Public-Private Partnership as an effective mechanism for implementation of strategic projects.

Mostepaniuk A.V.

Taras Shevchenko national university of Kyiv, Ukraine

Public-Private Partnership as an effective mechanism for implementation of strategic projects.

Current transformation in Ukraine is impossible without new fulfilment mechanisms and models for strategic projects that can provide stable socio-economic development. The effectiveness of such models is determined by meeting the common needs of representatives of state administration and business.

The term "public-private partnership" (PPP) uses in the international economic literature and practice to indicate the coordination between the state and business sectors. Universal definition does not exist in the scientific literature, at the same time most researchers tend to that public-private cooperation is an institutional and organizational alliance between state and business to implement socially important projects and programs in a wide range of industries, R & D, including service sector [1,3].

Research shows that the institution of PPP is nowadays widely used in European countries. At the same time studying and summarizing the international experience enable to structure interaction between state and business in the following three vectors:

- functional (PPP development in industries that determine the enterprise access to factors of production and markets);

- industrial (interactions between state and business in certain sectors based on mixed types of ownership, cooperation between public and private companies, concluding sectoral agreements);

- regional (PPP development in certain territorial industry segments, regional labor markets, territorial and communal infrastructure, etc.) [2].

We note that in international practice singled out such basic forms of PPP: 1) the contract, 2) rental service, 3) concession, 4) production-sharing agreement, 5) joint venture [3]. A more detailed analysis of these forms of PPP allows to identify inherent distribution of property rights, costs and risks between partners, namely:

1) contract as an administrative agreement concluded between the state (local government) and private firms to engage in certain socially necessary projects, often involves works, public services, management, supply products for state needs, and providing technical assistance. At the same time property rights is not transferred to the private partner in the administrative contractual relations, costs and risks fully borne by state. The interest of the private partner is that under the contract he obtains the right to the agreed share of income, profits or fees collected;

2) rent in the traditional form (rental agreement) and in the form of leasing provides that state property transferred to the private partner for temporary use and for a fee under certain conditions of the contract. Traditional rental agreement aimed at return of leased objects, while the right to dispose of the property is kept by the owner and not transferred to the private partner. In some cases, the lease can be completed by buyout the leased property, particularly in the leasing agreement the lessee is always entitled to redeem the state property;

3) concession (concession agreement) provides that state within the partnership is full owner of property which is the subject of concession agreements, authorizing private partner to perform within a specified time limit stipulated in the agreement features and provides the appropriate rights to ensure the normal functioning of the subject of concession. For the use of state property concessionaire pay a fee under the conditions which are provided by concession contracts, while ownership of products produced by the concession is transmitted to concessionaire;

4) production-sharing agreement similar to the traditional concession. The difference is in various configurations of property relations between partners, unlike the concessions in production sharing agreements the private partner owned not the entire production volume, but only a share. In this case state provides their exclusive right to use natural mineral resources to private investor on chargeable basis and for a certain term, and distribution of products may occur by different schemes;

5) joint venture, which may take the form of joint stock company or joint venture with equity participation of the parties. Shareholders in companies may be state agencies and private investors. Thus the private partner opportunity to make independent administrative and economic decisions determined by the share in equity. The feature of joint ventures is a constant state participation in current productive and administrative investment.

The point is that private business has substantial financial resources that are more mobile than the state, ahead of the public sector in technical and technological innovations. However, it is often difficult for private partner to access to those industries that are traditionally considered as public or risks of which are very high. However, combining the financial resources of the private sector allows the state to solve some important problems connected with: the implementation of strategic projects, increasing development efficiency and management of infrastructure, concentration of investments in key social sectors, the transmission of a significant part of risks to the private sector, stimulating innovation through competition mechanisms.

Thus, combining the financial resources of public and private sector can increase the efficiency of the implementation of strategic projects to solve economic and social problems. The key to successful implementation of PPPs is that both the state and private sector have their specialized activities and their benefits, which formed efficient cooperation and synergy occurs. After all PPPs make the improvement in living standards and increase the competitiveness of national economy.

References:

1. Building better partnerships: the final report of the Commission on Public Private Partnerships. Institute for Public Policy Research, 2001 – 285 p.

2. Graeme A. Hodge, Carsten Greve. The challenge of public-private partnerships: learning from international experience. Edward Elgar Publishing, 2005 – 357 p.

3. Stephen P. Osborne. Public-private partnerships: theory and practice in international perspective. Taylor and Francis, 2007 – 368 p.