Assessment summary 2008 - Estonia [EBRD - Legal transition]...WS0101.4426269.1 Estonia Core Area...

WS0101.4426269.1

Estonia

Core Area Summary of PFI Guide recommendations1 / Best Practice Rating Assessment 1-General Policy and

Concession Legal Framework

Existence of a policy framework for public private partnerships ("PPPs").and existence of specific concession law or of a comprehensive

set of laws regulating concessions and allowing easy access to a clear and stable legal environment for PPPs.

[5]/24 0,21

h Very low compliance

2-Definitions and Scope of the Concession Law

Existence of a clear definition of the boundaries and scope of application of the concession legal framework (definition of "concession", sectors concerned, competent authorities, eligible concessionaires) limiting the risk of a challenge to the validity of concession contracts irrespective of

the name given to the act.

[24]/36 0,67

Medium compliance

3-Selection of the Concessionaire

Mandatory application of a fair and transparent selection process. Limited exceptions allowing direct negotiations, competitive rules for unsolicited proposals and the possibility to challenge illegal awards.

[30]/45 0,67

Medium compliance

4-Project Agreement Flexibility with respect to the content of the provisions of the concession agreements which should allow a proper allocation of risks without

unnecessary or unrealistic/not bankable/compulsory requirements/interferences from the contracting authority (obligations,

tariff, termination, compensation).

[9]/27 0,33

Low compliance

5-Security and Support Issues Availability of reliable security instruments on the assets and cash-flow of the concessionaire in favour of lenders including "step in" rights and

possibility of government financial support or guarantee of the contracting authority’s proper fulfilment of its obligations.

[3]/18 0,17

Very low compliance

6-Settlement of Disputes and Applicable Laws

Possibility to obtain proper sanction for breach under the applicable law through international arbitration and enforcement of arbitral awards.

[11]/15 0,73

High compliance

OVERALL RATING 46% Low compliance

1 UNCITRAL Legislative Guide on Privately Financed Infrastructure Projects, 2001 (hereinafter the "PFI Guide") Checklist Estonia Local Expert: Priit Pahapill -Luiga Mody Hääl Borenius

2.

Checklist Estonia WS0101.4426269.1

OVERALL ASSESSMENT OF THE QUALITY OF CONCESSION LEGISLATION: A general policy framework for improving the legal environment and promoting PPP has not been identified in Estonia and the country does not have a general law on concessions. Concession-related issues are regulated by the Competition Act, dated 2001 (and the Decree adopted on its basis) and the Public Procurement Act, dated 2007. More particularly, the former regulates the granting of "special or exclusive rights" and the latter regulates the granting of a "construction work concession" (and other contracts concluded by public authorities above certain thresholds). However, the application of one general law over the other is not simple to determine. The new Public Procurement Act of 24 January 2007 came into force on 1 May 2007, thus the Public Procurement Act of 19 January 2001 is no longer in force. The aim of the new act is to bring Estonian public procurement legislation in line with EU public procurement directives 2004/17/EC and 2004/18/EC and update the law. Sector-specific legislation does not refer directly to concessions, even if the regulation of certain activities (e.g. transport) allows concession-type arrangements. The procedure to be followed is rather vague in the sector-specific laws that refer to the general law (Competition Act or Public Procurement Act). Thus, the general legal framework for PPP needs to be elaborated.

3.


Key for assessment of Each Question

Yes 3 points Yes, with reservations 2 points No, with limited compliance / redeeming

features 1 point

No 0 point N/A Not applicable 0 point

Key for Assessment of Each Core Area and for Overall Assessment

> 90% Very high Compliance 3+1 points ≥ 70%-89% High Compliance 3 points 50%-69% Medium Compliance 2 points 30%-49% Low Compliance 1 point

< 30% Very Low Compliance 0 point

4.


1.

GENERAL POLICY AND CONCESSION FRAMEWORK

QUESTION

ANSWER

ARTICLE

COMMENTARY

1. Is there a general/national policy framework (explicit or implicit) for PPPs in infrastructure or public services?

PPPs are understood in this context as different forms of cooperation between public authorities and the world of business which aim to ensure the funding, construction, renovation, management or maintenance of infrastructure or the provision of a public service.

Further to information provided by the Ministry of Economic Affairs and Communications, there is no such general/national policy framework.

2. If the answer to 1 is yes, is PPPs policy framework distinct from that for privatisation?

N/A

5.


3. If the answer to 1. is yes, is such policy framework supported by:

3.1. certain policy framework documents? 3.2. certain institutions (a "task force" or other institution specialised in the promotion and development of PPPs)? For information, are there:

• reference to PPPs in the Constitution?

• sector-specific policy frameworks dealing with

PPPs?

• municipal policy frameworks dealing with

PPPs?

If the Country's legal or institutional framework contains undesirable restrictions on PPPs in infrastructure or public services, please mention these.

N/A

N/A

6.


QUESTION

ANSWER

ARTICLE

COMMENTARY

4. Does the country have a concessions or a PPPs law (the "Law") or if the answer is no, do the Constitution or other general laws (ex: the Civil Code, sectorial law ) recognise the basic principles of concessions and regulate the granting of concessions in such a way that concessions are legally possible in the country?

[.For the purpose of this questionnaire, the set of rules applicable to concessions in the absence of a specific concession law will also be referred to as the Law] .For information, is a new concessions/PPP law or amendments to the existing Law being prepared?

Competition Act ("CA"), article 14.

