Public-Private Partnerships Regime

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, this regime has the National Secretariat of Public-Private Associations (SNAPP), whose objective is to offer technical support for the implementation of public initiatives or proposals under the PPP modality, in charge of the Contracting Public Entities. (EPC)-ministries, decentralized institutions, public companies or municipalities; and operationally supports the Governing Body, which approves or rejects the proposals.

There is also the Advisory Committee, which represents the private, academic, teaching and worker sectors. The function is to propose ideas to analyze the potential implementation of possible PPP projects.

For more details, download here Law 93 and Executive Decree 840 that regulates the law.