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Albania to limit use of unsolicited proposals, scrap bonuses for PPPs

Albania is planning to scrap the use of controversial unsolicited proposals for public private partnerships in the road sector but continue allowing it for a series of other sectors it considers strategic. Legal changes already approved by the government and submitted to Parliament for further review envisage the unsolicited proposal procedure will be scrapped for national road projects of key importance starting July 2019 and remain in use only for PPPs and concessions for the provision of works and services in ports and airports, electricity generation and distribution as well as natural gas distribution, the latter expected to receive a major boost due to expected 2020 Caspian gas flows from the under construction TAP project.The proposed legal changes only partially meet recommendations by international financial institutions such as the World Bank and the International Monetary Fund that had demanded the full removal of such procedure, often criticized for leading to pre-determined winners in tenders with little competition due to bonuses awarded to companies initiating and conducting preliminary studies on the projects they propose in return for government financial support or operating them for a period of up to 35 years. With the use of PPPs to provide public services having considerably increased, the IMF and World Bank have often recommended in the past couple of years eliminating the practice of unsolicited proposals as a procedure that places bidders at unequal position and leads to controversial PPPs with no thorough cost-benefit analysis that could create new arrears undermining the public debt reduction agenda. The winners of several major PPP road projects in the past couple of years have emerged through unsolicited proposals placing them at an advantage in tenders that later proved unattractive for potential competitors. Public procurement has traditionally been one of the key concerns for local and foreign investors complaining of corruption and tailor-made criteria favoring specific companies with alleged links to ruling majorities.

Source: Tirana Times

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