Is a feasibility study mandatory for all PPP projects in Georgia?

Yes, according to the Georgian Law on Public-Private Partnerships, a comprehensive technical, economic, and financial feasibility study is mandatory for both state-initiated tenders and unsolicited proposals brought by private investors to evaluate the project's viability and state obligations.

What role does the Value for Money (VfM) assessment play?

The VfM assessment is a core component of the study that mathematically proves whether implementing the project via a PPP offers better value (cost efficiency and risk transfer) to the state compared to traditional public sector procurement and financing.

How long does a PPP feasibility study typically take?

The duration varies significantly based on the scale and complexity of the infrastructure or energy project. Typically, a full feasibility study involving technical design, financial modeling, and legal risk assessment takes anywhere from 3 to 9 months to complete.

Do I need a local Georgian consultant for this study?

While international experts often lead technical aspects, having local Georgian consultants—particularly financial and legal specialists—is highly recommended. They ensure that the financial models comply with Georgian tax codes and that the legal structuring aligns with local PPP regulations and civil law.

PPP Feasibility Study in Georgia | Legal.ge

Introduction: What is a Public-Private Partnership (PPP) Feasibility Study?

A Public-Private Partnership (PPP) is an innovative and highly effective mechanism for collaboration between the state and the private sector, aimed at implementing large-scale infrastructure, energy, and public service projects. Against the backdrop of Georgia's economic growth and infrastructural development, the PPP model is becoming increasingly relevant. It allows the government to attract private capital, efficiency, and expertise for projects that would otherwise place an unbearable burden on the state budget. However, before such a significant, long-term agreement is signed, a comprehensive analysis of the proposed project is absolutely essential. This is exactly where the Public-Private Partnership (PPP) Feasibility Study comes into play, serving as the foundational document for the entire endeavor. This extensive study evaluates the project's viability, commercial profitability, technical feasibility, and socio-economic benefits. Its primary goal is to determine whether the project is financially attractive to a private investor while simultaneously ensuring that public interests are fully protected and budgetary resources are spent optimally. Without a highly qualified technical and economic feasibility study, it is virtually impossible to secure government approval or attract international lenders, as this document acts as the definitive roadmap for the successful implementation of the project.

What This Service Covers in Detail

A PPP Feasibility Study is a multidisciplinary and highly complex process that integrates several critical components. Professional advisory services in this field comprehensively cover the following stages and sub-services:

Market and Demand Analysis: Assessing macroeconomic trends, purchasing power, the target audience, and forecasting the future demand for the services offered by the project (such as electricity generation, toll road usage, or port services) over the entire lifecycle of the concession.
Technical Feasibility Assessment: Evaluating engineering solutions, geological, topographical, and seismic conditions of the site. It involves selecting appropriate technologies, developing preliminary project designs, and establishing realistic construction schedules and milestones.
Financial and Economic Modeling: Creating robust spreadsheet models to calculate Capital Expenditures (CAPEX) and Operating Expenditures (OPEX). This includes revenue forecasting, calculating the Internal Rate of Return (IRR), Net Present Value (NPV), and Debt Service Coverage Ratio (DSCR) to prove bankability.
Value for Money (VfM) Assessment: This is a specific and mandatory component of PPP studies. It compares the cost of implementing the project through traditional public procurement against the PPP model, mathematically proving that private sector involvement provides better financial and qualitative value for the state.
Risk Matrix Development and Allocation: Identifying all potential risks—including construction, operational, financial, political, legal, and force majeure risks—and optimally allocating them between the public authority and the private partner based on who is best equipped to manage them.
Environmental and Social Impact Assessment (ESIA): Evaluating the project's impact on the natural environment and local communities, planning mitigation measures, and ensuring strict compliance with both Georgian environmental laws and the standards of International Financial Institutions (IFIs).

Common Real-World Scenarios in Georgia

The application of the PPP model is rapidly expanding in the Georgian reality. Let us explore several typical situations where a comprehensive feasibility study is critically necessary:

The first scenario involves renewable energy projects. An investor plans to build a large-scale hydropower plant (HPP), wind, or solar power facility and wishes to sign a Power Purchase Agreement (PPA) with the state. The government mandates a detailed feasibility study before granting any guarantees. The second scenario relates to transport infrastructure. The government plans to develop a new deep-water seaport, airport, or a high-speed toll highway and announces a tender to find a private operator under a concession agreement. The third scenario is municipal services and waste management. A local municipality wants to build a modern waste processing and recycling plant in partnership with a private company, requiring a study to determine tariffs, subsidies, and profitability. The fourth scenario involves healthcare and educational facilities. The construction of a new multi-profile hospital or a university campus by a private investor, where the state guarantees the procurement of certain services over decades. The fifth scenario is Unsolicited Proposals, where a private entity proactively approaches the government with a unique project idea and is legally required to prepare and submit a full technical and economic justification at its own expense.

