Kč 217 million for nothing. Long live Czech PPPs!

Prior to the ÚVN project, the first project billed as a PPP initiative on the national level was the construction of the D47 motorway. ‘The state often doesn’t know what it wants and what its priorities are’In reality, however, that project did not bare any traits of a genuine PPP project: In 2002, the government of Miloš Zeman (then Social Democrats - ČSSD) decided to award the contract to the Housing & Construction (H&C) consortium without holding a public tender.

The amount to be paid to the private partner over 30 years was not to exceed Kč 125 million. However, in the autumn of 2002 then-transport minister Milan Šimonovský (KDU-ČSL) condemned the contract as being extremely disadvantageous for the state and then in 2003 the government of Vladimír Špidla (ČSSD) cancelled the contract at a cost of Kč 626 million to the taxpayer.

Thus to date, while no PPP projects involving a state ministry have been realized in the Czech Republic, consultants and potential private partners have made a handsome profit from the state’s plans. At the beginning of 2011, the Czech branch of Transparency International announced that according to their estimates, to date the state has spent around Kč 240 million just on consultations on PPP projects.

Deputy Minister of Regional Development in charge of public contracts, Jan Sixta, told Czech Position that the PPP model is wrongly considered as an option that can always be used when the state organ requiring services does not know how to properly formulate a public tender. “The state often doesn’t know what it wants and what its priorities are,” Sixta says. In the case of the ÚVN, it cost Kč 217 million to establish the state’s priorities. The question now is whether anyone will be brought to account.