RESOLUTION OF AUDIT CHAMBER OF THE REPUBLIC OF MOLDOVA

of July 28, 2016 No. 32

About the Report of audit of system effectiveness of public and private partnership

Audit Chamber in the presence of Mr. Valentin Guznak, the deputy secretary general of the Government; Mr. Oleg Krechun, deputy minister of health care; Mr. Andrian Delinski, deputy minister of the environment; Mr. Dumitra Parfentyev, CEO of the National company of medical insurance; Mrs. Dorina Chebotaryan, deputy director of the Agency of public property; Mr. Anatoly Dimitriu, chairman of the area Yaloven; Mrs. Diana Manoli, the chairman of the area Telenesht, and also other responsible persons, being guided by Art. 2 (1) and Art. 4 (1) a) the Law on Audit Chamber No. 261-XVI of 5:12. 2008, considered the Report of audit of system effectiveness of public and private partnership.

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(1) the Law on Audit Chamber No. 261-XVI of 5.12.2008 (further – the Law No. 261-XVI of 5:12. 2008).

Having considered results of audit and having heard the submitted Report and explanations of the officials who are present at public meeting, the Audit Chamber established:

increase in management efficiency in the sphere of public and private partnership in the Republic of Moldova is crucial element for development of national economy.

Improvement of quality of public management is one of main objectives of public bodies of the state which are on service of citizens both on central, and on local levels. Thus, public and private partnership represents adequate formula of participation and attraction of private equity in projects implementation, being of interest to community which purpose consists, including, in increase in effective management of public property. At the same time it serves as support and possibility of participation, in particular local public authorities, in the problem resolution, concerning rehabilitation or constructions of infrastructure, the improvement of service quality rendered to the population, etc.

This mission of audit was oriented to need of investment attraction for the purpose of provision to the population of better medical services, and also upgrade of infrastructure and the sector of sanitation which are areas with important role in maintenance and ensuring development of the prospering society.

Thus, as of 1.01.2016 were reflected in the reporting and are included in the Register of public property of 69 agreements of public and private partnership from which 7 were concluded by the central public bodies, and 62 – local public authorities. Realization term in case of 49 agreements was established within 49 years, and for 20 agreements it varies from 12 to 25 years.

From the total amount of the property which is in management of public bodies (88,2 of one billion lei) to public and private partnership the property was transferred to one billion lei to the amount 2,, their specific weight made % 2,4. Those which concern improvement (40 agreements), health care (13 agreements) and infrastructures (6 agreements) were the most demanded areas in which public bodies initiated public and private partnership.

Ascertainings of audit note number of positive actions which were registered, in particular, by adjustment of the regulatory base, actions for support of initiation of public and private partnership, implementation of investments by private partners within the pro-audited agreements (about 1,1 of one billion lei). At the same time also some problems, shortcomings of effective management of system of public and private partnership which cause inefficiency of execution of the relevant agreements with respect thereto the complex of actions which realization will allow to achieve progress in this plan is necessary were noted. So,

- some signed agreements of public and private partnership do not conform to the established requirements and criteria in this area, do not contain condition about distribution of risks that caused in certain cases reducing obligations of partners and, respectively, decrease in level of goal achievement and the expected benefits;

- the legislative arrangements concerning procedure for establishment of contractual terms (up to 49 years), do not contain concept/regulations on payback period of investments and obligation of their reasons;

- The national council on public and private partnership did not provide assessment of policy of the state for determination of priorities in the field and obvious shortcomings therefore decisions for their timely correction were not revealed;

- the matrix of distribution of risks developed by the Ministry of Economics is not applied by the state partners, and this situation reduces responsibility of the state and private partners, increasing risk of emergence of problem situations and their influence on the expected results, and also by stability of agreements;

- actions for identification of the existing obstacles and shortcomings within execution of agreements, on their monitoring and assessment, implemented by the Agency of public property, are inefficient and do not promote determination of possible decisions for their elimination;

- in case of initiation and execution of agreements of public and private partnership local public authorities do not respect in accuracy legislative arrangements of their creation, according to the established criteria that caused failure to provide of safe execution of agreements (in number of 30 units).

Ascertainings of audit demonstrate that the system of public and private partnership is submitted negative influence of inefficient actions of the management participating in realization of its purposes; insufficiency of actions for monitoring, from the state partners, implementation process of stages of the initiated agreements; not appointments of persons responsible for implementation of the agreement; lack of specific normative provisions on accounting and the reporting of execution of contractual conditions by the state partners and private partners, etc.

These circumstances caused not achievement fully of the established purposes under agreements, including not ownership of the state partners of the relevant information on the achieved and registered results, failure to carry out of contractual commitments by the parties, not overcoming the arising obstacles and problems, etc.

Proceeding from the above, based on Art. 7 (1) a), Art. 15 (2) and (4), Art. 16 c) and Art. 34 (3) the Law No. 261-XVI of 5:12. The Audit Chamber decides 2008,:

1. Approve the Report of audit of system effectiveness of public and private partnership according to appendix.

2. To direct this Resolution and the Report of audit:

2.1. And to demand to provide to the Ministry of Economics for informing implementation of recommendations from the Report of audit, with its consideration at meeting of National council on public and private partnership;

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