Our contribution to the control hearing on concessions

On Monday, the Parliamentary committee on Economy, Finance and Budget will hold a control hearing “Implementation of the policy, i.e. the laws in the area of concessions, with the review of the realization of the conclusions of the Parliament of Montenegro, brought in regard to the reviewing the work of the Commission for concession in 2013”.

Wanting to contribute, in order that this hearing to be successful and effective, Committee members were submitted the data which we consider to be useful in examining in which way the policy in the area of concessions is being implemented and to which extent the conclusions of the Parliament are being realized.

Namely, last year, the Parliament has adopted the conclusions in regard to the work of the Commission, in which they appeal for, among other things, “the need of the amending the Law on concessions, especially taking into consideration that the current competencies of the Commission are not satisfiying for achieving better regulation of the matters and the control.

We remind that the Draft Law on Public-private partnership (PPP), put on the agenda for the public discussion during March and April earlier this year which regulates the area of concessions, significantly different regulating the institutional coordination, the preparation of PPP and reporting process, which is good solution when it comes to abolishing numerous bodies which were spending significant budgetary resources while not having any significant role in these projects.

Nevertheless,

  • It is still unclear how exactly would the Investment Agency, whose establishing is planned, improve the expert core, nor it is not stipulated does the Agency “take over” the employees from the institution which are being abolished (Secretariat for Development Projects, Directorate for Transformation and Investments within the Ministry of Economy, etc. This Draft Law abolishes the Commission for Concessions as well);
  • Except the possibility of the insight in the annual report of Investment Agency work which should be established 90 days after the Law entries into force, the Parliament is completely excluded for the control in this area;
  • It is stipulated that the public partner submits to the Agency the data on supervision over the implementation of the contract, all changes and the reports on collection of fees only once a year or at the request of the Agency, which is problematic from the aspect of transparency;
  • The special procedures for the selection of the private partner are stipulated, which would be defined later on in the bylaws, which represent the avoidance of the application of the Law on public procurement.
  • The content of the register of PPP contracts will not be extended, since without the obligation to quarterly submit the reports grantor of the concession, i.e. the public partners about the state of collection the concession fees, it is not possible to improve the scope of information to be published. Detailed prescribing phases and elements in the preparation and approval of projects and managing two different registers with all mandatory items still does not contribute to transparency, since the publishing of essential elements that hitherto have not been public is again avoided;
  • The maximum period in which it is possible to conclude a contract between a public and a private partner is not specified, which leaves space for the conclusion of the contractual relationship that due to the length does not need to be in the interest of the public partner. Such case was, for example the conclusion of the contract on the lease of Luštica Peninsula for a period of 99 years. Comparative practice shows that this period must be stipulated. Croatian law on PPP, for example, in Article 4 provides that the PPP contract is concluded for the fixed period which shall not be less than three nor more than forty years. Article 18 of the Law on PPP and concessions in Serbia stipulates that the deadline for the conclusion of a contract may not be shorter than five nor longer than fifty years.

Key information of poorly managed and non-transparent policy in the area of PPP and concessions:

  • The Government has adopted the Report on the implementation of the concession policy in January 2013 and since then it does not inform the public on the condition in this area. Therefore the current amount of debt of the concessionaires is unknown. The total amount of debt at the end of 2012. was more than 12 million EUR;
  • The mandate of the Commission for concession has expired in September 2014, but the Government has appointed a new one not before April 2015;
  • Since September 2014, the website of the Commission, within which the register of concession is kept, is unavailable;
  • The Commission has not yet prepared the Annual report for 2014;
  • The Commission had considered, since its establishment in 2009 until the end of 2013, 13 objections related to the awarding of concessions, which implies that the scope of their work and competencies was limited, while having significant budgetary resources allocated for their work.
  • Apart from inadequate institutional regulation in the area of concessions, the coordination between the institutions on the national and local level is poor, which is evident from the fact that municipalities do not adopt the concession plans, although they are obliged to do so by the Law on concessions. In its Report on the Registry of concession contracts, the State Audit Institution points out that since the Law has entered into force, only Municipality of Berane and Municipality of Kolašin have adopted the concession plans in 2011 and 2014, respectively.
  • Municipalities do not own the data on the type of the concession, based on which the payment is being done. Consequently, municipalities are not able even to realistically estimate the revenue estimates on annual or long-term basis. Initiatives to improve the collection by the Department of Public Revenues existed, but there is still no significant progress;
  • The special limitation of the system of control over the implementation of contracts on awarded concessions, as well as control of payment of concession fees, is the inspection. This is the problem due to the shortage of staff in the Department for Inspection in all areas, but also due to incomplete inspections.

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