2015 Financing for
THE ROLE OF PPPs IN FOSTERING
Development: Multilateral Development Finance
SUSTAINABLE DEVELOPMENT
prepared jointly by the African Development Bank, The World Commission on Environment and
the Asian Development Bank, the EBRD, the Development’s 1987 Brundtland Commission
European Investment Bank, the Inter-American report Our Common Future defined sustainable
Development Bank, the IMF and the World Bank. development as “development that meets the
needs of the present without compromising the
The private sector plays a key role in implementing
ability of future generations to meet their own
the SDGs, particularly SDG 17 (partnerships),
needs”. From this definition, the inter-temporal
with the expectation that it will contribute with
element of development becomes clear. PPPs
capital investment in the face of dwindling public
as instruments and financial structures
resources. In recent years, PPPs have become
encompass a long-term nature that typically
increasingly important as governments around the
includes, importantly, a servicing element.
world seek to address the immense challenges
Therefore, this unique characteristic allows
associated with pandemics, population growth,
effective and sustainability-aligned changes
climate change and economic inequality. PPPs play
to take place in the long run.
a vital role in efforts to identify and implement new
and cost-effective solutions by bringing together PPPs have many benefits. When properly
the resources of the public sector and the creative structured and implemented, PPPs can fulfil
thinking, efficiency, modern technology and a range of valuable purposes and objectives for
expertise of the private sector. the benefit of society and the common good.
They can advance the efficient and cost-effective
development, provision and operation of public
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PUBLIC -PRIVATE PARTNERSHIPS FOR PROMOTING SUSTAINABLE DEVELOPMENT GOALS
infrastructure and public services, by harnessing around the world recognise the importance of private
the skills, resources, know-how and/or finance of sector involvement to achieve the SDGs, there has
the private sector most effectively and sustainably been an increase in the number of PPPs and the
on a long-term basis, and structuring projects in scope of their projects. In a similar vein, the EBRD
ways that has been actively working to help governments
allocate the risks and responsibilities involved develop legal and regulatory frameworks for PPPs
most appropriately over the project’s duration. in a good number of countries in its regions. This
This can strengthen the efficacy of project delivery has enabled governments to better leverage the
(whether of design, construction, rehabilitation, resources of the private sector in developing
operation and/or maintenance), stimulate new sustainable projects that benefit local communities.
funding and investment opportunities, help bridge
In a similar vein, adequate and well-allocated
the public infrastructure and service gap, raise
financing is a critical enabler for the development
the quality of public services, improve the public’s
and the success of a PPP, which in turn will advance
access to those services, and so help to achieve
the host country’s development agenda. To this end,
wider economic, environmental and social goals.
the Bank recently commissioned a study on the
PPP structure can help foster economic growth and sources and types of financing for PPPs in the EBRD
social development in ways that promote the SDGs, regions. In the context of global financial and
leading to a better and more sustainable future for economic instability, many countries are experiencing
all. By bringing together different stakeholders, PPPs difficulties in financing infrastructure projects,
can create efficiencies, increase access to capital especially large-scale ones. Similar to the
and promote innovation. Furthermore, they can help identification of alternative mechanisms and
create a long-term framework for sustainability, as processes to achieve sustainable development (for
public and private entities work together to ensure instance, turn to renewable energy and responsive
the success of their projects, becoming more financial regulation), diversification of financing
prevalent in the sustainability realm. As governments sources for PPPs is most welcome.
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FINANCE AND GOVERNANCE
Looking beyond traditional bank lending, there is Most importantly, the EBRD has developed
room to explore alternative ways to finance PPP a collection of PPP regulatory guidelines over the
projects. Global awareness of sustainable PPP past few years that represents some five years
projects has grown among institutional investors, of hard work by a dedicated group of experts, most
especially as governments have been trying to of whom took an active part in this formidable effort
scale up investments to meet the SDGs. on a pro bono basis. The publication aims to address
Introducing innovative financing and new forms the needs of the many governments and authorities
of PPP structures could offer a broader range of in the EBRD economies that shared their feedback
PPP financing mechanisms, which could better and priorities with the EBRD regarding their desire
address the needs and financing/funding gaps in and even the necessity to assemble examples
so many jurisdictions. Indicatively, alternative of internationally accepted standards and best
types of financing might include blended finance practices in the area of PPPs as far as its regulatory,
and receivables financing and alternative sources institutional and enabling frameworks are concerned.