Procedure for Grant of Special or Exclusive

Rights ("PGSER") Public Procurement Act ("PPA"), Article 6

• Competition Act, 5/06/2001(CA): Art.14(2): "the procedure for the organisation of public competitions for granting special or exclusive rights shall be established by the Government of the Republic". This was established by: The Decree No 303, 25/09/2001 "Procedure for organising a public competition for the grant of special or exclusive rights". • Public Procurement Act, 24/01/2007: The construction work concession is considered as public procurement. Construction work concession is defined as an exclusive right to exploit a structure, which is granted either for a charge or without charge for the performance of construction works.

Concessions by the state authorities have been mostly granted on the basis of sector-specific laws and PPA.

5. If the country has a Public Procurement Law, is Public Procurement Act, 24/01/2007(PPA)

7.


it clear to what extent the Public Procurement Law applies or not to the granting of concessions

For information:

• is the application of the Public Procurement

Law specifically excluded?

• does it apply for certain types of concessions

only?

• is it applicable to the selection of the

concessionaire?

• is it applicable to all or some sub-contracts to

be entered into by the concessionaire?

PPA, Article 6

PPA explicitly provides that PPA applies to construction work concessions. However it does not enumerate any other types of concession to which it applies. At the same time, above certain thresholds, PPA applies to all purchases and services, and it is obligatory for state authorities to follow the procedures of PPA. Special or exclusive rights in the meaning of CA must be organised in accordance with CA and PGSER respectively. Thus, if a concession does not constitute a special or exclusive right, public authorities must follow the procedures established by PPA. See also question 6.

6. If the country has sector-specific laws regulating the granting of concessions in specific sectors, is it clear which law is applicable to a particular sector and/or infrastructure and/or services?

CA, article 14.

PPA Article 6

- CA (art. 14) applies to all infrastructures and sectors, unless a specific law provides otherwise. Further, certain sector-specific laws make reference to procedures enacted under the Competition Act (see question 6.)

- Public Procurement Act applies to construction

work concessions of all infrastructures and sectors. PPA also applies to the conclusion of any contracts by public authorities regarding services above thresholds provided at question 12.

8.


In the absence of sector-specific law, it is unclear whether priority should be given to CA or PPA. In principle, any concession that can be considered as "special or exclusive right" (see question 8) should be granted on the basis of CA and PGSER. In practice, state authorities are reluctant to organise competition on the basis of PGSER and are more willing to organise a public tender on the basis of PPA.

7. If the country has a "local public services" law (i.e. law regulating basic legal framework for municipalities using PPPs for the construction of "local infrastructure" and/or the provision of "local utility" services) is it clear which law is applicable to a particular infrastructure and/or services?

There are no general legal provisions regulating the use of PPP for local public services. However certain sector-specific laws provide for the use of PPP inter alia by municipalities. Local authorities have organised competitions award concessions on the basis of the PPA and PGSER.

9.


2.

DEFINITIONS AND SCOPE OF THE CONCESSION LAW

2.1 Concession definition 2

QUESTION

ANSWER

ARTICLE

COMMENTARY

8. Does the Law define one or several term(s) (ie: "PPP", "concession", "BOT", others) for the arrangements to be regulated by the Law which specify the limits of application of the Law?

For information, please provide the given definition, if any. (Irrespective of the name given in the Law the word

CA

”special or exclusive rights“ are defined as: ”rights granted to an undertaking by the state or a local government which enable the undertaking to have a competitive advantage over other undertakings in a goods market or to be the only undertaking in the market”.

2 For further information on concession definition please refer to: PFI Guide, Consolidated Legislative Recommendations, Recommendation 3 and Commission Interpretative Communication on Concessions Under Community Law dated 12 April 2000;together with additional EU major documents/decision /recommendation on concessions including Directives 2004/18/EC and 2004/17 EC of 31 March 2004; Green Paper on Public Private Partnerships and Community Law on Public Contracts and Concessions dated 30 April 2004; Report on the public consultation on the Green Paper (SEC(2005) 629- Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on Public-Private Partnerships and Community Law on Public Procurement and Concessions (Brussels, 15.11.2005. COM(2005) 569) European Parliament resolution on public-private partnerships and Community law on public procurement and concessions (2006/2043(INI))

10.


concession will be used for all types of defined agreements for purposes of this questionnaire)

PPA Articles 2(2), 4(1) and 6

“Public procurement means purchasing of, contracting for provision of services, organising design contests, contracting for public works and granting of works and service concessions by the contracting authority and contracting for works by the concessionaire of works concession.” “Public contract means a contract with mutual material obligations awarded between one or several contracting authorities and one or several persons as a result of the public procurement, the object of which are, services or public works. The provisions stipulated on the type of the relevant contract are applied to the procurement contract in the legal acts.” ”Public works concession for the purposes of this act is a contract the object of which is the same as in the public works contract mentioned in section 4(3) of this act and according to which the fee for the works mentioned in the same subsection lies either in the right of the concessionaire to exploit the work or in that right together with the monetary payment of the contracting authority.” ”A service concession for the purposes of this act is a contract the object of which is the contracting for services mentioned in annex 2 of this act and according to which

11.


the fee for the provision of services lies either solely in the right of the concessionaire to provide the specific service and receive fee for the provision of the service from the users of this service or in that right together with the monetary payment of the contracting authority.”

9. Does the Law provide that it applies to all contracts entering into the definition of concession irrespective of the name given to such contract (concession, licence, usufruct right, lease, etc.)?

PPA Article 2, Article 4(1), Article 6

The law does not explicitly state that it applies to all contracts entering into the definition of concession irrespective of the name given to such contract, yet this principle could be interpreted from the subject of Articles 2, 4(1) and 6 of the PPA.

