22-04-2013

Public Private Partnerships (PPP) - Law On Concessions

Authors

  • Artan Bozo, LLM, Attorney at Law
    Managing Partner at Bozo & Associates Law Firm

What is the main legal framework on the concessionary procedures in Albania?

The main law that regulates the concessionary procedures in the Republic of Albania is Law No 9663, dated 18.12.2006 “ON CONCESSIONS”. The latter has undergone to a number of amendments, which are found below in the following order:

  • Law No. 9995, dated 22.09.2008 “On some changes and addenda in Law No 9663, dated 18.12.2006 “ON CONCESSIONS“;
  • Law No.10157, dated 11.05.2009 “On some changes and addenda on Law No 9663, dated 18.12.2006 “ON CONCESSIONS”, as amended;
  • Law No. 10281, dated 20.05.2010 On the approval of the Normative Act with the power of law, No. 1 dated 5.05.2010, of the Council of Ministers “ On some changes and addenda on Law No. 9663, Dated 18.12.2006 “ON CONCESSIONS”, as amended.

In addition, there are several Council of Ministers Decisions that supplement and regulate in details the concessionary procedures, which include:

  • Council of Minister Decision no.27 dated 19.01.2007 On the approval of the rules of Evaluation and Assessment of Granting Concessions, as amended;
  • Council of Ministers Decision No. 448 dated 16.06.2010 “On some addenda on decision No. 27 dated 19.01.2007 “On the approval of the rules of Evaluation and Assessment of Granting Concessions, as amended;
  • Council of Ministers Decision No. 104 date 28.02.2007 “On an addendum of CMD No. 27 dated 19.01.2007 “On the approval of the rules of Evaluation and Assessment of Granting Concessions, as amended;
  • Council of Minister Decision No. 150 dated 22.03.2007 “On the organization and functioning of the Concessionary Treatment Agency”;

What are the Albanian Government priorities regarding the concessionary procedures legal framework?

According to IPA1 2008 National Program for Albania, the main priority of the Albanian Government, in the light of approximating the Albanian Legislation “On Concessions” with the Acquis Commounitaire, is to increase, efficiency and transparency of the public procurement in general and concessions in particular. Given that the basic law is only partially aligned with the EU Law, several amendments are made, as referred above. In this regard, new structures with complaint assessment attributes are established and are duly functioning.

Moreover, based on the aforementioned legislation new rules of procedure are set, which reflect to a certain extent those of the EU member states.

What is the purpose of the Concessions Law, and in what sections of the economy it applies?

The purpose of the Concession’s Law is to create a favorable framework for promoting and facilitating the implementation of privately financed Concession Projects; Enhancing transparency, fairness, efficiency and long-term sustainability, in development of infrastructure and public service projects. Furthermore it aims at developing the general principles in the award of contracts by public authorities through the establishment of specific procedures.

The Concession’s Law is implemented for the economic activities in the following sectors:

a) Transport (railway system, rail transport, ports, airports, roads, tunnels, bridges, parking, public transport);

b) Generation and distribution of electricity and heating;

c) Production and distribution of water, treatment, collection distribution and administration of waste water, irrigation, drainage, cleaning of canals, dams;

d) Collection, transfer, processing and administration of solid waste;

e) Telecommunication;

f) Education and sport;

g) Health;

h) Tourism and culture;

i) Prison infrastructure;

j) Recycling projects, rehabilitation of land and forests, in industrial parks, housing, governmental buildings, service of maintenance of IT and data base infrastructure;

k) Natural gas distribution;

l) Management contract or provision of public services including those related to sectors specified above.

Who supervises the application procedure?

The Public Procurement Agency supervises the application of the concession procedures. The monitoring of the implementation of this law and the bylaw acts stemming from it is performed by the Procurement Advocate.

What are the selection stages on a step by step basis?

1. Prequalification procedure

a) The Concessionaires are selected through a pre-qualification procedure, accompanied by a request for proposal.

b) The Contracting Authority shall prepare the invitation for participation in the pre­selection procedure and the pre-qualification documents with a view to identifying bidders that are suitably qualified to implement the concession.

c) The invitation to participate in the pre-qualification procedure shall be published in the Public Announcements Bulletin, as well as in the international and local press.

