Concession legislation is developing on the principle of “one foot forward – two feet back!”

4 june 2014

On 3 June, 2014 the expert of the Analytical Center Dmitry Khomchenko participated in a scientific and practical conference on “Current issues of development of water utilities sector as an economic entity in the modern legal field”, organized by OJSC “Mosvodocanal” under the support of the Analytical Center for the Government of the Russian Federation.

This event was held within the framework of the Annual International Water Forum “Ecvatec-2014” which is also an exhibition. This is the biggest forum in Russia and CIS dedicated to the full range of issues in water utilities sector, such as: water supply and sanitation, water technologies, restoration and rational use of water resources, water ecology in industry and public utilities sector.

Participants discussed the prospects for the development of companies within the water supply and sanitation sector (WSS). Presenting his report on “Concession agreements in WSS sector: legal requirements, theory and practice”, Mr. Khomchenko pointed out that changes and amendments made last year to the Federal Law of July 21, 2005 № 115-FZ on “Concession Agreements” did not simplify the practical conclusion of concession agreements in the utilities sector and WSU, but on the contrary, made it more complicated.

At the same time, according to the requirements of the Federal Law of December 7, 2011 № 416-FZ “On Water Supply and Sanitation” in the near future, concessions will be the main and nearly the only form in which ownership and use of property in the WSS, could be transferred to private operators that provide water supply and sanitation services to residential and commercial customers.

As a solution to this issue, the expert suggested to finalize the legal framework for concession agreements. New provisions must be included to expand the subject of concession agreement. They must include not only and not necessarily obligations of the concessionaire, regarding construction and reconstruction of facilities and infrastructure for utilities, but also obligations to ensure their exploitation and the delivery of water supply and sanitation sector services.