In the literature, we often find the view that the involvement of the private sector in the provision of public goods and the implementation of public services is a novelty that was introduced within the framework of the public sector reform that took place over the last thirty years. However, with a closer look at history, we can conclude that the involvement of the private sector in the provision of public goods was already known in the Roman Empire, which can be clearly seen, e.g. on the example of the organisation of Rome's grain supply. If we analyse the system of organisation of Rome's grain supply established at that time from a distance of time, we find that, even by today's standards, it was relatively advanced and, according to modern terminology, it could be classified within the framework of the concept of public-private partnership.
The next period in which we can see a markedly active cooperation between the public and private sectors in the provision of public goods is the period of the 19th century, when industrialisation and the accelerated concentration of the population in cities intensified the need to provide public infrastructure. Rapid technological progress and population growth further stimulated the construction of public infrastructure in the field of transport (roads, bridges, railways), drinking water supply, electrification, communal infrastructure and the like. In this context, this model of French concessions was developed in the middle of the 19th century, which originally related mainly to the supply of drinking water. It was imitated elsewhere in Europe and used to grant various types of concessions. The concession for the construction and management of the Suez Canal, which connected the Mediterranean and the Red Sea and was awarded to a private company for a period of 99 years, certainly belongs to the larger and more prominent projects of cooperation between the public and private sectors.
The trend of cooperation between the public and private sectors reversed at the beginning of the 20th century, when the statist conception of the state strengthened, mainly as a result of the world wars. During this period, the influence and role of the state in providing public goods was greatly strengthened.
With the general economic crisis at the beginning of the 1980s and the emergence of new public management, ideas about the active involvement of the private sector in the provision of public goods became relevant again, and the concept of public-private partnership is often associated with the strategy of modernisation of public sector, which took place under the auspices of the new public management reforms.
No uniform definition exists of the term public-private partnership, and most authors focus primarily on describing the fundamental features of the public-private partnership relationship, but in general, public-private partnerships could be defined as (contractual or institutional) relationships between the public and private sectors, where resources and risks are shared between the public and private sectors with the aim of ensuring the implementation of public services or the development of public infrastructure. Therefore, the goal of a public-private partnership is to involve the private sector to provide more efficient public services or better public infrastructure.
The European Investment Bank, in its document Role of the European Investment Bank in Public-Private Partnerships, defines the following key features that are characteristic of public-private partnership relationships:
Concession relationships are counted among public-private partnership relationships and represent one form of public-private partnership, which is becoming the dominant form of public-private partnership in Europe and also in Slovenia. Due to the growing importance of the granting of concessions in the EU on the one hand and the absence of clear rules governing the granting of concession contracts on the other hand, which represented a lack of legal certainty and an obstacle to the free provision of services and distorted functioning of the internal market, Directive on the Award of Concession Contracts was adopted in 2014.
In the Directive, the term "concessions" is defined as a term that can mean works concessions or service concessions, whereby:
The award of a works or services concession shall involve the transfer to the concessionaire of an operating risk in exploiting those works or services encompassing demand or supply risk or both. The concessionaire shall be deemed to assume operating risk where, under normal operating conditions, it is not guaranteed to recoup the investments made or the costs incurred in operating the works or services which are the subject-matter of the concession; The part of the risk transferred to the concessionaire shall involve real exposure to the vagaries of the market, such that any potential estimated loss incurred by the concessionaire shall not be merely nominal or negligible.
Namely, the Directive separates the concept of concession from the concept of public procurement based on the main distinguishing criterion – significant operational risk. The preamble of the Directive on the Award of Concession Contracts defines operational risk as the risk of exposure to the vagaries of the market, which may consist of either a demand risk or a supply risk, or both a demand and supply risk. Demand risk is to be understood as the risk on actual demand for the works or services which are the object of the contract. Supply risk is to be understood as the risk on the provision of the works or services which are the object of the contract, in particular the risk that the provision of the services will not match demand.
The Public-Private Partnership Act (Zakon o javno-zasebnem partnerstvu – ZJZP) was adopted by the National Assembly of the Republic of Slovenia on 23 November 2006 and entered into force on 7 March 2007. The Public-Private Partnerships Act was adopted as an umbrella law to regulate the issue of public-private partnerships in general, while special laws would be adopted for specific areas (e.g. healthcare, transport, environment, etc.).
