The disorganized state of regulations governing the public-private partnership (the "PPP") model in Turkey and certain shortcomings of the main law regulating the BOT projects, Law No. 3996 on Realization of Certain Investments and Services under the Build-Operate-Transfer Model (the "BOT Law"), has given rise to the need for addressing models of such cooperation between public and private sectors by means of a framework law. Thus, the Prime Ministry's State Planning Organization (the "SPO") has prepared a Draft Law on Realization of Certain Investments and Services through Public-Private Party Cooperation Models (the "Draft PPP Law") and submitted it to the relevant public entities for their review. Following the comments rendered by the relevant public entities, the SPO is now ready to submit the Draft PPP Law to the Parliament for its review and enactment.
The enactment of the Draft PPP Law will revoke the applicability of the previous laws in this area, which are the BOT Law, Law No. 3096 on Authorization of Entities other than the Turkish Electricity Administration for the Generation, Transmission and Distribution of Electricity ("Law No. 3096"), Law No. 3465 on the Construction, Maintenance and Operation of the Access-Restricted Highways by Entities Other than the General Directorate of Highways ("Law No. 3465"), Law No. 4283 on Construction and Operation of Electrical Energy Generation Facilities under the Build-Operate Model and Regulation of Energy Sales ("Law No. 4283"), Law No. 5396 on Supplementing One Additional Article to the Basic Law on Health Services and Article 33 of the Law No. 5335 on Amendments to be made to Certain Laws and Decrees With the Force of Law. Besides, the Draft PPP Law deletes the term "transfer of operation rights" stated under Article 18(1)(a)(c), Article 2(1)(h), Article 7, Article 3(2)(c) and 3(2)(d) of Law No. 4046 on Privatization Implementations.
In its official Statement of Reasoning, the Draft PPP Law reiterates the European Commission's understanding, attributing four fundamental roles to the PPPs: (i) providing additional capital; (ii) developing alternative management and application skills; (iii) providing superior value to consumers and society; and (iv) determining needs accurately and using resources efficiently. The Draft PPP Law will, if enacted in its present form, introduce various innovative concepts and regulations, such as defining the PPP concept, creating uniformity in PPP legislation, determining the PPP models, increasing the number of sectors subject to the PPP model, defining objective criteria governing the PPP process, establishing a central unit responsible for PPP projects, regulating the "risk" concept and guarantees in PPP projects. Among these, the key innovation of the Draft PPP Law is the recognition of "risk" and the "efficient risk sharing" concepts, which are being regulated so clearly for the first time.
The BOT Law, which is expected to be replaced with the Draft PPP Law, has undergone a number of cancellations and amendments since its enactment on 8 June 1994. When first enacted, Article 5 of the BOT Law held that BOT projects would be subject to private law provisions and would not be deemed concession contracts. However, such article was cancelled by a Constitutional Court Decision, in 19951; thus, such projects became subject to administrative law provisions. Following this Constitutional Court decision, a new provision was added to the Constitution in order to legalize the realization of public services by private parties through private law contracts. Ultimately, Article 5 of the BOT Law was redrafted in order to regulate the BOT contracts under private law provisions. Similarly, pursuant to the Draft PPP Law, projects in all PPP models shall be subject to private law provisions.
The ultimate purpose of the Draft PPP Law, which will be the exclusive law applied to the PPP projects, is to unify and standardize the existing regulations with regard to the PPP projects. Thus, upon enactment of the Draft PPP Law, it is hoped that there will be an end to confusion about which regulation applies to which project and which government entity will coordinate the implementation and success of the PPP model.
Footnote
1. The Constitutional Court decision dated 28 June 1995, and numbered 1995/23K.
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