Public-Private Partnerships Regime
Public-Private Partnership (PPPs) as established in Law 93 of 2019 are “modalities of linking private capital in which experiences, knowledge, equipment, technologies and technical and financial capabilities are incorporated, and risks and resources are distributed, with the objective to create, develop, improve, operate and / or maintain public infrastructure for the provision of public services”.
With this new regime, the strengthening and coordination of investment between the public, private and financial sectors is expected; as well as the revitalization of the economy through the generation of jobs and quality infrastructure.
Two types of PPP projects are envisioned according to the PPP law: self -financed and co-financed. Self-financed are those in which all project costs are recovered with the income received by the PPP contractor in charge of providing the infrastructure or public service, through the collection of tariffs, prices, tolls, or fees charged directly to the end user. In co-financed PPP´s, the private partner will bear no risk for the repayment of the project and the risk will be kept by the State (either through money transfers, guaranties or both).
Contracts will have a maximum term of 30 years (which can be extended for up to 10 additional years). As for the investment amounts, these cannot be less than 15 million dollars (except projects that are developed by the municipalities). In addition, that state banks will not be able to finance more than 25% of these projects.
From an institutional point of view, the program will have a National PPP Secretariat with the function of technical and operational support, as well as, carry out promotional and marketing activities about the program. There will also be a Governing Body formed by the Ministry of the Presidency, Ministry of Economy and Finance, Ministry of Public Works, Ministry of Commerce and Industries, Ministry of Foreign Affairs and the General Comptroller of the Republic, who will define the priority areas for the development of projects, approve and reject applications, among others. It also has an Advisory Committee, represented by members of the business sector, members of the academic sector and representatives of organized labor.
For more information, download Law 93 here.