10. Does the Law make a clear distinction between concessions and public procurement contracts (i.e.: public works, supply or services) whereby the distinguishing criterion is the transfer of risks inherent to the exploitation?

PPA Article 6 Public works concession is a contract the object of which is the same as in the public works contract and according to which the fee for the works lies either in the right of the concessionaire to exploit the work or in that right together with the monetary payment of the contracting authority. (The public works contract includes contracting for:

1) Execution of any public works mentioned in annex 1 of this act or both execution and the design of public works;

2) Construction of the building or

12.


construction and the design or 3) Prior to acquisition, lease or rental

of the immovable or the related right by the contracting authority or by giving it into the disposal of the contracting authority on other legal basis, performing of the public works regarding this immovable according to the requirements specified by the contracting authority based on any method and means.

A service concession is a contract the object of which is the contracting for services mentioned in annex 2 of PPA and according to which the fee for the provision of services lies either solely in the right of the concessionaire to provide the specific service and receive fee for the provision of the service from the users of this service or in that right together with the monetary payment of the contracting authority.

11. Does the Law make a clear distinction between concession/PPPs and licence (i.e an authorisation to operate granted automatically by a public authority when certain criteria are met)?

XXX No, the law does not make a clear distinction between concession/PPPs and licence.

2.2 Application of the Law

13.


QUESTION

ANSWER

ARTICLE

COMMENTARY

12. Does the Law provide that it prevails over any

sector-specific law or other laws dealing with concession?

XXX No, it does not state that it prevails over any sector-specific law or other laws dealing with concession. Yet on the other hand, sector-specific laws state that public procurements are handled in accordance with the PPA.

2.3 Entities involved 3

2.3.1 Public Authorities

QUESTION

ANSWER

ARTICLE

COMMENTARY

13. Does the Law identify (or allow identification by reference to other laws or regulations) the public authorities that are empowered to award concessions and enter into project agreements ("Contracting Authority")?

If yes, for information, which of the following

authorities are identified?

• national authorities (e.g.: the government,

PGSER, article 4.

PPA, Article 10

- Minister authorised by the Government of the Republic, "official" authorised by Minister and "official" authorised by local government entity.

The procedure stipulated in PPA shall be followed by the following persons and institutions:

1) state or state authority; 2) local government entity, its authority or

association;

3 For further information on the entities involved, please refer to: PFI Guide, Consolidated Legislative Recommendations, Recommendation 2, 6 and 42.

14.


ministries, independent agencies)?

• provincial authorities?

• local or municipal authorities?

• public enterprises?

3) other legal person governed by public law or a body of legal person governed by public law;

4) a foundation at least one of which founders is a state or which founders include more than half of the persons specified in clauses 2 or 3 of this subsection or more than half of the members of which supervisory board are determined by the persons specified in clauses 1-3;

5) a non-profit association if more than half of its members are persons specified in clauses 1-3 of this subsection;

6) another legal person in private law which is compliant with the characteristics stipulated in subsection 2 of this section.

The same article enumerates further persons, who are empowered to act on the basis of this Act. However, these persons are not public authorities.

14. Is there a specialised agency established to take

care of concessions (which consent or recommendation is necessary for the granting of a concession, ex: Concession / PPPs Agency)?

PPA Article 104

There is the Public Procurement Office which is a governmental authority in the area of government of the Ministry of Finance that:

1) advises the contracting authorities regarding the application of the Public Procurement Act; 2) exercises state supervision over carrying out public procurements and extrajudicial proceedings of misdemeanours in the extent and according to the procedure stipulated by law; 3) carries out international communication

15.


within its competence in the questions of public procurements; 4) fulfils other tasks imposed on it with this act and with the legal acts established on the basis of it.

The Public Procurement Office evaluates the performance of the system of public procurements in the course of performing its tasks and may submit proposals for its improvement. The Public Procurement Office publishes on its website up-to-date information necessary for carrying out public procurements, including the international thresholds mentioned within three working days from their actual publication by the European Commission. However, the Public Procurement Office does not give any consent or recommendation for the granting of a concession.

15. Is the division of power between different public

authorities involved in the concessions granting process simple and coordinated (ex: one stop shop)?

Yes, the division of power between different public authorities involved in the concessions granting process is simple and coordinated.

2.3.2 Concessionaire and Project Company

QUESTION

ANSWER

ARTICLE

COMMENTARY

16.


16. Can concession be granted to a domestic and/or

foreign person or to a domestic person with foreign shareholders can the shareholders of the concessionaire be domestic and/or foreign persons (without discrimination)?

PPA Article 3 (1) 3); Article 12(3)

The contracting authority should treat all persons whose place of residence or location is in Estonia, in some other Member State of the European Union, in other state which is a contracting party to the EEA Agreement or in the country having joined the WTO Agreement on Government Procurement (GPA), equally and non-discriminatorily and follow that setting the restrictions and criteria for all persons comply with the proportionality, relevance and justification principles in relation to the object of the public procurement. The tenderer or candidate may be any person who offers goods, provides services or carries out public works on the market. The contracting authority may restrict in the contract notice the circle of tenderers and candidates in the procurement procedure, without permitting the persons originating from the countries other than mentioned in clause 3 of Article 3 of PPA to participate in the procurement procedure or grant the advantages for the tenders submitted by the persons coming from the countries mentioned in clause 3 of Article 3 of PPA before the tenders submitted by the persons coming from other countries.

For information only, can concession be granted to public entities or to entities jointly owned by private and public entities?

PPA Article 12(3)

The tenderer or candidate may be any person who offers goods, provides services or carries out public works on the market.

17.


