Public-private partnership (PPP) is one of the ways of public infrastructure development based on the long-term collaboration of the Government and business where a private party is involved in not only designing, financing, construction or reconstruction of an infrastructural facility, but also in its further operation (provision of services at the facility built) and (or) its technical maintenance.
From the economic perspective, the PPP is aimed at encouraging private investments in production of services, works and consumer goods which must be secured by the public-law entities from the respective budget resources, as well as reducing the Government involvement in the economic turnover when the business can do the same tasks in a more efficient way.
From the legal perspective, this means the relationships between the public-law entities (Russian Federation, Republic of Crimea, municipality) and the private sector persons. These relationships are built on the basis of private-public partnership agreements or concession agreements signed by and between them and being civil law contracts by virtue of their legal nature.
- Long-term nature of partnership (at least 3 years for PPPA). The long-term nature of PPP projects arises out of the need to return private investments and complex nature of such projects.
- Allocation of risks and responsibilities to partners through involvement of private investors in both creation of a facility and its further operation and (or) technical maintenance. Risk sharing is a mandatory condition for outlining relationships between private and public parties in PPP projects, and the optimal risk sharing balance is the most complex task arising in the course of a PPP project elaboration.
- Full or partial financing of a public infrastructure facility creation by a private party. The principal difference between a PPP and a state order is mandatory financing of a facility creation by a private partner (a concessionaire) where a public partner (a concessor) is entitled to compensate for a portion of expenses incurred for creation of a contractual subject-matter, as well as to fully or partially meet any expenses related to operation and (or) technical maintenance of the contractual subject-matter.