Panama: Bill on PPP regime

Author: | Published: 23 Sep 2019
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Alfaro, Ferrer & Ramirez

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Samuel Lewis and 54 Street Panama City
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Republic of Panama

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The executive branch of the Panamanian government has presented a Bill to the Legislative Assembly for the formal creation of a public-private partnership (PPP) regime in Panama. The Bill was approved in the first of three debates required within the Legislative Assembly for its final approval.

Facing fiscal constraints and sometimes technical limitations, Panama may strongly benefit from this initiative, attracting private investment and financing for the development of important projects, aimed to improve public services and at the same time, create new jobs.

The Bill incorporates strong mandatory principles applicable throughout PPP projects, as well as eligibility factors to determine the convenience of implementing a given project through the PPP regime. It also contemplates the application of arbitration clauses in the PPP contracts as a conflict resolution mechanism.

Under the Bill, public contracting entities identify and prepare potential projects to be developed under the PPP regime, with the cooperation of a specialised national secretariat for PPP. After thorough evaluation, a separate PPP governing body will authorise the opening of the project for public tender. The tender process is based on the analysis of the best economic proposal of those bidders that have complied with all the technical, administrative and financial minimum requirements.

The awarded bidder must provide a performance bond and create a special purpose vehicle (SPV) to execute the PPP contract with the public contracting entity. The Bill classifies the projects as self-funded or co-financed, depending on the government´s contribution. In co-financed PPP projects, the use of a trust is mandatory.

The public contracting entity will oversee the execution of the project, and once the contract reaches termination, the infrastructure and/or goods will pass to the public contracting entity.

Once the Bill passes all three debates within the National Legislative Assembly, the president will sign the Bill into law, and it will become effective.

Luis H Moreno IV