Romania’s experience with PPPs

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Attention has turned to the country’s secondary cities following closure of the Bucharest concession.

Outside Bucharest, where Apa Nova Bucuresti (Vivendi) has a 25-year concession, Romanian cities have had something of a mixed experience with public-private partnerships. However, the market is still one of the most promising in central and eastern Europe and there is considerable local and central political will to involve the private sector.

Ploiesti, a city to the north of Bucharest, awarded a 15-year concession to Vivendi in 2000. This was a direct deal between the city and Vivendi. However, a number of other negotiated deals, such as Timisoara, have failed to close.

Timisoara was courted by Ondeo for some time but the deal was shelved when the local council applied for EU ISPA funding. Before the application, Ondeo was the only company involved so there was no need for an open tender. However, the city was told by Brussels in no uncertain terms that if it wanted ISPA grant money it would have to launch a transparent bidding process if it was to involve the private sector.

Ondeo was also the winner of a BOT contract for bulk water provision in Bucharest which was cancelled when Apa Nova Bucuresti won the concession in 2000. Ondeo’s setbacks in Romania may explain why it failed to attend the meeting in Constanta last month.

In addition to Timisoara, other medium-sized cities which have applied for grants under ISPA and are considering some form of private sector participation (PSP) include Cluj and Brasov.

Norman Willis of the UK’s Hyder Consulting, which has been following the Romanian market, told GWI that there are clear projects for looking at PSP options in half-a-dozen cities with around 300,000 inhabitants.

“It may be a long time before a deal is done but at least the will seems to be there”, Willis said.