of financing might include pension funds, sovereign
wealth funds and impact investors. In a nutshell,
alternative means of PPP financing shall be explored
as they are of great importance for supporting the
“ A stable and predictable
viability of SDG-oriented projects. legislative and regulatory
environment makes it
PPP LEGAL FRAMEWORKS
easier to attract investment
Sound PPP legal frameworks and policies are in PPP projects and further
of paramount importance for the PPP sector’s
development. A stable and predictable legislative lays the ground for the
and regulatory environment makes it easier to successful completion
attract investment in PPP projects and further lays
the ground for the successful completion of PPPs.
of PPPs. ”
Until recently, almost all PPP legal frameworks
primarily focused on commercial business
The EBRD Legal Transition Team has carried out PPP
practices, which, to an extent, would ensure the
regulatory advisory technical cooperation projects
commercial viability of the project. While the
in more than 30 countries, helping to upgrade a
actual objective of the project may have been
legislative and/or enabling framework or institutional
society-oriented or environmental in nature
infrastructure, and to enhance the public sector’s
(healthcare or education social infrastructure
PPP capacity. By way of example, the team has
projects, for instance), the focus of the legal
provided a comprehensive programme of technical
framework was geared towards the mechanics
cooperation to the Serbian authorities since 2011.
of the project per se and aimed at enhancing
Serbia is one of a very few countries where the Bank
well-recognised legal values, such as transparency,
exercised a well-structured approach, from helping
predictability and accountability.
the authorities design and draft PPP policy to drafting
In line with the global shift towards proactively PPP law, creating regulatory and institutional
infusing sustainability considerations in legal and frameworks and an enabling environment, and
regulatory texts and policies, the EBRD’s work offering training in the country’s regional centres.
on PPPs has been critical in helping develop This contributed to the development of a good
and implement the Paris Agreement on Climate number of banking projects. The Bank used an
Change. The Bank has provided technical integrated approach in Serbia and coordinated with
cooperation to its economies to help them identify the EBRD Banking Department on regulatory
and implement projects that reduce emissions framework advisory, which helped identify gaps and
and promote renewable energy sources. This has room for improvement (the Bank then considered
included activities such as developing legal and Belgrade underground parking and a number of
regulatory frameworks for PPPs, providing capacity other potential municipal and transport infrastructure
building to local stakeholders and facilitating investments). As a result, within three years of the
access to finance for green projects. new law’s enactment, the pipeline of PPP projects
grew significantly, from just a handful to more than
50, and Serbia’s PPP programme keeps expanding.
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PUBLIC -PRIVATE PARTNERSHIPS FOR PROMOTING SUSTAINABLE DEVELOPMENT GOALS
THE EBRD’S PPP REGULATORY and can contribute to the sustainable development
GUIDELINES COLLECTION of economies. The publication consists of three
volumes and will be issued as an electronic version
The EBRD’s PPP Regulatory Guidelines Collection
and in a limited number of hard copies.
(hereinafter the EBRD PPP Guidelines) is a nearly
comprehensive massive resource for policymakers The EBRD PPP Guidelines consist of a set of model
and practitioners involved in developing and laws, policies, explanatory materials and templates
implementing PPP projects. The collection offers that have been produced according to best practices
guidance on the key legal, regulatory and and can be used by governments as benchmark
contractual aspects of PPPs, including PPP policy and reference material.
formulation and law drafting, key elements of the
Central to Volume I of the guidelines is the
PPP regime, procurement, risk allocation, project
EBRD/UNECE Model PPP Law for SDG-compliant
appraisal and monitoring and dispute resolution.