2.4 Concerned sectors4

QUESTION

ANSWER

ARTICLE

COMMENTARY

17. Does the Law identify (or allow identification by reference to other law or regulations) the sectors and/or types of infrastructure and/or services in respect of which concessions may or may not be granted?

Section 5 of PPA

Section 5 of PPA specifies the sectors in which public procurements are handled in accordance with Section 2 of PPA.

18. Do the sectors eligible for concessions correspond to a large extent to those listed below, or if not, is the list of eligible sectors an open-ended one (as opposed to being exhaustive) allowing (or at least not preventing) concessions to be granted in numerous sectors”?

For information:

a) does it include the transportation sector?

• is the railway system included? • are rail transport services included? • are ports included? • are airports included? • are public roads included?

Public Transport

Act, article 10(1), (2)

No specific reference to concessions, but to the way certain activities can be performed: - Public Transport Act, 26/01/2000 A public service obligation may be imposed on a carrier only on the basis of a public service contract entered into between the carrier and the party ordering the transport operation. The carrier shall be selected on the basis of a public competition the conditions of which shall be established by the party ordering the transport

4 For further information on the concerned sectors please refer to: PFI Guide, Consolidated Legislative Recommendations, Recommendation 3 and 4.

18.


b) does it include the electricity sector?

• is the generation of electricity included? • is the transmission of electricity included? • is the distribution of electricity included?

c) does it include the water and wastewater sector?

• is water production included? • is water treatment included? • is wastewater treatment included? • is water distribution included? • is wastewater collection (sewerage) included?

d) does it include solid waste collection, transfer or

disposal?

Electricity Market Act

Public Water

Supply and Sewerage

Act, article 7(2)

Waste Act, article 66(1), 67(1)

operation. If the remuneration to be paid to the carrier is expected to exceed the values provided in Public Procurement Act (see question 12), public procurement must be organised in accordance with the PPA. At the same time, Art.10(2) provides that a public service obligation may also be imposed on the carrier who has special or exclusive rights.

- Electricity Market Act, 11/02/2003. Activities in the electricity sector are subject to licensing. - Public Water Supply and Sewerage Act,

10/02/1999 “a water undertaking shall be appointed by a decision of the local government council on the basis of subsection 14(2) of the Competition Act”. - Waste Act, 28/01/2004 “Organised waste transport means collection and transport of municipal waste from a designated region to a designated waste management facility or facilities by an undertaking elected at a competition organised by a local government body.” Competition must be organised on the basis of the Art. 14(2) of the Competition Act.

19.


e) does it include the oil, gas and mineral sector?

f) does it include other public services such as

education, health care and prisons?

g) Does it include any other sectors or infrastructure

(please specify)?

Postal Act Article 6(2)

- Postal Act, 1/07/2006 Postal services. According to the Postal Act the Ministry of Economic Affairs calls on a public procurement if the thresholds stated in PPA are met in case of the rendering of the universal postal service.

20.


3.

SELECTION OF THE CONCESSIONAIRE5

3.1 General Considerations

QUESTION

ANSWER

ARTICLE

COMMENTARY

19. Does the Law require in principle the Contracting Authority to select a concessionaire through competitive procedures?

CA, article 14(2)

PPA Article 15

- Competition Act, 5/06/2001; Art.14(2): “the procedure for the organisation of public competitions for granting special or exclusive rights shall be established by the Government of the Republic”. This was established by: Decree No 303, 25/09/2001 “Procedure for organising a public competition for the grant of special or exclusive rights” - Public Procurement Act, 24/01/2007 The threshold of the cost of organising the public procurement procedure, granting the works concession and organising the design contest are the following: 1) As to the public procurements started in the year

2007 EUR 30,000 in case of service contracts and design contest, EUR 190,000 in case of public works contract and works concession;

2) As to the public procurements started in the year

5 For further information on the selection of the concessionaire, please refer to: PFI Guide, Consolidated Legislative Recommendations, Recommendations 14 to 39 included.

21.


2008 and later EUR 40,000 in case of service contracts and design contest, EUR 250,000 in case of public works contract and works concession;

The international threshold is the sum established periodically by the European Commission based on the section 69 of the directive 2004/17 of the European Parliament and Council which harmonises the procurement procedures of purchasers operating in the sector of water, energy, transport and postal services (OJ L 134, 30 April 2004, pgs 1-113) and the section 78 of the directive 2004/18 of the European Parliament and Council on the harmonisation of the procedure of awarding the works, supply and service contracts and which will be published in the Official Journal of the European Union. The international threshold shall be also disclosed by the Public Procurement Office on its website and on the website of the registry of the responsible processor of State Public Procurement Register.

20. Is there reference in the Law to the principles of transparency, equal treatment and proportionality.

For information, please specify if a reference is made to the principle of mutual recognition.

PPA Article 1 and 3

The objective of PPA is to ensure the transparent, purposeful and economical use of financial resources of the contracting authority, the equal treatment of the participants and effective use of existing competition in public procurements. The contracting authority is obliged to comply with the following principles in organising public procurements:

1) The contracting authority should use financial

22.


resources economically and expediently and achieve the objective of the public procurement with the reasonable price by ensuring the best price and quality ratio by comparing different tenders in case of existing competition;

2) The contracting authority should guarantee the transparency and verifiability of the public procurement;

3) The contracting authority should treat all persons whose place of residence or location is in Estonia, in some other Member State of the European Union, in other state which is a contracting party to the EEA Agreement or in the country having joined the WTO Agreement on Government Procurement (GPA), equally and non-discriminatorily and follow that setting the restrictions and criteria for all persons comply with the proportionality, relevance and justification principles in relation to the object of the public procurement;

4) The contracting authority should ensure effective use of the existing competition in public procurements, whereas the participation of the legal person governed by public law or the person governed by private law using the public means in the public procurement should not distort competition due to its use of public means;

5) The contracting authority should avoid the conflict of interests distorting the competition;

6) If possible, the contracting authority should

23.


prefer environmentally safe solutions.

