What is PPP?

Definition and features of PPP in Lithuania

PPP definition in Lithuania

PPP in Lithuania is defined as a long-term contract between a public or municipal authority, or a legal person controlled by it, and a private entity, under which the latter provides and finances public services and/or performs an economic activity by investing in assets and assuming the risks and generating income of the activity.

PPP can be implemented by several public entities, preceded by a cooperation agreement. Such a PPP project is called a consolidated PPP project.

The 5 main features of PPP projects implemented in Lithuania are as follows:

  1. Planned Long-term cooperation. The need for the service is long-term and therefore a long-term cooperation with a private entity is planned.
  2. Complexity of services. The private entity will be responsible for the design, execution of the construction works, maintenance of the created or upgraded assets, and other services. If the private entity is only to create the asset, but the public entity itself or a legal entity controlled by it is to carry out the supervision, the contract will be treated as a simple construction contract rather than a PPP.
  3. Investing in assets. The only exception is in the case of service concessions, where the improvement and maintenance of existing assets are transferred to a private entity.
  4. Transferring all or most of the risks to a private entity (construction, infrastructure adequacy, quality of service, demand, financing).
  5. The project requires state/municipal assets and/or land parcel.
Last updated: 21 08 2023