List of possible objects of concession/PPP agreements is updated

June 2018 proved to be fruitful for development of Public-Private Partnership legislation. Within just a week the Federation Council has approved 2 draft laws supplementing the list of possible objects of Public-Private Partnership agreements (hereinafter “PPPA”) and concession agreements (hereinafter “CA”).

       I.       Telecommunication facilities

Prior to the changes, only telecommunication lines and linear facilities could be PPPA objects, but upon adoption of Federal Law No.165-ФЗ it will become possible to enter into a PPPA if respect to telecommunication facilities such as engineering infrastructure facilities (including buildings and constructions), specially designed for telecommunications equipment and cables.

The adopted law is expected to have a positive impact on development of telecommunication network construction projects (including LTE networks along federal highways) since it allows to eliminate infrastructure limitations faced by investors implementing projects in remote regions.

    II.       IT facilities

Initiatives to add IT facilities to the list of possible objects of a CA and PPPA were discussed by the State Duma in spring 2017, but draft law No. 157778-7 was adopted in the third reading only on 21.06.2018.

Newly adopted Federal Law No.173-FZ allows entering into a CA or PPPA in respect to:

• IT facilities: software applications, databases, IT systems (including state IT systems), web sites containing such software and/or databases;
• IT facilities and supporting hardware;
• data processing centers, in which IT facilities supporting hardware is placed.

The fact that there is no longer a need for integrating real estate into the object of an agreement is an important achievement allowing to considerably reduce the term of the investment stage and expenses for project implementation.

Persons whose decisions may be directly or indirectly factored by foreign persons, foreign states or their authorities, cannot be a concessionaire (private partner) under agreements concerning IT facilities.

Obligations of the concessionaire (private partner) under agreements may include creation and re-engineering (modification) both of an IT facility as such and the supporting hardware.

It should also be noted that the new law does not restrict the investor from partial commercialization of the facility by additional chargeable services.

The adopted changes will give rise to projects of state IT systems, including traffic enforcement cameras, paid parking and public transport management systems.