09 . 11 . 2023

SOLUTIONS Public-Private Partnership (PPP) in Poland

09 . 11 . 2023

What is PPP all about?

Public-Private Partnership, or PPP, is a model of cooperation between the public and private sectors. As part of PPP, the private partner undertakes the implementation of public tasks on the basis of a long-term agreement that precisely defines the division of duties and risks between the parties to the agreement. The aim of PPP is to provide specific public services based on public infrastructure in return for remuneration. The realization of PPP projects most often includes the construction or renovation of public infrastructure and its maintenance and management.

It is worth emphasizing that public-private partnership brings a number of benefits to public institutions. First and foremost, it makes it possible to optimize budget expenditure by engaging private capital to finance public projects. This not only reduces the financial burden on the public sector, but also makes it possible to benefit from the knowledge and experience of business. Success in the implementation of PPP projects depends not only on carefully prepared documentation and the selection of a private partner, but also on smooth and effective cooperation between the public entity and the private partner.

Situation on the domestic market (as at 2023)

In the first quarter of 2023, only one PPP agreement was concluded and two proceedings were announced. The second quarter again brought only one deal, as well as two announced proceedings. However, the third quarter brought a significant upturn – the latest report of the PPP Department at the Ministry of Funds and Regional Policy for Q3 2023 shows that two new PPP deals worth PLN 14.66 million were signed and as many as nine new proceedings were identified. A total of four contracts worth PLN 18.3 million were concluded in Q1-Q3 2023. The new contracts concerned the energy efficiency sector and the water and sewage sector.

It should be noted that since 2020, the dynamics of concluding PPP agreements in Poland has clearly slowed down. One of the main reasons for this phenomenon is financial. The increasing costs of investment, financing and maintenance of PPP projects make it difficult to predict the total costs. A private partner in a PPP project undertakes to cover all costs, which involves the necessity to estimate how much the project will cost in a perspective of 10, 15 or 20 years. The increase in investment and maintenance costs significantly reduces the dynamics of PPP contracts.

In addition, high inflation makes it difficult to estimate project costs, which is important for multi-year contracts. Public-private partnerships are based on the cooperation of public entities, which often have limited implementation capacity. PPPs require specialised knowledge and the involvement of more staff, which may further influence the limited popularity of this cooperation model.

Despite these challenges, the Ministry’s data shows that in the period since 2009, when detailed PPP regulations were introduced in Poland, 179 partnership agreements with a total value of PLN 9.2 billion were concluded. The average value of these agreements in the previous year was PLN 29 million, and the total value since 2009 was PLN 52 million. What is more, the Ministerial Database of Potential PPP Projects contains many items, of which as many as 26 are at the stage before the announcement of proceedings. This proves that there is interest in PPP projects in Poland, and we may see an increasing number of agreements and proceedings in the future.

PPP in Space: fun fact or a real opportunity?

The trend of ‘privatizing’ space has been gaining popularity for some time. American, Chinese and Indian companies are actively participating in this process. However, Poland is not lagging behind, and accession to the European Space Agency in 2012 has opened up new opportunities for the development of the Polish space sector. Thriving Polish companies such as Creotech Instruments S.A., SatRevolution S.A., Astronika sp. z o.o. and Blue Dot Solutions sp. z o.o. have contributed to the success of many international space missions. Poland has the potential for further development and participation in international space projects.

The space sector poses particular challenges due to the high risk of space activities. Public-private partnership appears to be the optimal solution to effectively manage the risks and costs of space projects.

Virtual Data Room supports PPP

The VDR can become an invaluable tool in the context of PPPs, increasing the transparency, security and efficiency of sharing confidential project-related information. PPP projects involve collaboration between public and private sector entities, with the need for seamless information sharing, due diligence and document management. The VDR is a secure platform where stakeholders can upload files, access and view documents, ensuring that confidential data is protected while communication is streamlined. The technology not only simplifies the process for investors and government agencies, but also fosters trust between all parties involved, ultimately promoting the successful implementation of PPP initiatives.

The key to successful Public-Private Partnerships

Many experts agree – in order to increase the popularity of PPPs, there needs to be more trust in private partners and more promotion of this cooperation model. It is also important to identify exactly where PPP is most economically effective. Public-private partnership should be used where it adds value and requires the expertise of the private partner. It is worth making an effort to understand which PPP projects can and should be decided upon so that they bring real benefits to the Polish society and economy. The right decisions will be reflected in the market situation.

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For years, he has been involved in the "more creative" side of marketing. At Fordata, in addition to executing marketing strategies, he collaborates on industry reports and webinars with international experts. Privately, he is a music producer and DJ.

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