Public-Private Partnerships are growing in popularity across Lithuania, reports Kate Kolbina

Public-Private Partnerships are growing in popularity across Lithuania, reports Kate Kolbina

In December 2014, national development agency Invest Lithuania together with BQ Baltic Magazine is holding an event in London to promote public-private partnership (PPP) opportunities in Lithuania to UK bidders.

Tadas Jagminas, the director of project management at Invest Lithuania, says: “The UK has one of the biggest PPP markets in the world with a remarkable experience in multiple infrastructure sectors. We expect that experienced bidders from the UK could bring the best practices and know-how to local players and lead some of the PPP projects of relevant scale”. The event is supported by an integrated project and programme management consultancy Faithful and Gould and renowned legal advisors Harper Macleod.

Public-private partnership (PPP) is a business relationship between a private-sector company and a government agency for the purpose of completing a project that will benefit society. Public-private partnerships can be used to finance, build and operate projects such as public transportation networks, parks and convention centres. Financing a project through a public-private partnership can allow a project to be completed sooner or make it a possibility in the first place. Lithuania, like many countries in the region, faces a growing demand for public infrastructure and services. Hence, like many Central and Eastern European governments, Lithuania is looking at PPP arrangements to stimulate the economy and deliver the investments needed to close the infrastructure gap.

The European Bank for Reconstruction and Development has recently conducted a survey entitled Evaluating the Environment for Public-Private Partnerships in Eastern Europe and the Commonwealth of Independent States, the study is the first of its kind. It places Lithuania among the top five countries in Eastern Europe by institutional framework, investment climate, financial facilities and sub-national adjustment, noting constant improvements in PPP institutional design and the continuous encouragement of private sector participation.

One of the pilot PPP projects, Palanga bypass, reached its financial close last year. The Lithuanian Road Administration selected Kauno tiltai and Siauliu plentas to design, build, operate, and finance the Palanga bypass contract, worth €36 million over 25 years. New PPP plans are already under way: the new Detention Facility [prison] in Vilnius with 1,620 beds. This is one of the four PPP projects described in Lithuania’s prison modernisation strategy, which was recently approved by the Government. The project includes design, building, maintenance and financial activities. After the approval in Parliament’s autumn session, the tender documents will be prepared, and hopefully the tender will be launched in the second half of 2015.

The Ministry of Transport is also contemplating the implementation of two projects via the PPP route. The first is Vilnius-Utena highway reconstruction project (reconstruction of 58.10 km of individual sections and maintenance of 72.15 km in total). The maximum value of the project approved is almost €175 million. This value covers initial investment, as well as all maintenance and financing costs. The project has already been approved by the Government and awaits approval by the Parliament. The second PPP project is a concession for the Inland Cargo Port in Kaunas. The private operator (concessionaire) will be responsible for the development of superstructures and operation of the port during a 25 years period. The project has been approved and tender documents are under preparation.

A tender announcement is foreseen in the first half of 2015.