2. Criteria and Documents In order to participate in the selection procedure, interested bidders must meet some objective criteria, which the Contracting Authority considers appropriate in the particular procedure.

a) The criteria shall at least include:

i. professional and technical qualifications, human resources, equipment and other physical facilities as necessary to carry out all the phases of the concession project, including design, construction, operation and, where appropriate, maintenance;

ii. Sufficient ability to manage the financial funds of the project and capability to finance the project;

Appropriate managerial and organizational capability, reliability and experience in operating similar projects.

3. Interested qualified bidders are qualified to participate in a selection procedure when:

a) They are not subject to proceedings of bankruptcy, liquidation or controlled administration or termination of activity or of any other related situation, which according to the effective laws, brings about proceedings of the same character;

b) They have not been found guilty of producing false documents.

c) The contracting authority shall, prior to inviting the bidders into the selection phases, allow them to form temporary bidding unions of companies.

Decision: The contracting authority performs the qualification of each bidder that has submitted an application for pre-qualification, in accordance with the criteria set forth in the prequalification documents. The contracting authority shall publish the list of pre-qualified bidders in the Public Announcements Bulletin within 30 days from taking the decision. All pre-selected bidders shall be invited to submit proposals.

What are the evaluation criteria?

1. The criteria for the evaluation and comparison of the technical proposals shall include at least:

  • Technical soundness;
  • Compliance with environmental standards;
  • Operational efficiency;
  • Quality of services and measures to ensure their continuity;
  • Social and economic development potential offered by the proposals.

2. The criteria for the evaluation and comparison of the financial and commercial proposals shall at least include, as appropriate:

  • Present value of the proposed tolls, unit prices and other charges over the concession period;
  • Present value of the proposed direct payments by the contracting authority, if any;
  • Costs for design and construction activities, annual operation and maintenance costs, present value of investments and operating and maintenance costs;
  • Extent of financial support, if any, expected from a public authority of the Republic of Albania; and
  • Soundness and viability of the proposed financial arrangements./li>

The contracting authority compares and evaluates each proposal in accordance with the evaluation criteria, the relative weight accorded to each such criterion and the evaluation process set forth in the request for proposals.

How is the successful bidder determined?

  • The contracting authority ranks all responsive proposals on the basis of the evaluation criteria and notifies about this the bidders.
  • Upon notification, all bidders have the right to present any claims. Upon expiry of the complaining period, the contracting authority shall invite for final negotiations the bidder that has attained the best rating. Final negotiations shall not concern those contractual terms that were stated as nonnegotiable in the final request for proposals.
  • If it becomes clear to the contracting authority, within a time period set by Council of Ministers, that the negotiations with the bidder invited will not result in a concession contract, the contracting authority shall terminate the negotiations with such bidder and invite for negotiations the other bidders in the order of their ranking until it signs a concession contract or rejects all remaining proposals. The contracting authority shall not resume negotiations with a bidder with which negotiations have been terminated pursuant to this point.
  • Following completion of concession contract negotiations, the Concession Treatment Agency shall, within 45 days, issue an opinion on the terms thereof. Following such opinion and the signature of the Concession Contract, it shall be submitted to Council of Ministers for approval.
  • The contracting authority shall publish in the Public Notification Bulletin the name of the concessionaire and essential terms of the concession contract within 30 days after the approval.

What is the complaint procedure?

  • Each bidder may request an administrative review of the selection processes, when he deems that an action undertaken by the contracting authority is in violation of the provisions of the law on Concessions or other legal or by legal acts on the concession procedures.
  • The complaint shall be submitted to the Public Procurement Committee within 5 calendar days from the date of the publication of the announcement of the pre-qualified candidates or announcement of the ranking of the bidders by the contracting authority.
  • The petitioner is entitled to take an appeal against the decision of the Public Procurement Committee, within 30 days since the notification, in front of the competent court.