21. Is there a provision in the Law concerning the publication of information related to the competitive procedures in the Country media and in the international media (for large projects)?

PPA Articles 16

(6),(7); 28(3),

29(1), 37, 48(4),

90(4),(5), 105, 106

There is a public procurement register which is a state database of public procurements, the responsible and authorized processor of which is the Ministry of Finance. The information included in prior information notices, periodic indicative notices, contract notices, simplified contract notices on a dynamic purchasing system, public procurement reports, qualification system notices, notices of public works concession, design contest invitations and results of the design contest are submitted to the register by the contracting authority and the results of the appeal procedure by the appeal committee and the mentioned documents will be published. The contracting authority shall be responsible for accuracy of information submitted to the register by it. The information specified above is publicly available, except for the information the publishing of which would hinder the work of law enforcement authorities, is contrary to the public interest or violates the business secret of undertakings or jeopardises the competition between them. The register shall forward the prior information notices, periodic indicative notices, contract notices, simplified contract notices on a dynamic purchasing system, qualification system notices, public works concession notices and design contest invitations for

24.


publication to the Office for Official Publications of the European Communities in the standard forms established with the regulation of the Commission (EC) no. 1564/2005 by the European Commission which establishes the standard forms of publication of notices related to the public procurement procedure according to the directives of the European Parliament and Council (EC) 17/2004 and (EC) 18/2004 (OJ L 257, 1 October 2005, pgs 1-126), in case the estimated value of the public procurement is equal to the international threshold or exceeds it, or in other cases if the contracting authority so requests. The register shall forward the results of the design contest submitted to the register by the contracting authority for publishing to the Office for Official Publications of the European Communities in case a notice of design contest has been earlier communicated to the Office for Official Publications of the European Communities before or in case the contracting authority requires to communicate the results of the design contest. The request to award the public contract, the estimated value of which without VAT exceeds 20,000 euros in case of products or services or 130,000 euros in case of public works, if the contracting authority is the one mentioned in Article 10(1) of PPA or exceeds 40,000 euros in case of products or services or 250,000 euros in case of public works if the contracting authority is the one mentioned in Article 10(3) of PPA, but is lower of the threshold from which on the relevant contracting authority should organise the procurement procedure,

25.


is notified of by the contracting authority on its website or, if non-existent, in the local or county newspaper. The contracting authority mentioned in Article 10(3) of PPA notifies of the award of the public contract, the cost of which without VAT exceeds 40,000 euros in case of products or services or 250,000 euros in case of public works, but is lower of the international threshold, on its website within ten days pursuant to the award of public contract. Upon request of the European Commission the contracting authority sends the relevant report on the circumstances of implementation of the basis stipulated in Article 28(2)1) of PPA to the European Commission through the Ministry of Finance. In order to start the open, restricted or negotiated procedure with prior publication of a contract notice or the competitive dialogue the contracting authority submits the contract notice to the register through the website of the register. The contracting authority shall submit the public procurement report to the register through the website of the register within ten days after the end of the procurement procedure. Provided the contracting authority establishes that the value of tender is abnormally low, as the tenderer has obtained state aid, it may reject the tender only after

26.


the tenderer is not able to prove within the reasonable term specified by the contracting authority that the state aid given was in accordance with the legal acts. Provided the contracting authority rejects the tender on this basis and the estimated value of public contract is equal to the international threshold or exceeds it, it notifies the European Commission of it through the Ministry of Finance. In case of implementation of the referred exception referred and in the case of contracts awarded for purposes other than the pursuit of an activity referred to in Articles 83 to 89 of PPA the contracting authority shall notify in writing the European Commission, at the latter’s request, through the Ministry of Finance of all such activities which are considered to be covered by the exclusion or the purpose. In case of implementation of the exceptions referred to in Article 90(1) 3-5) and (2) of PPA the contracting authority shall communicate in writing to the European Commission, at the latter’s request, through the Ministry of Finance the names of relevant undertakings, the description of important terms and conditions and the value of the contracts to be awarded and a proof as may be deemed necessary by the European Commission that the relationship between the contracting authority and the connected undertakings complies with the requirements of this section.

27.


22. Are there provisions of the Law, regulations or special manual, recommendation governing in detail the selection of the concessionaire ("Regulations") (i.e.: the pre-selection of bidders, the procedure for requesting proposals, other procedure such as competitive dialogue/two stage procedure) ?

Section 2 of PPA

Section 2 of PPA states the basis and the selection procedure of public procurements.

23. Does the Law / Regulations provide that, if the

Contracting Authority rejects an applicant at the time of preselection or disqualified a bidder , it must make public the reasons for the decision (or inform the rejected bidder thereof explaining the reasons for rejection)?

PPA Article 54(1) and

(2)

The contracting authority submits immediately, but not later than within three workdays, the written notice on each decision made within the procurement procedure which has an impact on its rights or obligations in the procurement procedure to the tenderers or candidates, including the decision of eliminating the tenderer or candidate from the tendering procedure, decision of qualifying the tenderer or, candidate, decision of leaving the tenderer or candidate unqualified, decision of rejection of tender, decision of rejection of all tenders, decision mentioned in subsection 4 of § 65 of PPA, decision of declaring the tender suitable and decision of declaring the tender successful with the names of tenderers or candidates, as to whose or whose tender the relevant decision was made, also the reasons why the public contract or framework agreement was decided not to be awarded or restart the procurement procedure. Upon the request of the tenderer or candidate the contracting authority submits in writing within three workdays from the receipt of such application the reasons of leaving them unqualified for the tenderer or

28.


candidate.

