On 1 January 2007 Bulgaria joined the European Union which presented the country with new funding opportunities with respect to the utilization of the EU Structural and Cohesion funds. This aspect of the Bulgarian membership in the EU is particularly significant in terms of the  successful implementation of large-scale infrastructural projects where the public sector not always has the necessary financial resources. With a view to this new opportunity important legal amendments were introduced in the Bulgarian legislation some of which specifically aimed at creating a legal environment that would provide for the involvement of the private sector in such projects. The practical dimension of these legislative changes is the implementation of the so called Public-private partnerships ("PPP") as an effective tool for the public and private sector to work together. The good international practices show that the PPP is amongst the most successful instruments for investments in infrastructure and delivery of public services.

The main guiding principle with respect to PPP projects is that EU funds are managed by the public sector and cannot be awarded directly to private investors. The relevant public authorities delegate the realization of a project to a private investor who undertakes to secure the required capital for the project. Upon completion, the public authorities provide refinancing of the invested private funds, where in some cases the private investor might get reimbursed for as much as 100% of the invested funds. 

Forms of PPP

There are two main forms of PPP - contractual and institutionalized PPP.

Contractual PPP is a long-term contractual relationship between public authorities and private sector companies, which aim to ensure the funding, construction, renovation, management or maintenance of an infrastructure or the provision of a service.

Institutionalized PPP is a form involving cooperation between the public and the private sector within a distinct entity, which would develop the project or deliver the service.

Relevant PPP legislation

In 2006 a new Bulgarian Concession Act (the “CA”) (promulgated in the State Gazette, issue 36/2006 as amended) was adopted in compliance with the EU law and implementing the requirements of Procurement Directives 2004/18/EC and 2004/17/EC ("Procurement directives").

The principles of the two Procurement directives were also transposed in the significant amendments to the Public Procurement Act (the “PPA”) (promulgated in the State Gazette, issue 28/2004 as amended) introduced in 2006.

Although the Procurement directives are already part of the Bulgarian legislation, when forming PPPs the public authorities should consider the principles stipulated in the Treaty establishing the European Community ("EC Treaty"), namely: