Comparative study of the implementation of Public-Private Partnerships (PPP) in Colombia, Peru, Brazil and Argentina

PublicationsComparative study of the implementation of Public-Private Partnerships (PPP) in Colombia, Peru, Brazil and Argentina

Executive Summary 

Public-Private Partnerships (PPP) have been promoted worldwide as
the solution for States to be able to meet the needs of infrastructure
and public services with the participation of the private sector. Latin
America has been close to implementing private sector participation,
which has been ofered as the principle solution to bridge the
infrastructure gap that the region sufers. Thanks to the stimulus and
technical support from regional multilateral banks—mainly the World
Bank (WB) and the Intern-American Development Bank
(IDB)—regulatory and institutional framework has been improving, to
allow for the implementation of PPP.

Taking this into context, the present document will address the
regulatory framework that Colombia, Peru and Brazil have gradually
been adopting in order to implement PPP since the mid 2000s,
elaborating publicity, types of contracts, and the fexibility of social
and environmental norms. Subsequently, risk allocation and acquired
coping obligations will be analyzed. A third point will study the
compensation that private actors receive for PPP and project funding,
emphasizing the role of pension funds.

In Argentina, PPP schemes are less developed than the other three
countries, given that a norm from 2005 on public-private nancing had
little to no development during previous Governments. It was only
under the current Government that, in 2016, the country adopted a
new regulatory PPP framework which, at the time of writing this
document, did not have the proper regulation nor sucient
experience to link this private capital plan with the other three
countries. Nevertheless, some details and developments of the
regulatory framework have been observed in Argentina. These include
advances in follow-up mechanisms, project transparency, and the
manner in which PPP contract compensation is carried out by the

Regulatory framework will be analyzed by identifying the norms that
regulate the PPP and the contributing procedural details from each
country in order to identify similarities and diferences between the
countries involved in this study. This section will also study contract
type. Although there are diferences in types of possible contracts in
Colombia, Brazil, and Peru, similarities exist in their nal purpose.
Lastly, it is important to identify norms that have been relaxed in order
to provide incentives to private inversion, despite negative efects that
are felt mainly by communities and the environment.

In contrast to what rhetoric has indicated about the PPP, risk allocation
aims to be a beginning point, not an end. This has led us to dene the
objectives of this exercise and recognize that the true purpose of the
PPP is to attract private capital for both project execution and funding.
Likewise, it will be seen that risk allocation implies taking on
obligations that, if not adequately carried out, can imply substantial
costs for the public budget which normally are not covered by this
sector and how these obligations that are taken on to manage risk can
afect environmental and social public policy.

This document will also identify the practical details of compensation
for the private partner creditor, which are carried out only if a certain
level of quality services and standards are met. According to other
studies on funding, the private sector leads the way in investing in
infrastructure. However, in order to achieve this the State must either
create norms or relax existing norms in order for private banks to
increase inversion. Additionally, the State also typically lends nancial
assistance in order for these projects to be carried out. Pension funds
are also involved in funding, but putting large capital, which the future
of many laborers rely on, at risk. Finally, this document intends to
provide a global view of the implementation of this plan in four
countries in order to gain a better understanding of it and some of its
efects a bit more. To achieve this, the conclusion proposes a few
themes that need to be reassessed for PPP implementation, such as the
vulnerability of collective rights, the loosening of environmental
norms, the cost of PPP, and the transparency of and citizen
participation in project planning.

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