On July 1, 2015, the State Duma adopted in the third reading the draft law “On public-private partnership and municipal-private partnership in the Russian Federation” which was proposed by the Government of the Russian Federation.

For the first time at the federal level, the law provides a definition of public-private partnership (PPP) and municipal-private partnership, eliminating the difference in approaches of the regional lawmakers to determining these notions. The law also unifies the approaches to legal regulation of the PPP forms, establishes powers of the public legal entities in the course of implementing such projects, sets the obligations of the public and private partners, as well as the guarantees for the rights and legal interests of the private partner.

That provided, the relations pertaining to conclusion of the concession agreements are excluded from the scope of this law and will be regulated, as before, by the law “On concession agreements.”

The new law determines an exhaustive list of facilities that can be the subject of PPP agreements, including transport facilities. It should be particularly noted that the facilities of water supply, water disposal and heat supply, as well as roads of federal, regional and local significance cannot be the object of a PPP agreement (such projects can be implemented pursuant to the Federal Law “On concession agreements”).

The new law also establishes that subsidies are the only form by which the public partner can provide state/municipal budget funds under PPP agreements. This allows eliminating ambiguity in relation to possible forms for granting budgetary funds for implementing PPP projects. Furthermore, a mandatory element of the PPP agreement is the private ownership title to the object of the agreement, i.e. the facility, which can be transferred to the state after expiry of the term established by the agreement.

It should be noted that the constituent entities of the Russian Federation must bring their regional laws and regulations in compliance with the norms of the federal law by July 1, 2016.

The law has been submitted to the President of the Russian Federation for signing, and could enter into force starting from January 1, 2016.

Pavel Karpunin   Partner   St. Petersburg    pkarpunin@cls.ru   Tel.: +7 (812) 346 79 90

Rimma Tolmacheva   Senior Associate    St. Petersburg    rtolmacheva@cls.ru   Tel.: +7 (812) 346 79 90

Additional notes

Should any questions arise in connection with the above or if you need any additional materials, please contact Pavel Karpunin or Rimma Tolmacheva, St. Petersburg Office of Capital Legal Services.

This Information letter keeps the clients of Capital Legal Services and other interested parties abreast of information that may, to any extent, affect their activity or cater to their particular interests. The opinions and commentaries expressed in this information letter shall not be deemed as legal opinions and do not cancel the need to obtain legal advice or legal opinion on separate issues. www.cls.ru