With the adoption of the ZJZP, entities governed by public law (mainly the state and municipalities) gained a legal basis for the implementation of public-private partnership projects in the areas of:
This opened the door for the private sector to take a more active role. Until the adoption of the Public-Private Partnership Act, the inclusion of the private sector in the traditional public sector of public services was made possible by the Services of General Economic Interest Act for the provision of public services in the form of a concession relationship and in the form of capital investment in the activities of entities governed by private law (the latter option was abolished with the adoption of the ZJZP) and the Institutes Act, which also provided for the possibility of granting concessions for the provision of non-economic (social) public services and thus the establishment of private institutions, which, by granting a concession, acquire the status of an institution with public rights.
The purpose of ZJZP is to enable and promote private investment in the construction, maintenance and/or operation of structures and facilities of public-private partnership and other projects that are in the public interest, to ensure the economically sound and efficient performance of commercial and other public services or other activities which are provided in a method and under conditions that apply to commercial public services, or other activities whose performance is in the public interest, to facilitate the rational use, operation or exploitation of natural assets, constructed public good or other things in public ownership, and other investment of private or private and public funds in the construction of structures and facilities that are partly or entirely in the public interest, or in an activity provided in the public interest. Furthermore, the purpose of ZJZP is also:
The public-private partnership is defined in Article 2 of the ZJZP, which defines as public-private partnership projects those projects which are:
Such a definition is very broad and practically includes all projects where public interest can be defined. The legislator made one step further, as it also defined projects that are only partially in the public interest as projects of public-private partnerships.
Therefore, public-private partnership projects can include all projects where the public and private sectors cooperate in ensuring the implementation of a public service or the establishment of public infrastructure.
The Public-Private Partnership Act mainly affected:
The following by-laws are particularly important for the management of public-private partnership projects:
Directive 2014/23/EU of the European Parliament and of the Council of 26 February 2014 on the award of concession contracts, published end of March 2014, is important for regulating the field of public-private partnerships.
As projects of public-private partnerships, projects for the provision and implementation of public services and projects for the establishment of public infrastructure can be implemented. The fundamental condition for a certain project to be implemented in the form of a public-private partnership is the existence of public interest.
The public partner must identify and define the public interest in the decision on public-private partnership, which is adopted by the Government of the Republic of Slovenia at the national level, and by a municipal council at the municipal level. Another condition that must be met to implement a certain project in the form of a public-private partnership is the sharing of commercial risks. The private partner must assume at least part of commercial risk to be qualified as a public-private partnership project. Where the private partner does not assume even part of commercial risk, it is not a public-private partnership relationship, but a classic public procurement.
If, on the one hand, the existence of public interest is a necessary condition for being able to talk about a public-private partnership, then on the other (private) side, a necessary condition for being able to talk about a public-private partnership is the profitability and cost-effectiveness of the project. Namely, the private sector will enter only those projects that will allow it to recover the invested funds and an adequate return. It is important that, in the process of creating a public-private partnership, public partners are aware of the primary interest of the private sector in entering into public-private partnership projects, and that they adjust the substance of the project accordingly, so that the public interest is most effectively protected, while simultaneously the project maintains commercial appeal.
The public-private partnership relationship or the concession relationship
Each public-private partnership relationship or concession relationship is represented by relationships between three entities:
The central part of every public-private partnership relationship or of the concession relationship is a public-private partnership agreement. The key issue that must be precisely defined in the contract is the identification and distribution of commercial risk of the project between the public partner (concessionaire) and the private partner (concessionaire). In accordance with the distribution of risks, the rights and obligations of the public and private partners and other provisions of the contract are also defined.
Who can act as a public partner (grantor)?
Only persons governed by public law can act as public partners. ZJZP stipulates that the following entities can act as public partners:
Who can act as a private partner (concessionaire)?
The circle of potential private partners includes:
In practice, companies are the most common performers of public-private partnerships.
The Public-Private Partnership Act defines the following as possible forms of public-private partnerships:
Concession public-private partnerships can be defined as those public-private partnership relationships where the majority of commercial risk is assumed by the private partner.
It is important that the concept of concessions to the legal system includes the definition of a concession as the transfer of a service function from the state to the contractor, which is carried out by a special official act (administrative decision), while acts of selection of contractors in other forms of public-private partnerships are issued in the form of a business act. Such distinction is also important from the perspective of the legal protection of non-selected contractors, since in the case of the issuance of an administrative decision, this is guaranteed before the administrative court, while in cases where the act of selection is an act of operation, legal protection is guaranteed before a special and independent state body, the National Review Commission for Reviewing Public Procurement Procedures, which was established primarily to decide on disputes that arise in public procurement procedures.
