What is PPP?

Agreement types and forms of PPP in Lithuania

PPP agreement types in Lithuania

There are 2 types of PPP agreements in Lithuania - government and private entities partnership (VžPP) and concession. The main difference between the two types is the assignment of demand risk.

In case of government and private entities partnership (VžPP), construction, asset adequacy, and service quality risks shall be transferred to the private entity, while demand risks (e. g. number of pupils in schools, number of staff in administrative buildings, number of prisoners in detention facilities, etc.) shall be retained by the public entity. In these projects, the private entity receives all or most of the income from payments made by the public entity.

In case of concessions, the risks of construction, asset adequacy, quality of service, and all or most of the demand risks (number of visitors in sports arenas, swimming pools, campsites, museums, car parks, conference centres, etc.) shall be transferred to a private entity. The public entity may retain only a small part of the demand risk, e.g. in determining how many hours a day the municipality's schoolchildren will use the swimming pool, or how many events planned by the municipality per year will take place in the sports and concert arena.


PPP forms in Lithuania

In addition, both types of PPP (government and private entities partnership (VžPP) and concessions) can be implemented in 2 forms: contractual or institutional partnerships. The main difference between institutional and contractual partnerships is that in an institutional partnership, the public entity and the private entity create a joint venture (a private limited company) and sign a shareholders' agreement in addition to the PPP contract.

The following key pieces of legislation must be followed when preparing and implementing PPP projects in Lithuania
  1. Law on Investment - defines what PPP is and how government and private entities partnership (VžPP) projects shall be prepared and implemented.
  2. Law on Concessions - determines the procedures for granting concessions.
  3. Law on Public Procurement or other laws regulating public procurement - determine the procedures for selecting a private entity to implement government and private entities partnership (VžPP) projects.
  4. Law on Land - determines the requirements for transferring state/municipal land to a private entity.
  5. PPP Rules, approved by the Government of the Republic of Lithuania by Resolution No. 1480 of 11 November 2009 - determines the process of preparation, approval, and implementation of PPP projects, and the responsibilities of institutions.
  6. CPMA methodologies. Available at: link. Note that this link is to methodologies that are provided in Lithuanian language.
Last updated: 21 08 2023