3.2 Award of concession

QUESTION

ANSWER

ARTICLE

COMMENTARY

24. Does the Law / Regulations provide that all proposals are ranked solely on the basis of the evaluation criteria set forth in the pre-selection documents/ request for proposals?

PPA Article 50(1)

The contracting authority evaluates the tenders declared suitable. The contracting authority considers the criteria of evaluation of tenders stipulated only in the contract notice, contract documents or tender invitation in evaluation of the tenders.

25. Does the Law / Regulations provide that a notice

of the award of the project, identifying the concessionaire and including a summary of the essential terms of the project agreement is to be published?

PPA Article 54(1) and

(2)

See section 23. Upon the request of the tenderer or candidate the contracting authority submits in writing within three workdays from the receipt of such application:

1) reasons of leaving them unqualified for the tenderer or candidate;

2) for the tenderer the reasons of rejection of its tender, including in cases when the decision was made according to which the tender is not equal for the purposes of

29.


subsection 2 of § 33 of this act or is not compliant with the performance or functional requirements set for the purposes of subsection 3;

3) to each tenderer having submitted the tender declared suitable data describing the successful tender and its advantages compared to its tender and the name of the tenderer or tenderers having submitted the tender declared successful.

The contracting authority may leave the information of the notices unsent to the tenderers or candidates, the disclosure of which would hinder the work of the law enforcement authorities, would contradict the public interest or would violate the business secret of undertakings or would damage their mutual competition.

26. Does the Law/Regulations provide that the Contracting Authority or any other public authority maintain records of key information pertaining to the selection and award proceedings?

PPA Article 105(2)

The information included in prior information notices, periodic indicative notices, contract notices, simplified contract notices on a dynamic purchasing system, public procurement reports, qualification system notices, notices of public works concession, design contest invitations and results of the design contest, are submitted to the register by the contracting authority and the results of the appeal procedure by the appeal committee and the mentioned documents will be published. The contracting authority shall be responsible for accuracy of information submitted to the register by it.

30.


27. If the answer to 27 is yes, does the Law provide that such record is accessible for public or at least to interested parties?

N/A

3.3 Final negotiations

QUESTION

ANSWER

ARTICLE

COMMENTARY

28. Does the Law/Regulations contain provisions regulating final negotiations (i.e. post contract award) so that transparency, equal treatment and competition are preserved?

XXX

No, the Law does not contain provisions regulating final negotiations (i.e. post contract award) so that transparency, equal treatment and competition are preserved.

29. Does the Law/Regulations provide that the Contracting Authority has the authority to terminate negotiations with the invited bidder when it becomes apparent that the bid will not result in an agreement and start negotiations with the second ranked candidate?

PPA Article 53(1)

Provided the tenderer having submitted the tender declared successful withdraws its tender due to the reasons not resulting from the contracting authority:

1) the contracting authority declares the second-best tender as to the price successful, if it awards the public contract on the basis of the tender with the lowest price; 2) provided the contracting authority awards the public contract on the basis of the most economically advantageous tender, it revaluates all the remaining tenders according to Article 50(2) of PPA and declares the tender successful which is the most advantageous of the tenders having been declared suitable according to the tender

31.


evaluation criteria stipulated in the contract notice, contract documents or tender invitation.

3.4 Concession Award without competitive procedure

QUESTION

ANSWER

ARTICLE

COMMENTARY

30. According to the Law / Regulations, does the Contracting Authority have the authority to award a concession without competitive procedures only in limited exceptional circumstances such as the ones listed below?

For information, which of the following conditions

allowing direct negotiations are provided for?

• when there is an urgent need for ensuring continuity of the provision of service and engaging in a competitive selection procedure would be impractical?

• for projects of short duration and with an anticipated initial investment value not exceeding a specified minimal amount (or with an anticipated turnover not exceeding a specified minimal amount)?

• reasons of national defence or national security?

No

Yes (construction

work concession)

No

Yes

PPA, article 15

PGSER,

If thresholds provided at section 12 above are not met, PPA does not apply.

32.


• cases when there is only one source capable of providing the required service (e.g.: in the case of patented technology or unique know-how)?

• when an invitation to the pre-selection

proceedings or a request for proposals has been issued but no applications or proposals were submitted or all proposals failed to meet the evaluation criteria?

• others (please specify)?

Yes

Yes

article 9.

PGSER, article 6.

PPA, article 28(2), (4)-

(7)

PPA, article 27

“Tendering from one undertaking is used as a tendering procedure if there is only one possible tenderor on the goods market”

“If the open tender does not give an anticipated result, negotiated restricted tender or tender from one undertaking may be used to grant the same right.” PPA Article 28(2), (4)-(7) lists the cases when negotiated tender procedure may be used. PPA Article 27 lists the cases of negotiated tender procedure with prior publication of a contract notice.

31. According to the Law / Regulations, is there a procedure (rules) to be respected for the award of a concession without competitive procedures?

PPA Article 68

In case of negotiated procedure without publication of a contract notice the contracting authority submits the contract documents to one or several interested persons whose economic and financial standing and technical and professional ability are presumably sufficient for proper performance of the public contract. The contracting authority will not add the data mentioned in Article 31(2) of PPA to the contract documents which as a result of the nature of negotiated procedure without publication of a contract notice could not be specified at the moment of submission of contract documents or which are negotiated over during the procurement procedure. The contracting authority submits the qualification terms with the contract documents and the requirements of submission of documents certifying

33.


the qualification to the interested person and controls the qualification of the person according to the stipulations of PPA and the provided qualification criteria prior to starting the negotiations over the terms of the public contract. The contracting authority holds negotiations over the terms of public contract with the interested persons having received the contract documents to award the public contract according to the provisions of Article 50(2) or (3) of PPA.