Depending on the substance of the public-private partnership project, concession relations can be divided into:
Due to the growing importance of the granting of concessions in the EU on the one hand and the absence of clear rules governing the granting of concession contracts on the other hand, which represented a lack of legal certainty and an obstacle to the free provision of services and distorted functioning of the internal market, Directive on the Award of Concession Contracts was adopted in 2014.
In the Directive, the term "concessions" is defined as a term that can mean works concessions or service concessions, whereby
The award of a works or services concession shall involve the transfer to the concessionaire of an operating risk in exploiting those works or services encompassing demand or supply risk or both. The concessionaire shall be deemed to assume operating risk where, under normal operating conditions, it is not guaranteed to recoup the investments made or the costs incurred in operating the works or services which are the subject-matter of the concession; The part of the risk transferred to the concessionaire shall involve real exposure to the vagaries of the market, such that any potential estimated loss incurred by the concessionaire shall not be merely nominal or negligible.
Namely, the Directive separates the concept of concession from the concept of public procurement based on the main distinguishing criterion – significant operational risk. The preamble of the Directive on the Award of Concession Contracts defines operational risk as the risk of exposure to the vagaries of the market, which may consist of either a demand risk or a supply risk, or both a demand and supply risk. Demand risk is to be understood as the risk on actual demand for the works or services which are the object of the contract. Supply risk is to be understood as the risk on the provision of the works or services which are the object of the contract, in particular the risk that the provision of the services will not match demand.
The analysis of the provisions of the ZJZP shows the connection of the concept of management with the concept of concession. Thus, the concept of concession,
Depending on the moment of ownership transfer, ZJZP defines three basic forms of works concessions:
In international practice and theory, in addition to the basic forms of works concessions defined above, we can find many derivatives, the most common of which are:
The listed forms are far from all, but they are the ones most often used in the implementation of public-private partnership projects. The different forms show the diversity of public-private partnership projects and the different options for risk distribution between the public and private partners.
The special feature of Slovenian Public-Private Partnership Act is the public procurement form of public-private partnership. By defining the public procurement form of public-private partnership, the legislator wanted to enable those projects in which the public partner assumes the majority of commercial risk to be implemented in the form of a public-private partnership. The public procurement form of public-private partnership is suitable for projects where the private sector takes an active role only in certain phases of project realisation, e.g. stage of planning, financing and/or realisation, while to a lesser extent it assumes risks related to profitability, accessibility and/or marketing of the project.
The special feature of the public procurement form of partnership is also that the provisions applicable to the management of public procurement procedures are directly applied to the selection of the contractor of the public-private partnership. Accordingly, the act of selection in the case of the selection of a contractor of a public procurement public-private partnership is a business act, just as in the process of awarding a public contract, the same applies to the legal protection that takes place within the framework of the National Review Commission for Reviewing Public Procurement Procedures.
The identification and distribution of commercial risk among the partners of a public-private partnership is the key to distinguishing between public procurement partnerships, where the majority of commercial risk is assumed by the public partner, and concession partnerships, where the majority of commercial risk is assumed by the private partner. In accordance with this, it is necessary to draw attention to the principle of balance, which stipulates that in the process of establishing a partnership it is necessary to ensure a balance of rights, obligations and legal benefits of the public and private partner, whereby the risks in the public-private partnership relationship must be distributed in such a way that they carried by the contracting entity who can handle them most easily. In any case, regardless of the nature of the public-private partnership relationship, the contractor of the public-private partnership must bear at least part of the commercial risk. Where the private partner would not bear even part of the commercial risk, it is not a public-private partnership, but a public contract. This is important from the perspective of the selection process of the contractor of the public-private partnership or the procedure for selecting the most favourable bidder according to the rules applicable to public procurement.
In relation to the differentiation mentioned above, there is an important provision which stipulates that in case of doubt, when it is not possible to determine from the circumstances of the public-private partnership who bears the majority of commercial risk, it shall be deemed to be a public procurement partnership. Such provision is unusual, since the identification and distribution of commercial risk among the partners is one of the key tasks in the establishment of a public-private partnership and the creation of the substance of the public-private partnership agreement. With a properly formed partnership, it is practically impossible for a situation to arise in which it would not be possible to determine which of the partners bears which commercial risk and, consequently, who bears most of the commercial risks.
