This content is from: Local Insights

Peru’s complications in pushing for PPPs

Milagros Maravi
Public-private partnerships (PPPs) have been used in Peru since the 90s, primarily for the development or improvement of public infrastructure and services, specifically transportation (ports, airports, highways, urban road networks, train and subways) telecommunications, health, sanitation, electricity, hydrocarbons, public cleaning and disposal of solid waste, agriculture and irrigation sectors.

PPPs in Peru bind private investors with the national, regional or municipal governmental agencies, as a means to promote projects within their corresponding competence or jurisdiction.

Despite the significant portfolio of projects planned to be developed through PPP schemes currently and during past years, Peru is still lagging far behind other countries in the region with regard to the development of the aforementioned sectors.

According to applicable regulations (mainly Law 28059 and Legislative Decree 1012), investment projects to be developed through PPPs in Peru may be initiated either due to an initiative of the applicable public governmental agency, or through an initiative put forward by a private party, seeking to develop a project jointly with a governmental agency.

Private initiatives for the development of a PPP are promoted or incentivised by applicable regulations. For example: (i) the expenses incurred in the studies for the development of the private initiative will be reimbursed by the applicable governmental agency, should the applicable project be awarded; and (ii) the private party who initially presents the private initiative will have a right to match any other better bid or offer presented by third parties for the development of the applicable project.

The issue in the applicable regulatory framework that has presented problems for the furtherance of more project development through PPPs, is the fact that the submission of a private initiative does not generate or imply an obligation by the applicable governmental agency to analyse and respond to such initiative, or even to proceed with the applicable response within a certain deadline if the applicable agency declares its interest in the project.

This has caused several private initiatives to be rendered ineffective without having the applicable governmental agency analyse or respond to them, which has in turn caused private investors to have to carry out prior research within governmental agencies in order to obtain certain assurances as to their interest in projects, in order not to incur further costs.

This delays and complicates the implementation of PPPs set forth through private initiatives.

Milagros Maravi

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