New Concessions Law Sets 50-Year Cap, Million-Dinar Fines

A minimum term of five years and a maximum of 50, fines of up to a million dinars, and an electronic database logging every signed contract: those are the boundaries the Economy Ministry has set in the draft Law on Public-Private Partnership and Concessions. Public consultation on the draft concessions law began on July 31 and runs through August 19, marking the first comprehensive overhaul of this area in 14 years, since the current law was adopted in 2011.

The draft keeps the existing logic, under which a private partner finances, builds or maintains infrastructure and provides a service of public interest, but it changes who decides on those arrangements and who bears the consequences if the numbers do not add up.

Finance Ministry Gains a Bigger Role

The center of gravity for oversight shifts toward the Finance Ministry. In the draft’s explanatory note, the Economy Ministry states:

The proposed solutions would give the Finance Ministry a greater role in controlling fiscal risks

Specifically, projects with an estimated value exceeding six billion dinars (about 51 million euros) require a prior opinion from that ministry. The opinion on the project itself, meaning on the proposed concession act, is issued by the Commission for Public-Private Partnership, a body whose establishment, status and jurisdiction are also regulated by this law.

The second mechanism is the registry. Every public contract is entered into a single electronic database run by the Finance Ministry, and the registry is public, subject to data protection and business secrecy rules. The practical effect will only become visible once that database fills up: obligations that cities and municipalities have taken on under public-private partnership contracts have so far been scattered across individual decisions of local assemblies, so the total amount could not be added up from a single source.

What Must a Contract Contain?

The draft sets out the mandatory elements of a public contract, so that key questions cannot be left out of the text. A contract must specify:

• the scope of work and services taken on by the private partner
• the allocation of risk between the public and private partner
• quality standards and the consequences of failing to meet them
• the method of payment to the private partner
• the contract term and obligations upon its expiry
• the grounds and consequences of early termination

The term is set to let the private partner recoup its investment, but no longer than necessary: not less than five years and not more than 50 years. The public partner can be a state authority, a province, a local self-government unit or a public company, while the private partner can be a domestic or foreign legal entity or individual, acting alone or as part of a consortium.

Fines and Project Values

The draft’s penalty provisions have three tiers. Legal entities, including public bodies and public companies, face fines of 100,000 to a million dinars (about 850 to 8,500 euros). Officials responsible within the public partner face fines of 30,000 to 80,000 dinars, while officials in state, provincial and local authorities can be fined 30,000 to 150,000 dinars.

The relationship between those figures and the value of the projects they govern speaks for itself. The highest fine for a legal entity is six thousand times smaller than the six billion dinar threshold above which a Finance Ministry opinion is required. Among other things, the fines apply to carrying out a partnership without the prescribed procedure for selecting a private partner, to artificially splitting projects to circumvent the law, and to unlawful amendments to already signed contracts.

Deadlines After August 19

The draft aligns with European Union directives on concessions and public procurement, which is the formal reason for drafting it. Once it takes effect, the current law will cease to apply, while procedures already underway will be completed under the rules in force when they began.

The government and relevant ministries have 90 days from the start of implementation to adopt the bylaws needed to operationalize it. Until then, the law remains a framework without operating rules, and the real reach of the Finance Ministry’s new powers will only be measured once the first project goes through the entire process.