According to the Directive on the awarding of concession contracts, for the definition of the relationship as a concession, it is crucial that the concessionaire assumes the essential operational risk arising from the project. The concessionaire shall be deemed to assume substantial operating risk where it is not guaranteed to recoup the investments made or the costs incurred in operating the works or services which are the subject-matter of the concession. In the Preamble, the Directive makes clear that the main feature of a concession, the right to exploit the works or services, always implies the transfer to the concessionaire of a risk of economic nature involving the possibility that it will not recoup the investments made and the costs incurred in operating the works or services awarded. The application of specific rules governing the award of concessions would not be justified if the contracting authority relieved the operator of any potential loss, by guaranteeing a minimal revenue, equal or higher to the costs that the operator has to incur in relation with the performance of the contract. Simultaneously, the Preamble explains that some of the arrangements which are fully paid by the contracting authority should be considered concessions, if the return on the investments and the costs incurred to the operator in operating the works or providing the services, depends on the actual demand for services or resources or their delivery.
The common feature of all forms of status public-private partnership is that the public and private partners act as partners (or founders) in a "joint" legal entity. As a rule, the "joint" legal entity acts as a contractor of a public-private partnership. Depending on the substance of the individual public-private partnership project, such a public-private partnership operator may also be granted a concession for the performance of a public service or a public authorisation, if this is necessary for the performance of the tasks for which the "joint" legal entity was established.
Where the substance of an institutional public-private partnership is the implementation of an economic public service, the public and private partner as a "joint" legal entity will generally choose the legal organisational form of a commercial company in accordance with the provisions of the Companies Act (Zakon o gospodarskih družbah – ZGD). Where the substance of the institutional public-private partnership is the implementation of a social (non-economic) public service, the public and private partner as a "joint" legal entity will generally choose the legal organisational form of the institution in accordance with the provisions of the Institutions Act (Zakon o zavodih – ZZ). However, the Public-Private Partnership Act does not limit the partners regarding the legal organisational forms of public-private partnerships that may be used when forming a status partnership, so that the partners are free to do so and can choose the most suitable legal organisational form, which will enable optimal organisation and realisation, based on the non-specific features of each project.
The disadvantage of the public-private partnership status form is the dual role of the public partner, who on the one hand acts as a regulator of certain activities in the public interest and thus as a guardian of the public interest, while on the other hand it also acts as a partner (founder) of a "joint" legal entity, where it has a diametrically opposed interest that it can protect within the scope of its corporate rights. As a result, the public partner may find itself tempted when it tries to transfer its regulatory tasks to the field of corporate rights and thus protect the public interest through corporate rights. In such a situation, a conflict with the private partner, who only has corporate rights, is imminent, as the public partner can justifiably accuse the public partner of abusing corporate rights to achieve goals that it would otherwise have to protect within the framework of the regulatory task.
This question is not only theoretically interesting, but also has important practical consequences. The public partner mainly performs its regulatory function in the form of adopting or amending general legal acts (laws, decrees, decisions, etc.). In the context of the establishment of a public-private partnership relationship, an important question is which of the partners assumes the risk of changes in regulations that affect the implementation of the public-private partnership. As a rule, it is a risk that, according to the principle of balance, is assumed by the public partner, all the more so because it is under its exclusive jurisdiction and the private partner thus has no influence on it at all. Therefore, public-private partnerships contracts generally contain a provision where the public-private partnership contractor is entitled to monetary compensation if, during the implementation of the public-private partnership, a regulation is changed that raises the standard of implementation quality, e.g. certain public services. The public-private partnership contractor is obliged to comply with the applicable regulations and to ensure a new – higher level of quality of the public service. In the case of a status partnership, the public partner can also achieve an increase in the standard of public service quality within the scope of its corporate rights, e.g. so it proposes that the profit not be distributed among the partners, but that it be spent on investment in equipment that will raise the level of quality of public service performance. The public partner, through its corporate rights, would achieve the same effect as through its regulatory function, with the difference that in this case, the contractor of the public-private partnership would not be justified in receiving financial compensation for raising the quality standard, since the latter would not be required by regulations.
The first step in the creation of a public-private partnership is the identification of a project suitable for implementation in the form of a public-private partnership. The identification of an eligible project can be provided by either the public partner or the private partner. If a private partner does this, for a project that he believes would be expedient to implement in the form of a public-private partnership, it must submit an application as a promoter, with which it also shows its interest in carrying out the proposed project and proposes a way of creating a public-private partnership. The law sets out that the public partner, as a general rule, once a year, with a public call, shall invite potential promoters to submit applications of interest in implementing a public-private partnership in areas where the conditions for public co-financing of a private project could be met or where there is an interest in private investment in public projects.
