Agnieszka Le Nart: What is your view on the issue of public-private partnerships?
Jerzy Miller: The city has an obligation to provide its residents with public services, such as health care, public transportation and schools. Until now, the prevailing belief was that public funds should be used to subsidize and manage public services. The essence of PPP is to maximize the efficiency of the provision of public services by conferring the responsiblity of construction, maintenance and administration onto a capable private investor.
And with respect to Warsaw?
It's a common misconception that PPP involves shortages in the city budget but Warsaw is a city that is considerably well-off. In this case, it has more to do with a shortage of technical expertise with regard to certain projects that could be managed better by an experienced private investor. In the commercial market, it is a common assumption that private investments are more viable. Why shouldn't this be the case with regard to the public sector? Ten years ago, people had to queue for years in order to get a phone line and telephone installed in their homes by the public service. In today's privatized market, there is a wide variety of fixed-line and mobile services available. The same mechanism can work within a number of public programs.
What are the obstacles that deter the implementation of public-private partnerships in Poland?
The city is currently undergoing a period of stagnation in terms of development because such partnerships have gained a reputation for being "corrupt." The trouble is that, in Poland, there are too many people who are afraid of taking the blame if something goes wrong within a deal, while no penalty exist for inaction. This leads to a situation where too few initiatives are undertaken because of this irrational approach to new ideas. It must be aknowledged that turning away from the opportunities that are provided by private investors hampers economic and social development - generally lowering the standard of living. The implementation of PPP requires a shift in the mentality of public servants.
How does the current legislation on PPP affect cooperation between the public sector and private investors?
A number of people complain that the legislation is flawed and offer justifiable criticism. However, the truth is that it is not necessary to have a separate law in order to implement these kinds of partnerships. Most of the countries in Europe manage their PPP projects without any specialized legislation. In the majority of cases, stipulations contained within basic civil codes are sufficient. Delaying PPP because of flawed legislation, which isn't even a requisite for PPP activity, is irresponsible.
How accurate is the assumption that Warsaw is not involved in any PPP projects?
It is a misconception that there have been no public-private investments to date. For example, 20 percent of the buses that provide transportation in the city are privately owned and operated. The city imposes the route, schedule and ticket price, and the difference is virtually unrecognizable for the end user, who is primarily concerned with whether the bus runs on time in a clean and safe environment. With regard to municipal institutions, a number of them already cooperate with private firms for services like catering and cleaning services. However, this is not enough and we are approaching the matter from many different angles. The city wants to take advantage of the expertise private firms have in financial management and program administration in order to realize our plans for development.
Is there any particular example from abroad that could be easily implemented in Poland?
There is no such thing as one particular model that could be copied directly and would be sure to work for Warsaw. Diverse cultures, laws and financial systems require tailored approaches. However, as we prepare to enter into negotiations with private investors, we want to see various examples of successful projects in other countries. The truth is that we don't have our own model for public-private partnerships and it is an arduous process to come up with one. Currently, we are preparing a contractual template which will serve as a base for contracts with private investors. Nonetheless, agreements will have to be worked out on an individual basis as there are many minute issues and details particular to each project.
How do such partnerships work?
For example, with regard to road works, the contractor must guarantee that the road will not only be built but will be in prime working condition five to 10 years down the line. Within these partnerships, the private contractor is not only responsible for the construction of the road but its maintenance as well. These are conditions that must be stipulated in the contract and every contingency must be considered with painstaking precision, including the dissolution or sale of the private end of such agreements. As we do not possess a Polish model for such contracts, we are looking to partner with foreign governments to help us prepare a suitable program that will be satisfactory for the municipal government, private investors and, above all, the city's residents.
What sectors are most likely to see PPP partnerships?
One sector that we are very interested in at the moment is healthcare. We are interested in a project that would guarantee a high-quality standard of healthcare for all citizens who are covered under the national healthcare plan (NFZ). It is not the city's responsiblity to own and operate a hospital, however, it is the city's responsibility to provide quality healthcare for the people of Warsaw. It is not necessary for the city to build a hospital itself. Instead, we are looking towards the UK model where privately owned and operated hospitals provide service for patients under the national healthcare program based on a five-year contract. We are not buying a hospital, but rather medical services - a complete package.
Are there any healthcare projects in the pipeline for Warsaw?
After a series of meetings with potential investors, we feel optimistic that within a few years there will be a number of such hospitals functioning in Warsaw. We have tentatively entered into negotiations with a private partner [Medicover] which is already developing a hospital in Warsaw. This project may well fit into our needs and we are considering how it could potentially be [in part] adapted to fit the city's needs. It will take time to fully analyze how this partnership can address those needs appropriately. The fact that the site is already in development simplifies this process to some degree.
Based on the success of this project, what other social programs might see PPP in the near future?
We are in the midst of preparing our annual multi-year investment plan. We are aware that the city is not independently capable of providing adequate solutions for every need and we will establish a list of sectors that will benefit from public-private partnerships in the future. These include community housing, schools or public-sports facilities, and the list is sure to grow. Entering into such partnerships under agreements that are closely regulated by the city will assure stable and conscientious development, effectively providing a high standard of social services for residents across a multitude of programs. In short, it will make Warsaw a better place to live.
