Federal Law No. 181-FZ of July 2, 2013 "On amendments to Articles 78 and 78.1 of the Budget Code of the Russian Federation pertaining to provided grants".
The procedure under which grants are provided to individuals and entities has been changed.
Grants are provided to individual entrepreneurs, individuals and entities (excluding state unitary enterprises (SUEs) and municipal unitary enterprises (MUEs)) (hereinafter – Parties) under Article 78 of Russian Budget Code (BC). Grants can be provided for the purposes of (а) income loss compensation and (or) (b) compensation of goods/works/services production (sale) related expenses.
Grants can be provided to (1) all of the Parties, (2) certain classes of the Parties, in particular, to concessionaires, and (3) to non-profit organisations. Grants can be also qualified as "general" grants and grants qualified by their provision procedure and terms.
The terms under which grants from various budget levels are provided have been amended. Thus, Article 78 of Russian BC has been supplemented with a provision, under which Russian Government, the supreme executive body of a constituent territory of Russia and local administrations may authorize federal state authorities, the constituent territory’s state authorities or local administration authorities, respectively, to adopt regulations related to circumstances and procedures for provision of grants.
In the context of PPP legislation development, amendments to Article 78 of Russian BC, regulating the procedure provision of grants to concessionaires under concession agreements, are the most significant ones. Before the amendments, parties to a concession agreement had difficulties that could not be regulated by laws, one of them was that it was compulsory to ensure the consistency of grant provision time limits with the time limits specified in the relevant budget. As a rule, the term of concession agreements is between 15 and 20 years, limits on budgetary obligations are in force during 3 years. Under the amendments, grants can be provided subject to time limits and conditions provided in concession agreements. Among other things, this may imply that it will be possible to execute a grant provision agreement for a term exceeding the term of limits on budgetary obligations.
Circumstances under which concession agreements may be executed for a term exceeding the term of limits on budgetary obligations, shall be provided by Resolutions of the Government, the supreme executive body of a constituent territory of Russia or local administration, respectively. Such Resolutions shall be passed in a manner provided by such authorities.
Similar rules apply to state and municipal procurement. Article 72 of Russian BC generally provides that state and municipal contracts shall be executed for a term not exceeding the term of limits on budgetary obligations. Other terms may be provided by resolutions on budgetary investments in state (municipal) property or by regulations or other Resolutions of Russian Government, the supreme executive body of a constituent territory of Russia or local administration.
To monitor the way grants are used by recipient Parties the legislation provides an obligation to include a consent from grant recipient into the grant provision agreement, under which compliance with the grant provision terms, conditions and procedure may be monitored. The previous version contained an exception applicable to SUEs, MUEs, business partnerships and state-owned entities. The law has supplemented the list of parties to which such exclusion may be applied, with partnership-owned businesses and state-owned entities. Amendments related to monitoring of grants use apply to certain cases in which grants are provided, including Parties acting as concessionaires.