Presentation held by Ms. Rozalija Vasilevska as a part of the Public Private Partnership Session at the 8th SEEITA and 7th MASIT Open Days Conference, 14th-15th October, 2010

1. Public Private Partnership
Alternative Municipal Funding for Capital
Projects
Rozalija Karchicka – Vasilevska, M.Sc.
Local Economic Development Team Leader
USAID Macedonia Local Government Activity (MLGA)

2. Issues addressed in the
presentation
Real need of PPP projects in Macedonia;
USAID Donor assistance in this area;
Thoughts for foods

3. Real need of PPP projects in
Macedonia*
- migration rural -> urban area -
 1900
 10% from the total population lived in urban area
 2007
 50% from the total population lived in urban area
 2050
 75% from the total population lived in urban area
*Excerpt from CEA document on PPP – Discussion for Intensifying PPP on local level

4. Real need of PPP projects
- thesis -
• Municipal budgets are limited and usually with low or no development
component ( capital improvements);
• Municipalities have needs and pressure for quality public services;
• Public investments in infrastructure are under leveled in accordance of EU
requirements for pre-accession standards
• In general, local infrastructure is old and it is necessary huge effort for
modernization and its replacement
• Public services on municipal level, need as well, huge investments for
better quality
• Evidently, the financing of the huge part of development, replacement and
renewal of the municipal capital objects NEED TO BE COVERED WITH
FINANCES OUT OF MUNICIPAL BUDGETS, including alternative
financing of capital projects.

5. Real need of PPP projects
- Macedonia-EBRD Transition Indicators (TI) - EBRD Transitional scores
[1]
4,5
4,0
3,5
3,0
2,5
2,0
1,5
1,0
0,5
[1] TI are from 1- 4 where 4 means free market economy
0,0
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Macedonia Bulgaria Czeck R. Estonia Hungary Latvia Lithuania Poland
Romania Slovak R. Slovenia Albania Serbia Croatia

6. 0,00
0,50
1,00
1,50
2,00
2,50
3,00
3,50
4,00
4,50
ALBANIA
BULGARIA
CROATIA
CZECH REPUBLIC
ESTONIA
MACEDONIA
HUNGARY
LATVIA
Railways
LITHUANIA
POLAND
ROMANIA
SERBIA
SLOVAK REPUBLIC
SLOVENIA
ALBANIA
BULGARIA
TI by sectors for 2008
CROATIA
CZECH REPUBLIC
ESTONIA
MACEDONIA
HUNGARY
LATVIA
Electric power
LITHUANIA
POLAND
ROMANIA
SERBIA
Real need of PPP projects
SLOVAK REPUBLIC
SLOVENIA
- Macedonia - EBRD TI railway, el.power-

7. 0,00
0,50
1,00
1,50
2,00
2,50
3,00
3,50
4,00
4,50
ALBANIA
BULGARIA
CROATIA
CZECH REPUBLIC
ESTONIA
MACEDONIA
HUNGARY
Roads
LATVIA
LITHUANIA
POLAND
ROMANIA
SERBIA
SLOVAK REPUBLIC
SLOVENIA
ALBANIA
BULGARIA
TI by sectors for 2008
CROATIA
CZECH REPUBLIC
ESTONIA
MACEDONIA
HUNGARY
LATVIA
LITHUANIA
Water and waste water
POLAND
ROMANIA
Real need of PPP projects
SERBIA
SLOVAK REPUBLIC
SLOVENIA
- Macedonia - EBRD TI roads, water/waste-

8. PPP Context
 One solution for delivery of public services;
 Transferring the risk on the private partner;
 Increased efficiency, quality and
management of service delivery;
 Increased value for invested money (Value
for money – comparator for public sector

9. PPP - Yes or No?
-According to the World Bank in period 1990-2001 on annual basis, PPP projects
are 754 billion dollars-
1. Municipality adopts economic and
development policies;
1. List of municipal project proposals is
developed;
2. Evaluation of municipal projects;
3. Decision for entering PPP with specific
project (recommended are projects related
with municipal own and decentralized
authorities)

10. USAID Donor assistance on PPP
Two projects worked on PPP issue;
 USAID BEA (2006- 2010);
 USAID MLGA (2007- 2011);
 Development of Feasibility studies for PPP in 3
municipalities;
 Analysis/identification of municipal PPP projects in
5 municipalities;
 Institutional and new legislation development
support to MoE;
 Support of local consultants in their certification for
PPP experts;

11. USAID Donor assistance on PPP
1. Feasibility study for PPP in Probistip- green
market and administrative /business center
2. Analysis/identification of municipal PPP projects
in 5 municipalities;
 Gazi Baba – Administrative building and hotel complex;
 Chair – underground parking garage and mun square;
 Novo Selo – Green Market;
 Veles – Reconstruction of Sport hall;
 Vasilevo – Tourism development on lake Turija;
Great interest from municipalities for this project

12. PPP Challenges
 Level of capital improvement costs and
their availability;
 Risk allocation and its management
between public and private partner;
 Value for money in PPP project need to be
logical for transfer from private to public
partner

13. USAID Experience
 PPP projects related with mun. own or decentralized
authorities;
 Complex procurement process for all categories of PPP;
 Municipal resources for entering PPP are still very weak
( land, attractive competencies, buildings etc)
 PPP culture on local level is still too weak (mun. officials
are discouraged to make PPP decisions, no single
municipal PPP project implemented, no institutional
framework for PPP exists etc)
 PPP is considered for infrastructure projects only;
 Municipalities need to establish PPP Municipal Teams
(Lawyer, Civil Engineer, Economist, Architect..) and to
build their capacities;

14. Recommendations
 Legislation need to be streamlined not only for
concessions but for PPP as well;
 Special municipal projects for education and awareness
rising need to be developed for Private Funding
Initiatives,
 Management of PPP project may be another challenge
on this road after critical number of PPP projects are
implemented;
 Municipal financial possibilities are definitely very modest
and there is necessity for additional municipal
investment funds for PPP tender and contract
preparation and funding
 Macroeconomic stability is one good incentive for
Macedonia in order to attract PPP partners;

15. Thoughts for foods
 PPP in ICT and other related services
 Entrepreneurship;
 R&D;
 Business Incubators;
 Technological Parks;
 “Low hand fruits”;
 Model for learning and practice;
 Development and upgrading the municipal staff capacities;
 Institutionalization of PPP function as one of municipal
functions;
 Legislation streamline;
 Creating PPP culture on municipal Level

16. Thank you for your attention!
Q&A?

17. Rozalija Karchicka – Vasilevska, M.Sc.
LED Team Leader & Best Practice Coordinator
USAID Macedonia Local Government Activity (MLGA)
email: rvasilevska@mlga.com.mk ; web. www.mlga.com.mk