What does the Concessions Contract provide for?

Concession contracts shall provide for the following issues:

a) Nature and scope of works to be performed and services to be provided by the concessionaire;

b) Contract duration, which shall be adjusted to the specific requirement of the relevant concession and shall not exceed 35 years, and the conditions for its prolongation. In case of a term exceeding 35 years, the contract will enter in force after the ratification from the parliament.

c) Assistance that the contracting authority and the concession treatment agency may provide to the concessionaire in obtaining licenses and permits necessary for the concession;

d) any requirements relating to the establishment and minimum capital of a legal entity to be established by the successful bidder in accordance with the effective laws, and prohibition of transfer of shares or part of the capital of this company without prior consent of the contracting authority;

e) ownership on assets related to the concession project and the obligations of the parties, as appropriate, concerning the acquisition of the concession project site and any necessary facility;

f) remuneration of the concessionaire, regardless whether it consists of tariffs or fees for the use of the infrastructure facility or the provision of services; the methods and formulas for the establishment or adjustment of any such tariffs or fees; payments, if any, that may be made by the contracting authority or other public authority; as well as whether there is any obligation of the concessionaire to make payments to the contracting authority;

g) procedures for the review and approval of engineering designs, construction plans and specifications by the contracting authority, as well as the procedures for testing and final inspection, approval and acceptance of the infrastructure facility, rules and standards based on which the concession projects are designed, which should ensure the application of best practice, developing the market through sensible risks allocation;

h) extent of the concessionaire’s obligations to ensure, as appropriate, the modification of the service so as to meet the actual demand for the service, its continuation and its provision under essentially the same conditions for all users; mechanisms to deal with eventual costs related thereto;

i) right of contracting authority, or of another public authority to monitor the works to be performed and services to be provided by the concessionaire and the conditions and extent to which the contracting authority may order variations in respect of the works and conditions of service. The right of contracting authority to take such other reasonable actions as they may find appropriate to ensure that the infrastructure facility is properly operated and the services are provided in accordance with the applicable legal and contractual requirements, as well as the right to monitor mechanisms to deal with eventual costs related thereto;

j) Concessionaire’s obligation to provide the contracting authority, or other public authority, as appropriate, with reports and other information on its activity;

k) any restrictions or conditions applicable to the assignment of rights and obligations of the concessionaire under the concession contract;

l) Any restrictions or conditions related to the transfer of a controlling interest at the concessionaire;

m) Definition and consequence of force majeure, change in law and other changes in circumstances (including any right of the parties to seek compensation or revision of concession contract);

n) Eventual liabilities, if any, of the relevant public authorities or contracting authority;

o) circumstances under which the contracting authority has the right to temporarily take over the operation of the infrastructure facility for the purpose of ensuring the effective and uninterrupted delivery of the service in the event of failure by the Concessionaire to perform its obligations and to rectify the breach of contract;

p) any rights of the contracting authority to review and approve the main contracts to be entered into by the concessionaire, in particular with the concessionaire’s own shareholders or other legal entities where the concessionaire is participating or vice versa;

q) guarantees of performance to be provided and insurance policies to be maintained by the concessionaire in connection with the implementation of the concession;

r) Remedy procedures available in the event of breach of contract by any of the parties;

s) Conditions and procedure for amendment and/or termination of contract; rights and obligations of the parties upon the expiry of time period or termination of contract (including mechanism of transfer of assets, technology, compensation, training and support services to be provided by the concessionaire);

t) applicable law and the mechanisms for the settlement of disputes that may arise between the contracting authority and the concessionaire;

u) Rights and obligations of the parties with regard to confidential information;

v) The right of intervention from the creditors.


1. Instrument for Pre-Accession Assistance (IPA).

GREEK LAW DIGEST REPUBLIC OF ALBANIA MINISTRY OF INTEGRATION Union of Chambers of Commerce and Industry of Albania
Nomiki Bibliothiki ALBANIA INVESTMENT DEVELOPMENT AGENCY Foreign Investors Association of Albania
     

 

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