PPP Projects and the new role of financial structuring in enlarging investments’ impact

August 10, 2020
Blog

By Dr. Domingo PEÑALVER         

Mexico is at the point of unfolding its infrastructures development program, and public-private partnerships (PPPs) will play a central role in financing some of its most relevant projects. A central point in the Mexico’s PPP strategy will be, for sure, how the financial burden of such an ambitious investment programme will be passed on to users and taxpayers, who are actually the individuals that end up footing the bill of any public action.

 

Leaving aside the overall fiscal impact in terms of country debt, which depends on how projects' risks will be allocated between the public and the private partners, a major point to take into account is that, if the financial burden stemming from the many projects that will be carried out is transmitted too quickly to them - e.g., through earmarked taxes, pay-per-use, public subsidies, etc.- the (positive) social and economic effects of infrastructure investment (jobs generation, increase in economic activity, etc.) could end up somehow diluted as a consequence of the increase in the fiscal pressure of Mexico. On the contrary, if that financial burden is distributed over the years in a way that project's benefits and actual financial payments to be bear by the successive generations of fiscal individuals in a balanced way, the Value for People and Value for Future of the infrastructure program of Mexico will be enlarged as years will pass.

 

It is in this sense that WAPPP recommends to all professionals dealing with the many PPP topics not to lose the opportunity of attending the round table organized by the Federation of Civil Engineers of Mexico (FEMCIC) next Tuesday the 11th of August at 5 pm (Ciudad de México time). Among other panelists, our colleague Dr. Domingo Peñalver will be talking on how private financing in general and the financial structuring of PPPs in particular are central to deliver Value for People and Value for Future.


A special thanks to Ing. Oscar A. Cortés, -member of WAPPP, Vice President of FEMCIC and moderator of the event- for his support and engagement with the vision of PPPs as a tool for development

 

Free registration at: https://docs.google.com/forms/d/e/1FAIpQLSe_xSU8ukOz2I0-xr_JEibeUFCNiQBGch4dX0QvL5CycJzMzw/viewform