Georgian Legal Framework and Regulations

In Georgia, the sphere of public-private partnerships is strictly and meticulously regulated by relevant legislation to ensure transparency, competitiveness, and the protection of state resources. The primary regulatory document is the Law on Public-Private Partnerships, which establishes the general rules and procedures for the preparation, evaluation, approval, and implementation of PPP projects. This law mandates the Value for Money (VfM) assessment and dictates the principles of risk allocation. Furthermore, contractual relations between the parties are subject to the norms of the Civil Code of Georgia, particularly concerning long-term concessions, property rights, and the law of obligations. When studying the ecological aspects of the project, the feasibility study must strictly incorporate the requirements of the Environmental Assessment Code to ensure that all necessary permits and ecological expertise conclusions are obtained. It is also of paramount importance to apply the Tax Code of Georgia during financial modeling to accurately determine the tax burden of the Special Purpose Vehicle (SPV), VAT refund mechanisms, and potential tax exemptions in free industrial zones. The entire PPP process and project evaluations are overseen by the LEPL Public-Private Partnership Agency (PPP Agency) and the Ministry of Finance of Georgia.

Step-by-Step Process: Working with a Specialist

Preparing a PPP feasibility study is a lengthy, multi-stage process that requires close collaboration between the client and a multidisciplinary team of experts. In the first stage, the initial project idea is identified (Screening), existing data is collected, and the primary objectives are clearly formulated. In the second stage, technical experts and engineering teams are engaged; they study the site, prepare preliminary designs, and estimate capital costs. Concurrently, in the third stage, financial analysts build a detailed financial model, calculate the project's profitability, conduct the Value for Money (VfM) analysis, and determine the optimal financial and capital structure. The fourth stage is dedicated to legal experts who create the risk allocation matrix and assess the project's compliance with Georgian legislation. In the fifth stage, a unified, comprehensive feasibility study report is drafted, which is presented to investors and lenders. Finally, in the sixth stage, the official documentation is submitted to the Ministry of Finance and the PPP Agency of Georgia for review and approval, during which the consultants provide active support and address any government feedback.

Why Use Legal.ge to Find a Specialist

Conducting a PPP Feasibility Study requires the highest level of expertise across finance, law, economics, and engineering. A single miscalculation can lead to millions in losses or the outright rejection of the project by the state authorities. Therefore, selecting an experienced team of professionals is absolutely crucial. Legal.ge provides you with a unique opportunity to find and connect with verified specialists, consultants, and multidisciplinary advisory firms in one place. These experts possess direct, hands-on experience working with Georgia's PPP legislative framework and government agencies. On the platform, you can review their credentials, past project experience, and ratings, allowing you to choose a team that will ensure your investment project is prepared according to the highest international standards. Find your specialist on Legal.ge and secure a successful, legally sound start for your infrastructure project.

Introduction: What is a Public-Private Partnership (PPP) Feasibility Study?

What This Service Covers in Detail

Market and Demand Analysis: Assessing macroeconomic trends, purchasing power, the target audience, and forecasting the future demand for the services offered by the project (such as electricity generation, toll road usage, or port services) over the entire lifecycle of the concession.
Technical Feasibility Assessment: Evaluating engineering solutions, geological, topographical, and seismic conditions of the site. It involves selecting appropriate technologies, developing preliminary project designs, and establishing realistic construction schedules and milestones.
Financial and Economic Modeling: Creating robust spreadsheet models to calculate Capital Expenditures (CAPEX) and Operating Expenditures (OPEX). This includes revenue forecasting, calculating the Internal Rate of Return (IRR), Net Present Value (NPV), and Debt Service Coverage Ratio (DSCR) to prove bankability.
Value for Money (VfM) Assessment: This is a specific and mandatory component of PPP studies. It compares the cost of implementing the project through traditional public procurement against the PPP model, mathematically proving that private sector involvement provides better financial and qualitative value for the state.
Risk Matrix Development and Allocation: Identifying all potential risks—including construction, operational, financial, political, legal, and force majeure risks—and optimally allocating them between the public authority and the private partner based on who is best equipped to manage them.
Environmental and Social Impact Assessment (ESIA): Evaluating the project's impact on the natural environment and local communities, planning mitigation measures, and ensuring strict compliance with both Georgian environmental laws and the standards of International Financial Institutions (IFIs).

Common Real-World Scenarios in Georgia

The application of the PPP model is rapidly expanding in the Georgian reality. Let us explore several typical situations where a comprehensive feasibility study is critically necessary: