Research conducted by Transparency International - Czech Republic showed that the parties submitting these projects (ministries, cities) are not sufficiently prepared for the successful realisation of these complex projects
Today TIC presented its new study of the problems facing PPP, which evaluates the current state of PPP projects in the Czech Republic in economic terms. TIC’s research, which was conducted in January 2007, showed that neither ministries nor other submitting parties are not prepared for the realisation of PPP projects and mostly consider them a source of easy money. Such an approach is a grave error and can lead to a series of unsuccessful and overpriced projects, which burden public budgets (as happened in the recent case of the D47 highway or the toll system).
The total investment cost of the planned projects represents a fiscal burden for public budgets of over CZK 35 billion, i.e. 1.1% of GDP. ”PPP is an enticing idea, but the outcome need not always be advantageous for both parties.“, says David Ondráčka (TIC). “The refinement and wit of the PPP concept may only be used to meet certain prerequisites (quality of the institutional environment, transparency of selection, good quality contracts,…), which are not met as yet“.
TIC thus has the following recommendations:
- Slow down; do not commence new projects without giving them proper thought and concentrate on realising several pilot projects. Conduct independent (external) evaluations for at least five years and only then commence the potential next wave. The proper operation of the PPP concept in the Czech Republic must be evaluated prior to its mass launch.
- Instigate a business and political debate about the PPP. The government should, as soon as possible, find a new operational model for the PPP policy and to give a clear signal to the market about how it intends to continue and which projects it sees as key. In so doing it should not succumb to a one-sided lobby (consulting firms have a common interest, which does not allow them to make an independent evaluation of the usefulness of individual projects).
- Carefully weigh up which projects are suitable for PPP and which are not. It is necessary to take into consideration that there are areas where it is not appropriate to apply PPP (the healthcare sector, defence, the police force, the prison service). Place emphasis on maximum transparency of tenders in progress to select an advisor as well as the tenders prepared to select a licensee.
- Focus on a detailed monitoring of the individual entities conducted by an independent institution (specialised office, the Office for the Protection of Competition or the Supreme Audit Office).
- Pay extra attention to projects under the competence of the Ministry of Transport, which in past years has proven itself to be remarkably incompetent in this area.
Forget the idea of using PPP for building an infrastructure for the possible holding of the Olympics – the use of PPP is wholly inappropriate for these investments.
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