3.5 Special case of unsolicited proposals

QUESTION

ANSWER

ARTICLE

COMMENTARY

32. Does the Law / Regulations provide for the adequate framework for the Contracting Authority to handle unsolicited proposals/private initiative concessions (proposal relating to the implementation of a concession that is not submitted in response to a request or solicitation by the Contracting Authority) that ensure transparency and equal treatment and do not distort competition?

XXX

No, the Law does not provide for such adequate framework.

3.6 Review procedures

34.


QUESTION

ANSWER ARTICLE COMMENTARY

33. Does the Law allow the bidders who claim to have suffered or that may suffer loss or injury, to seek review of the Contracting Authority’s acts or failures to act?

PPA Article

117

The tenderer, the candidate or the person interested in participation in the procurement procedure which has the possibility to participate in this procurement procedure at the relevant moment (hereinafter the submitter of appeal), may appeal the activity of the contracting authority, if it finds that the violation of this act by the contracting authority violates its rights, by presenting such appeal to the appeal committee (hereinafter the appeal committee) located by the Public Procurement Office. The appeal may be submitted on the following documents or decisions of the contracting authority:

1) contract notice; 2) tender invitation; 3) concession notice; 4) periodic indicative notice which starts the procurement procedure; 5) qualification system notice which starts the procurement procedure; 6) invitation to design contest; 7) contract documents; 8) exclusion of the candidate or tenderer from the procurement procedure; 9) qualification and non-qualification of the candidate and tenderer; 10) declaring the tender suitable; 11) rejection of the tender or rejection of all tenders;

35.


12) declaring the tender successful; 13) other decision of the contracting authority made in the course of the procurement procedure on the basis of this act which could violate the rights of the appealer.

36.


4.

PROJECT AGREEMENT6

QUESTION

ANSWER

ARTICLE

COMMENTARY

34. Does the Law contain (or refer to) a model concession/PPP agreement which use is optional (for guidance only as opposed to being mandatory) or a mandatory list of provisions to be included in the agreement (the content of such provisions being left for negotiation) ?

PPA, articles 4(2), 5, 31(2)3

PPA provides that the conditions of the agreement must comply with the requirements set out in PPA, yet PPA does not foresee a special model.

4.1 Duration and extension of the project agreement

QUESTION

ANSWER

ARTICLE

COMMENTARY

35. Does the Law provide that the concession duration should depend on the length of time taken for the amortization of the private investment and an appropriate return on the capital?

For information, please provide the given duration (if any) and relevant information in the Law with respect to the conditions for extension.

XXX

No, the Law does not provide for the duration of the concession.

6 For further information on the project agreement definition, please refer to: PFI Guide, Consolidated Legislative Recommendations, Recommendations 12 and 40 to 68 included.

37.


4.2 Termination of the project agreement

QUESTION

ANSWER

ARTICLE

COMMENTARY

36. Does the Law provide for a restrictive list of termination events (such as those listed below)?

• material breach by the other party;

• if performance is made impossible by the

occurrence of circumstances beyond either

party’s control;

• mutual consent .

Law of Obligations Act Section

10 subsection 3

The Law of Obligations Act articles on termination of a contract apply to the termination of a public contract.

38.


37. Does the Law provide for (or does not prevent ) compensation of the concessionaire:

37.1. in case of termination for public interest?

37.2. for losses incurred as a result of public authorities acts? 37.3. in all cases of early termination (including in case of serious breach or failure by the concessionaire), for the non-depreciated value of assets financed by the concessionaire-?

No

No

No

Law of Obligations Act Section 5 subsection

2

The Law of Obligations Act articles on infringement of the obligations by a contract party apply to a public contract.

4.3 Tariff setting, service standards

QUESTION

ANSWER

ARTICLE

COMMENTARY

38. Does the Law provide for clear guidance for all aspects of interaction between the bodies that have the power to award concessions and the bodies that regulate tariffs and service standards?

PPA Article 104 and 107

The Public Procurement Office: 1) advises the contracting authorities regarding the application of the Public Procurement Act; 2) exercises state supervision over carrying out public procurements and extrajudicial proceedings of misdemeanours in the extent and according to the procedure stipulated by law; 3) carries out international communication

39.


within its competence in the questions of public procurements; 4) fulfils other tasks imposed on it with this act and with the legal acts established on the basis of it.

The Public Procurement Office also evaluates the performance of the system of public procurements in the course of performing its tasks and may submit proposals for its improvement. The Public Procurement Office publishes on its website up-to-date information necessary for carrying out public procurements, including the international thresholds mentioned within three working days from their actual publication by the European Commission. The Public Procurement Office performs state supervision and it has the right to:

1) control the fulfilment of PPA in an unhindered manner and without prior notification at the contracting authority. If the Office has a suspicion of a possible violation of PPA in the course of the procurement procedure in process, the Office may be present at the opening of tenders or at other proceedings of procurement procedure carried out based on the present act, also to control the proceedings and decisions already carried out by the contracting authority;

40.


2) obtain information on the public procurements necessary for carrying out state supervision from the contracting authorities, also the originals or transcripts of documents concerning the public procurement; 3) make a decision or a precept according to the provisions of Article 108 of PPA, in case the contracting authority has violated the terms of PPA in the course of public procurement.

