OREANDA-NEWS. May 19, 2008. Whether you are a football fan or not, you cannot escape the excitement surrounding the first European Cup Championships in eastern Europe to be hosted jointly by Poland and Ukraine in 2012, reported the press-centre of EBRD.

Multiple sporting facilities are yet to be built, roads, motorways, airports need modernizing or constructing, health care and security need addressing. Public-Private Partnerships (PPPs) have been heralded as the solution – can they deliver?

Even without the presence of Ukrainian representative Evgen Chervonenko, Head of the Ukrainian National Agency for the 2012 Euro, discussions were both fruitful and thought provoking.

“Time is of the essence” said panel moderator Sarah Carey, Chair of the Board of Trustees of the New Eurasia Foundation and Senior Partner at Squire, Sanders & Dempsey LLP. Given the scale and complexity of required investments, technical assistance and training bureaucrats responsible for project implementation will be vital for timely delivery.

The Mayor of Warsaw Hanna Gronkiewicz-Waltz assured participants that the government would do its utmost to deliver on time. Warsaw’s main stadium is being built and funded entirely by the Polish government at a cost of about 1,2 billion Polish zloty (?330 million). “Construction is due to be completed this year and we expect no delay,” the Mayor said.

“I don’t see any PPP involvement in the construction of our stadiums,” she said, adding that while projects need to be assessed on an individual basis, in general PPPs are not the best solution for Poland. “We lack both confidence and experience in PPPs.”

Infrastructure is the biggest challenge for us, the Mayor said. Priorities include public transport projects, roads leading to the airports, as well as the modernisation and extension of airports. The creation of new hotels and modernisation of hospitals are also high on the government’s agenda. In total, the government expects to spend around 25 billion zloty (or ?6-7 billion), half of which will come out of the capital’s budget.

Alfonso Querejeta, Secretary General of the European Investment Bank (EIB) highlighted capacity-building, the consistency of the programme and strict adherence to deadlines as key ingredients to successful delivery. “It is not how much you can invest, but how much is needed to achieve the right results,” he said. It may be easier and quicker to construct public and sell private after the event, this avoids lengthy contract negotiations when there is little time to spare, Mr Querejeta said. “It is not just about football, but the ambitious transformation of countries.”

Wilfried Rammler, Managing Director of Hochtief PPP Solutions also did not believe in concessions as a solution to all infrastructure problems. “There may be time loss in preparation but time gain in implementation,” he said. The advantages of PPPs are that they help sustain the public and state budget and reduce implementation risks.

Concessions and private infrastructure developments have started in eastern Europe, but slowly and sparingly Mr Rammler said. Barriers to further investments are lack of know-how, relevant laws and regulations and institutional capacity, ineffective decision-making and an unclear income and revenue basis. In Ukraine, there is also the added risk of inflation and an unstable exchange rate.

What to do? The multilaterals and the EU can assist, for example, by setting up an international PPP task force and helping standardise the legal framework for PPPs, he said. But ultimately, national governments need to decide on their PPP policy.

Nicolas Fournier, Regional President for Central Europe, CIS and Turkey at Lafarge focused attention on the raw material needed for constructing all infrastructure products: concrete. “The cement industry in Ukraine is barely meeting the needs,” he stressed. “Ukraine is short of two cement plants”. This will result in a big shortage when building all infrastructure needed for the Euro. Cement plants in Poland can only supply Polish construction sites, not Ukraine.

Lafarge is currently building a plant in western Ukraine, but facing many challenges in getting the green light for the 2 million tonne plant because of unclear land and permit regulations. “I urge the government to simplify permit and land acquisition laws. We need government support to meet the 2012 deadline,” he said. “Whatever Ukraine does now to meet its infrastructure bottlenecks will be crucial for the future development of Ukraine.”

Dr Fruzsina Szilvia Biro, former Head of the PPP Secretariat at the Ministry of Economy of Hungary said PPPs are not a miracle, but useful in increasing affordability and effective in implementation. Hungary has a long history in concessions having developed 500 km of motorways in the last five years with private sector involvement.

“There is no best solution. What seems right today may not be tomorrow,” she said. But the fact remains that there is a huge demand for infrastructure developments and budgets cannot finance it all, she stressed. “PPPs can help stretch and share the burden.”