Mr. Kanev, in Bulgaria we have discussed since a long time public-private partnership, but it seems that the proper way to implement them still could not be found. What is missing in order to apply more successfully this model?

-In Bulgaria there are broad interpretations of what public-private partnership (PPP) is. Sometimes every interaction between the public and private sectors is considered PPP, including corporate social responsibility (CSR). However, if we consider PPP as complex, long-term business models, where the private sector expects some return to its investments, we could start understanding the reasons for the low level of application of these models. Some of the main reasons are the unpreparedness of the public sector in terms of legislation and administrative capacity, as well as the small and weak Bulgarian economy, which could return investments in a very difficult way.


There have been arguments since a long time whether there should be a special law for PPP. What is you opinion on this matter?

- Currently a number of laws have relation to PPP - the Concessions Law, the Public Procurement Law, the Obligations and Contracts Law, the Law for Public Property, the Law for Municipal Property, etc. In reality there is a lack of a legal definition of PPP, even though the term is used in dozens of legal documents.

PPP are being implemented mainly as concessions, most frequently for the building and operation of transport infrastructure with almost full transfer of risk to the private sector. However, if we want the whole economy to benefit from PPP, there should be a complete government strategy for using combinations of models; significantly larger political responsibility; and administrative capacity of the PPP administrative body. Thus we can understand the need for a special law, which should set up the institutional framework for managing PPP, and some other laws may treat specific forms of their implementation.


Which European countries could be used as models for development of successful PPP and what is the difference in their model?

- From the developed countries, the most suitable example is Ireland, which succeeded in attracting over 2 billion EUR from the private sector for building its infrastructure in the last 10 years. Their large advantage is the well working administration and the proximity to the pioneering and the largest PPP market in Europe - Great Britain. It should be no problem for us to invite, and why not even hire, some experts from Ireland in our administration. Thus we could buy some experience and save from time and mistakes.


Which of the sectors in the Bulgarian economy are most suitable for PPP and how this model would influence the products and services provided by them?

- The most suitable projects for both the public sector and the tax payers are the ones in which the private sector takes the whole risk related to the demand for public services. Such types of PPP are most of the concessions for transport infrastructure - roads, airports, and ports. All these are business models which could lead to market-only return to investment, i.e. without additional payments from public budgets. The problem related to this is that the small internal market and the weak consumption leave almost no other possibility for PPP besides from these simple, low-risk projects.

Other sectors - such as water and energy utilities, where monopolistic or quasi-monopolistic positions for the private sector exist, also guarantee return to investment. However, the largest advantage of PPP in comparison to public tenders - the transfer of risk - is questionable. The transfer of risk requires an adequate regulator of the respective public services. As we have seen in the last years, this is not always the case. Still we do not speak a lot about PPP in education, healthcare, judicial services, social services, and there are serious opportunities for PPP as well - mostly for modernization of the existing infrastructure. This is what really needs a suitable legal framework and managerial capacity.


Many people in Bulgaria still think that “public-private” means “privatization of profits” and “nationalization of losses”, if we could give as an example the financial crisis in the USA. What is the argument “for” PPP in such conditions?

- PPP provide better quality of public services and saving of budget funds. Such opinions exist because of the way that the public sector works and implements public procurement, for instance. The benefit of PPP could be reached only when there is full transparency of all obligations and monitoring on them. This is almost impossible without public registers for PPP and public procurement.


You have presented recently your new book - “Public-Private Partnership: Principles, Models, and Policies for Fair Provision of Public Services”. What was the reason to prepare this book and who will benefit the most from its contents?

- In 2001 I worked for a PPP project in Ireland and was impressed by the engagement of the government to attract private funds and to implement the best practices of the private sector in the public sector. Its philosophy was that Ireland could not become a first-class economy with a third-class infrastructure.

Considering the large funds needed for our infrastructure and the delicate condition of our public finances, either we should learn how to make PPP, or we are doomed to be left behind. I think that my book would be interesting to everyone who wants to know how public and private sectors could interact and what business models of partnership could be made.