CEE of tranquility
Unlike the UK – which has been knocked sideways by project cancellations and reviews over the past year – it’s a lot harder to draw trends across a region as vast as CEE.
Anecdotal evidence points to a recent pick up in asset privatisation: Croatia’s Zagreb airport is one example. But, Russia aside, there has been a notable absence of large deals for investors to get their teeth into in the past 12 months.
Hungary’s love affair with the procurement model came to an abrupt halt earlier this year when its government suspended all projects and even Poland has "gone quiet recently, despite a reasonably good track record", says a source in the region.
He describes current activity as "sporadic" but notes a "marginal increase in activity" in the region.
"You can make a link to the [financial] crisis, I don't think you could prove it, and around public sector balance sheets being worse than they were, but there are relatively few basket cases in CEE."
With Poland’s public sector borrowing levels nearing 60% many would argue there is a stronger case here for PPPs, but with the procurement model being talked about by the country's authorities since 2009 government balance sheets might be a moot point.
So what's actually driving dealflow in the region and is Poland any different from other countries that have flirted with the model?
Tomasz Korczynski, lawyer at Eversheds in Poland, believes we will see an increase in Polish activity this year – not just in the amount of deals but in their size and scope.
Although the Polish government "soured the milk" last year by stating, wrongly, that deals will weigh on the public debt and scaring investors, local authorities are slowly starting to bring different types of deals to market.
"In 2011 the projects are no longer just aquaparks or gyms but hospitals, roads, big waste schemes, and airports and railroad stations are planned."
This month, eleven bidders lined up for a waste PPP in Poznan. The cities of Koszalin, Lodz and Silesia are also preparing similar deals, adds Korczynski.
The A1 motorway scheme, part of Trans-European North-South Corridor which runs from Gdansk down to the Polish border, was approved in February and there is a possibility this may be procured as a PPP. There is also talk of a large highway PPP being prepared in Estonia for later this year.
Fifty-two projects were announced in Poland last year, up about a third on the previous year. But if Korczynski is right it’s the type of deals rather than the amount that might make for the most interesting trend over the next 12 months.