PPP stages and process

PPP stage explanation

The 1st stage of every PPP project in Lithuania is project preparation and approval stage. The 3 main steps of this PPP stage are as follows:

The steps of PPP project preparation and approval stage

1 step - PPP preparation

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Preparation of an investment project

Preparation of an investment project requires evaluation of all the possibilities of project implementation, selection of the optimal solution for its implementation, and a full justification of the benefits of the project from the perspective of the users of the public service and/or the public good, the financial and social rationale for the investment objectives, the funds needed for the project, and the sources and due dates of the financing. An integral part of the investment project is the investment project financial calculator, which must include all financial and economic calculations.

The investment project shall be prepared by a public entity that provides public services itself or that administers the provision of the service within its area of management. Private entities have the right to initiate PPP projects and to prepare an investment project when the initiative meets the objectives of the public sector strategic plans. Private entities also have the right to initiate PPP projects for which no investment project has been prepared. In this case, the private entity submits an initiation proposal to the central government institution or local authority by completing the Initiation Proposal Form, available here. NOTE. Language - Lithuanian.

Methodologies and information on the preparation of the investment project can be found here. NOTE. Language - Lithuanian.

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NOTE. If there is no expected investment by a private entity, the investment project shall not be prepared, and only a partnership questionnaire shall be completed.

IMPORTANT! Small local authority projects can be consolidated, which would reduce the cost of preparing investment projects for such projects and shorten the time of preparation for implementing PPP projects. Consolidated PPP projects can be combined by sector, e.g., two or more municipalities can combine planned school modernisation or expansion projects, or by functional area, i.e., combining projects that cover the territories of adjacent municipalities and are relevant for municipal communities.

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Preparation of a partnership questionnaire

Partnership questionnaire is a document to be completed by the public entity in a form approved by the CPMA, containing information on the public entity, the duration, and scope of the PPP project, the possibilities and limitations to outsourcing the creation and operation of assets to a private entity, the provision of additional services, the distribution of risk sharing between the public entity and the private entity, the most appropriate way of organising the selection of the private entity, the public entity's ability to pay for the obligations related to the contract for the entire duration of the PPP contract, etc.

A very important part of the partnership questionnaire is the evaluation of the criteria for applying PPP. Clarifications regarding compliance with PPP criteria affect not only the choice of the PPP type and form but also whether PPP can be applied to a particular project in general. It should be noted that different eligibility criteria are given for government and private entities partnership (VžPP) and concessions.

Together with the partnership questionnaire, a PPP project calculator (Appendix 2 of the PPP Partnership Methodology) and an evaluation table for financial feasibility to implement the PPP project (Appendix 3 of the PPP Partnership Methodology) must be prepared.

Methodology and appendixes related to preparation of PPP Partnership questionnaire can be found here. NOTE. Language - Lithuanian.

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NOTE. Unlike the investment project and investment project financial calculator, which is only prepared if there are expected investments in assets, the partnership questionnaire and the PPP financial calculator shall be prepared in all cases, and the evaluation table of the financial feasibility to implement the PPP project shall be prepared only if payments to a private entity are foreseen. When implementing a consolidated PPP project, the partnership questionnaire shall be completed by one person on behalf of all participating related parties.

2 step - PPP evaluation

The CPMA shall evaluate the submitted documents and provide a conclusion on the socio-economic benefits of the project and the appropriateness of the PPP within 30 days. If the documents submitted are not properly prepared, they shall be returned to the public body for revision within 10 days of receipt of the documents by the CPMA.

It should be noted that when the project is implemented by a municipality or a legal entity controlled by it, in this case the CPMA conclusion shall be submitted not only to the public entity but also to the municipal controller.

Blank conclusion form on the appropriateness of the PPP project and the socio-economic benefits of the partnership can be found here.

3 step - PPP approval

A PPP project shall be approved by the government or municipal council:

• The central government institution submits the CPMA report and the partnership questionnaire to the PPP Commission via the Ministry of Finance. If the PPP Commission does not agree on the appropriateness of a PPP project, the project shall not be implemented.
• The local authority submits the draft decision on the implementation of the PPP project, together with the CPMA's conclusion and the partnership questionnaire, to the municipal council only after receiving the opinion of the municipal controller.

NOTE. Regarding the implementation of large-scale PPP projects, when the state assumes financial obligations of more than 58,000,000 Euros, the Seimas shall make a decision on implementation.

NOTE. Decisions on the implementation of a consolidated PPP project shall be taken by the councils of the participating municipalities after receiving the conclusion of the controller of each municipality participating in the implementation of such a project.