Lithuanian Parliament approves new Concessions law
On 15th June, Lithuania’s Parliament approved a new Concessions law which comes into power from 1st January 2018. The legislation, passed together with the adoption of the EU Directive 2014/23/EU, enables a wider and more flexible use of concessions. The new law aims to establish an adequate, balanced and flexible legal framework for the award of concessions that ensures equal and open access to the market to economic operators from across the European Union.
By passing additional legislation alongside the adoption of the EU Directive, the Lithuanian Parliament has ensured that the country’s legal framework for concessions is as broad and versatile as possible. The EU directive provides for an uncapped maximum contract term, the possibility for more types of public entities to launch concession projects, and increased opportunities for a wider range of candidates to participated in tenders (such as temporary associations of undertakings, natural persons and public entities). Meanwhile, the new law on concessions passed by Parliament will allow for increased flexibility in the transfer and use of public assets by concessionaires. The legislation also provides for a clearer definition of work and service concessions and establishes clear rules for calculating concession value.
According to Mr. Tadas Jagminas, Director of the Project Management Department at Invest Lithuania, the legislation could lead both to more concessions being offered and more bidders taking part in them. “The broadened definition of who can be a granting authority is likely to widen the number of sectors where new concessions are undertaken,” says Mr Jagminas. “In addition, the increased flexibility in terms of asset use and project length will allow the country to offer more attractive investment opportunities. Overall, the new Concessions law is expected to increase the number of projects in the pipeline, and foster more intense competition and better bids.“
The latest statistics confirm that concessions are the main PPP model in use in Lithuania. To date, 50 concession contracts have been signed, with the majority of these being service concessions by municipalities. Analysis by Invest Lithuania shows this trend is set to continue. According to this analysis, municipal and governmental level public authorities have ambitious plans to implement up to 10 new concessions projects, mainly in the leisure and culture sectors. “It should be noted that these plans do not include the plans of public entities, which are newly entitled to launch concession projects under the new Concession law”, adds Mr. T. Jagminas, further strengthening the expectation for an increase in the PPP pipeline.
Lithuania’s PPP regulatory environment and procurement processes are already very favourably rated by multilateral institutions such as the World Bank and the EBRD. And the new legislation will further contribute to the ongoing improvement of the country’s PPP regulatory framework.