The second step is to perform the preliminary procedure. The purpose of the preliminary procedure is to establish, on the basis of an investment feasibility study, whether the economic, legal, technical, environmental, and other conditions for the implementation of the project and the conclusion of the public-private partnership relationship are fulfilled and that the basic elements of the public-private partnership to determine the substance of the decision and/or public-private partnership document.
If the estimated value of the project exceeds EUR 5,278,000, the public partner can perform the works or services contract as a public contract only if, based on the economic and other circumstances of the project, it is determined that the procedure cannot be carried out in one of the forms of a public-private partnership or it is not economically viable. Therefore, whenever the estimated value of the project exceeds EUR 5,278,000, public partners (or contracting entities under the provisions of ZJN-3) are obliged to check whether it is expedient to implement the project in the form of a public-private partnership and not in the classic way in the form of a public contract.
The third step is carried out if it is confirmed in the preliminary procedure that the implementation of the project in one of the forms of public-private partnership is feasible and expedient. As part of the third step, an act on public-private partnership is adopted. The form and substance of the act on the public-private partnership differs depending on the form of the public-private partnerships. The Public-Private Partnership Act defines the following options:
The fourth step is the execution of a public tender. The purpose of the public tender is the selection of a public-private partnership contractor. Regarding the procedural rules according to which the public tender is carried out, the Public-Private Partnership Act sets out the following options:
The fifth step is the selection of the public-private partnership contractor. In the selection process, an expert committee of the public partner usually participates, which during the selection process examines and evaluates the received offers and determines whether they meet the tender specifications, compiles a report and indicates which offers meet the tender specifications, and classifies these offers in such a way that it is clear which of the offers best meets the set criteria, or what is the further order in terms of relevance to the set criteria. The expert commission proposes a provider to the public partner, which the public partner should choose, as the contractor of the public-private partnership. The selection act is usually a business act, only exceptionally the selection act is an administrative decision, especially in the case of concessionary public-private partnerships.
The sixth step is the legal protection process. This step can be used by non-selected bidders who believe that their rights were violated during the selection process and that their bid was either unjustifiably rejected or improperly evaluated. In cases where the selection act is a business act, legal protection is provided within the framework of the National Review Commission for Reviewing Public Procurement Procedures. Where the selection act is an administrative decision, legal protection is provided within the framework of the administrative court.
The seventh step is the creation of a public-private partnership relationship. ZJZP stipulates that the public-private partnership relationship is established by concluding a public-private partnership agreement. With this moment, the rights and obligations arising from the public-private partnership relationship also arise.
The eighth step covers the implementation of the concluded contract on public-private partnership. Given that public-private partnership relationships are long-term relationships that generally last 10, 15 or more years, the mentioned phase is of course the longest. It is understandable that, given the long duration of the relationship, it is not possible to define all potential issues or problems that may arise during the contract implementation phase. Therefore, it is particularly important to define the tools and mechanisms in the contract that provide the partners with a framework within which to resolve open issues.
The ninth step is to monitor the performance of the contract. Usually, the public partner defines the manner in which control over the performance of the contract will take place in the public-private partnership agreement. Here, it is particularly important that the control includes validation of the satisfaction of users of public services and that payments are also made to the public-private partnership provider based on bonuses/maluses.
The tenth and the last step is the termination of the public-private partnership relationship. Usually, a public-private partnership contract ends with the expiration of the period for which it was concluded. Here, as a rule, the contract on public-private partnership also contains special provisions that allow the public partner to terminate the contract early, usually primarily for the reason that it is necessary to protect the public interest of the public service performed or consequently, the interest of the public service users of the public service.
Considering the fact that the ZJZP is a law relatively open to partnerships and does not contain many coercive norms that would demand mandatory behaviour from public or private partners, the fundamental principles of the law are even more important, as they will be often used in practice, especially in matters of whose ZJZP is not clear enough or is possibly inconsistent with the provisions of other regulations.