PPP Projects (the Model Law). The Model Law
It is based on the EBRD’s extensive experience
was drawn up as part of the wide-ranging corpus
with both regulatory advisory and supporting PPP
of guidance documents, modules and studies on
projects across its regions of operation, and
PPPs being produced on behalf of both the United
reflects internationally recognised standards and
Nations Economic Commission for Europe (UNECE)
best practices. The collection is a valuable tool for
Working Party on PPPs and the LTP of the EBRD to
governments seeking to promote private sector
help governments seeking to develop PPP systems
participation in infrastructure development and
of their own – both those doing so for the first time
for private sector stakeholders looking to navigate
and those willing to upgrade their own regime.
through the complexities of PPPs. By providing
a clear and practical enabling framework for
developing PPP projects, the EBRD PPP Guidelines
can help to promote transparency, accountability
and good governance in infrastructure development,
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FINANCE AND GOVERNANCE
The Model Law is followed by a supporting
commentary that narrates short summaries of the
Law’s articles and provisions and provides brief
explanations of the thinking behind them and some
discussion of the core issues to which they typically
give rise in practice. The commentary, written
in non-legal language, offers some additional
elucidation of the Law’s text and where it might be
helpful, but does not attempt to restate or explain
every one of its provisions.
Similarly, parts of the EBRD PPP Guidelines are The EBRD PPP Guidelines
devoted to six modules/chapters containing notes are an essential resource
on regulations and guidelines to support the Model for policymakers, legal
Law. These guidance notes are designed to show
governments, regulators, PPP units and others
practitioners and investors
involved in developing or refining the subsidiary involved in PPP projects.
documents that often support and accompany PPP
laws how to prepare and draft them. Supporting
documents of this kind will typically fall into
two broad categories, namely regulations and
guidelines. Both are defined in the Model Law, the
former being designed as legally binding secondary
legislation, covering the detailed procedures and
mechanisms necessary to give effect to a PPP Law,
the latter as guidance texts that describe, explain
and advise on their application.
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PUBLIC -PRIVATE PARTNERSHIPS FOR PROMOTING SUSTAINABLE DEVELOPMENT GOALS
The guidance notes cover six main categories the key steps and processes involved in preparing
that represent the areas where the supporting and implementing PPP projects. These enabling
documents are likely to have their principal focus. regulations and guidelines will be part of Volume II
These are: PPP criteria and requirements; forms of the EBRD PPP Guidelines Collection.
of government support; tendering procedures and
The EBRD recently participated in the seventh
requirements; unsolicited proposals and direct
UNECE International PPP Forum in Athens. The
negotiations; appraisal and approval procedures;
3-5 May 2023 event brought together more than
and review and challenge procedures.
700 participants from around the world, including
Volume I also includes the CIS Model Law on PPPs, policymakers, practitioners and experts in the
adopted by the Inter-Parliamentary Assembly of field of PPPs. One of the highlights was the EBRD
the Commonwealth of Independent States (CIS session specifically dedicated to the presentation
IPA) in 2014. This model law serves as a guiding of its PPP Regulatory Guidelines Collection. The
framework for PPP projects in the CIS region, forum provided an important platform for
providing legal and regulatory guidance on all stakeholders in the field of PPPs to exchange
aspects of PPPs. It aims to promote the adoption ideas and best practices, and the EBRD’s
of best practices and standardisation across participation and presentation of the publication
the region. The model law includes provisions on underscored its commitment to promoting good
project preparation and selection, procurement, governance and sustainable development in
contract management and dispute resolution, infrastructure investment.
among others. It is the first comprehensive text
The EBRD PPP Guidelines are an essential resource
of PPP model laws that could be used with (or
for policymakers, legal practitioners and investors
even without) adjustments and national specifics
involved in PPP projects. The collection is available
additions by CIS countries, given the common
on the EBRD LTP web page (www.ebrd.com/law).
legal systems background and similarities in
The web page, which is accessible to all visitors
emerging economies development. The CIS IPA
to the EBRD website, hosts a variety of legal
has adopted several enabling regulations and
resources, including publications, research and
documents to support its implementation. These
reports on various legal subjects. For more than
include Guidelines for the Preparation and
25 years, PPP support has been a core part of
Implementation of PPP Projects, the Model PPP
the EBRD LTP designed to provide regulatory and
Contract and Guidelines for the Development of
institutional support to authorities in the EBRD
PPP Legislation at the National Level. These
regions and help them create an enabling
documents, as well as the CIS Model PPP Law
environment in a few carefully selected areas
itself, were developed with the EBRD’s assistance.
of important commercial law. Working with
They provide detailed guidance on the practical
colleagues in the Banking and Policy departments’
implementation of the CIS Model Law, including
advisory on regulatory aspects of PPP has always
been an integral part of EBRD undertakings.
The SDGs have become the central focus and will
remain such in the foreseeable future.