4.4 Financial responsibilities of concessionaire and Contracting Authority

QUESTION

ANSWER

ARTICLE

COMMENTARY

39. Does the Law provide that the concessionaire can collect tariffs or fees for the use of the facility or its services?

XXX

No, the Law does not provide that the concessionaire can collect tariffs or fees for the use of the facility or its services

40. Does the Law provide the possibility for fixed and/or consumption-based payments to the concessionaire by the public authorities?

XX

PPA Article 6(1)

No, the Law does not explicitly provide the possibility for fixed and/or consumption-based payments to the concessionaire by the public authorities. Yet in Article 6 of PPA it is stated that the fee for the works mentioned in Article 4(3) lies either in the right of the concessionaire to exploit the work or in that right together with the monetary payment of the contracting authority.

41.


5.

SECURITY AND SUPPORT ISSUES7

5.1 Security Interests

QUESTION

ANSWER

ARTICLE

COMMENTARY

41. Does the Law provide for the possibility for (or not specifically prevent) a concessionaire to create security interests on the project assets and proceeds or other valuable guarantees related to the project?

Not specified.

42. If the answer to 42 is yes, does the Law clearly

state which types of security can be provided and includes some of the most common type of guarantees in project financing (such as those listed below)?

For information, can a concessionaire pledge or assign:

• the proceeds and receivables arising out of the

concession?

N/A

7 For further information on support and financial securities, please refer to:

PFI Guide, Consolidated Legislative Recommendations, Recommendations 13, 49, 57 and 60.

42.


• the assets for which it has rights of use under a

project agreement;?

• its property?

• shares of the Project Company?

• the project agreement?

• or obtain other valuable guarantees (please

specify)?

5.2 Government support

QUESTION

ANSWER

ARTICLE

COMMENTARY

43. Does the Law provide for the possibility (or not specifically prevent) the public authorities to provide support to the Contracting Authority and guarantee for the proper implementation of concessions by the Contracting Authority?

Public Transport

Act, article 14 and 22.

CA Article 30(1)

Specified only for the transport sector. Subsidies for specific purposes for the support of public transport can be prescribed in the state and local government budget for the provision of regular public services, acquisition of public transport vehicles, construction and renovation of objects of public transport infrastructure and conduct of public transport surveys. Art. 22 provides however such subsidy must be returned if certain obligations are violated by the receiver of subsidy.

- State aid Article 30(1) of CA states that state aid shall be deemed

43.


to be the aid laid down in Article 87(1) of the Treaty establishing the European Community. Under the EC Treaty Article 87(1) state aid is any aid granted by the state or through state resources in any form which distorts or threatens to distort competition by favoring certain undertaking(s) in so far as it affects trade between EU Member States. Thus, it could be argued that such an aid given to a contracting authority by the public authorities for the proper implementation of concessions could go under state aid regulation in cases when all the requirements of state aid are fulfilled.

44. Does the Law provide for the possibility (or not specifically prevent) the public authorities to provide financial or economic support for the implementation of concessions?

See question 43.

45. If the answer to 44 is yes, does the Law clearly state which public authorities may provide such support and which types of support can be provided?

For information, are the following types of support

provided for:

• interest-free or low interest public loans?

• loan guarantees?

N/A

44.


• direct or indirect equity participation by the

government in the project?

• subsidies for operations in non-profitable

sectors?

• direct subsidies?

• pro-poor subsidies?

• tax and customs benefits?

• foreign exchange protection (convertibility and

transfer guarantees)?

• protection from competition?

5.3 Lenders’ rights

QUESTION

ANSWER

ARTICLE

COMMENTARY

46. Does the Law provide for the possibility for the lenders to “step-in” or substitute a qualified new concessionaire in case of concessionaire defaults without a new tender?

XXX No, the Law does not provide for the possibility for the lenders to “step-in” or substitute a qualified new concessionaire in case of concessionaire defaults without a new tender

6. SETTLEMENT OF DISPUTES AND APPLICABLE LAWS8

8 For further information on the settlement of disputes, please refer to:

45.


6.1 Settlement of disputes

QUESTION

ANSWER

ARTICLE

COMMENTARY

47. Does the Law permit the Contracting Authority to enter into concession agreement that is subject to international arbitration?

Not specified. Not prevented.

48. Has the government of the country ratified the following international conventions? 48.1. the Washington Convention on the Settlement of Investment Disputes (ICSID) (1965)? 48.2. the New York Convention on recognition and enforcement of foreign arbitral awards (1958)?

In force since 28/11/1993. In force since 22/07/1992.

6.2 Applicable laws

QUESTION

ANSWER

ARTICLE

COMMENTARY

49. Does the Law permit the Contracting Authority to enter into concession agreement that is governed in whole or in part by foreign law or at

Not specified.

PFI Guide, Consolidated legislative Recommendations, Recommendations 57, 69 and 71.

46.


least allow the concessionaire to enter into financing and construction agreements governed by foreign law?

50. Has the country ratified any international convention for the protection of foreign investments?

Estonia has bilateral investment protection agreements with Spain, Turkey, Greece, Italy, Latvia, Belgium-Luxembourg, Lithuania, Ukraine, Czech Republic, Austria, Great Britain and Northern Ireland, USA, Israel, China, Poland, Switzerland, Germany, Netherlands, Norway, France, Sweden, Denmark.

EFECTIVENESS ASSESSMENT: HOW THE LAW WORKS IN PRACTICE: (please comment based on the previous 2006 effectiveness general assessment)

Assessment summary 2008 - Estonia [EBRD - Legal transition]...WS0101.4426269.1 Estonia Core Area...

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