The legislator defined the following as the fundamental principles that must be taken into account in the process of concluding a public-private partnership:
When reviewing the fundamental principles defined by the ZJZP, alongside classical principles such as the principles of equality, transparency and competition, it is necessary to emphasise the principles of balance and cooperation. The principle of balance requires the public sector, on the one hand, to ensure a balance of the rights, obligations and legal benefits of both partners in the process of forming a partnership, and on the other hand, it stipulates that the risks in a public-private partnership shall be distributed so that they are borne by that party, which it manages most easily. With this provision, the legislator placed the public partners in a contradictory role, since at the same time, in addition to the primary role of protecting the public interest, they also take care of the balance of the partnership and, consequently, to some extent, also take on the role of guardian of private interests. The principle of cooperation imposes on the public partner the obligation to assist the operator of the public-private partnership in securing the necessary real and other rights and various permits that it cannot obtain itself. In this regard, an important provision is that the principle of cooperation is defined in more detail by the contract on public-private partnership. It is interesting to add that ZJZP does not define the principle of economy as one of the fundamental principles. Of course, the above does not mean that the public sector is not obliged to act economically in the selection procedures of contractors of public-private partnerships, as both the Public Finances Act and ZJN-3 oblige it to respect the principle of economy.
A public-private partnership contract differs from a classic obligation (private law) contract in that it contains certain public law elements. In a classic obligation relationship, both parties are considered equal. On the other hand, public-private partnership relations are characterized by the fact that the public partner acts as a guardian of the public interest and, accordingly, occupies a special position and carries special rights. In cases where the public partner deems it necessary to protect the public interest, it acts in a public-private partnership relationship from the position of authority.
Contracts on public-private partnerships thus usually contain provisions where the right of the public partner to protect the public interest with unilateral (authoritative) actions is defined in advance, when this is absolutely necessary. The provisions of public-private partnerships contracts, which refer to the termination of the relationship, have a distinct public law nature, e.g. purchase of the contract, revocation of granted rights, unilateral termination of the contract and provisions relating to the conduct of the other party in case of force majeure, changed circumstances, strike, user protection, etc.
The Public-Private Partnership Agreement is the heart of the Public-Private Partnership. Within the framework of the contract, the risks of the project are identified and defined, and the rights and duties of each partner are defined with regard to each assumed risk.
Considering that the public-private partnership relationship is a long-term and complex legal relationship, within the framework of which various legal issues can be opened at different stages of the procedure and various rights and duties of the participants of the relationship can be established and terminated, special attention needs to be paid to:
Types of risks in public-private partnership procedures
Risks in public-private partnership procedures are roughly divided into:
Identification, definition and distribution of project risks are key steps in the creation of a public-private partnership. Every risk can be evaluated financially. If one of the risks is forgotten during the formation phase of the public-private partnership and it appears in a later phase of the project, the question arises along with it, which of the partners will take on the "new" risk or which of the partners will bear the costs caused by the assumed risk.
The partners can, of course, agree within the framework of the public-private partnership agreement that they bear certain risks together or each in a certain part. In such cases, it is necessary to pay special attention to the demarcation of the rights and obligations of both partners.
The principle according to which a given risk is assumed by the one of the partners who can manage it most easily has proven to be the most effective key to the distribution of risks between partners. The ability to manage risk depends on the role of the partner, its knowledge, personnel structure, experience and, last but not least, the content of the risk itself. Accordingly, within the framework of risk management, an individual partner can increase or decrease the level of a certain risk. It should be stressed here that some risks are considered to be completely outside the scope of the partners and cannot be influenced by the partners (e.g. force majeure). Such risks must be distributed in accordance with the principle of fairness and according to the economic benefits of the partners.
Regardless of the nature of the public-private partnership relationship, the contractor of the public-private partnership must bear at least part of the business risk. The Public-Private Partnership Act defines market risks as business risks, which are related to the volume of demand, supply, or are related to the risk of availability and accessibility. One of the key tasks in the process of creating a public-private partnership is:
According to the Directive on the awarding of concession contracts, the concept of business risk has been replaced by the concept of operational risk, which is somewhat broader in terms of content, as it means that the concessionaire assumes a significant operational risk if it is not guaranteed that it will be reimbursed for the investments or costs incurred in implementation of works or services that are the subject of the concession. The Commission explains that the main characteristic of the concession, i.e. the right to use works or services always means the transfer of economic risk to the concessionaire, including the possibility that the investments and costs incurred in the management of the granted constructions or services will not be repaid. The application of specific rules governing the award of concessions would not be justified if the contracting authority relieved the operator of any potential loss, by guaranteeing a minimal revenue, equal or higher to the costs that the operator has to incur in relation with the performance of the contract. At the same time, the Commission clarified that certain arrangements, which are fully paid for by the contracting entity, should be considered concessions if the reimbursement of investments and costs incurred by the contractor in operating the works or providing the service depends on the actual demand for the services or resources, or their availability
