Romania: PPP / infrastructure update
The Romanian government initiated its first public tender for a major infrastructure project under new PPP legislation: the Ploiesti-Brasov motorway construction initiative.
If executed successfully, this project will demonstrate the effectiveness of Romania’s updated PPP legal framework and conclude previous unsuccessful attempts to build this motorway through concession or PPP arrangements.
Prospective investors can submit initial bids by December 17 according to tender materials released by the National Commission for Strategy and Prognosis for the motorway PPP contract. Given project complexity and Romania’s limited PPP experience, key considerations for investors and lenders warrant examination.
Critical Contract Definition
“A vital step concerns the clear definition of the object of the contract” to establish proper scope and legal nature while reducing uncertainty around contractual relationships.
Counterparty Considerations
Given Romania’s limited experience managing sophisticated projects, investor concerns diminish when the contracting party includes central-level decision-makers or authorities with relevant policymaking authority.
Financing Aspects
Contract complexity and extended project duration make financing paramount. Clear perspectives on required financial resources and investment recovery mechanisms facilitate third-party lender negotiations.
Step-In Rights Framework
New legislation EGO no. 39/2018 explicitly addresses step-in rights, permitting contracting authorities to establish procedures allowing lenders to intervene before project termination—aligning with internationally recognized practices.
Tax Considerations
Tax matters require careful analysis, particularly given two available PPP structures: contractual and institutional arrangements. Tax implications span multiple complex areas affecting party profitability and liquidity. Additionally, foreign personnel dedications necessitate immigration and taxation evaluations.