EU to tackle PPP regulation

As it prepares to encourage public private partnerships to boost economic growth, the European Commission is investigating how EU law could improve regulation.

EU rules on public procurement, which force authorities to open up public contracts to the best bidder, do not necessarily cover PPPs created to fund so-called 'service concessions' such as hospitals, motorways and water management.

This means the EU executive may not have as tight a rein on how these contracts are created.

As a result, it has launched a 'green paper' explaining where rules should apply to PPPs and asking industry to comment on how they might be improved.

"If we want to attract private money we have to make sure the private sector is aware of the rules," a commission official said on Tuesday.

A basic problem, the official said, is that there is no legal definition of a PPP, which makes it even harder to regulate.

This is one of the issues tackled in the paper.

But he insisted legislation is not necessarily the next move, especially as a round of laws passed in February have already modernised and simplified how authorities award contracts.

"We have no directive in our drawers," he told journalists.

But he did not rule out a 'white paper' with a view to creating legal proposals, or that the commission would pass directly to adopting a directive.

A 'directive' is a form of EU law requiring implementation by member states.

Industry players have until July 30 to respond to the questions laid out in the paper and discussions will begin around the end of 2004, the official said.

The commission wants to boost the number of PPPs - where public bodies use private funds to invest in infrastructure - as part of its drive to make Europe a more competitive economy.

While no figures were given, the commission said PPPs are becoming increasingly used in Europe by governments as a way of continuing to invest whilst tightening their purse strings.

Public procurement as a whole in the European Union accounts for around 11 per cent of EU or half of Germany's gross domestic product.

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