A Brief Summary of The Content and Objectives of Peru's "Methodological Guide to Private Public Partnerships"

October 12, 2020
Blog

By : Jaime Li (jliojeda@gmail.com)

Peru has an infrastructure gap of around 363,452 billion soles or approximately 100,262 billion of dollars, which has a great negative effect on Peru's competitiveness and, therefore, on the living conditions of the population by not being able to fully meet the Sustainable Development Goals (SDGs) established by the United Nations.

 

In this context, the government has the great challenge of further promoting private investment in strategic sectors to comply with the above, for which, in the area of Private Public Partnerships (PPP), a project portfolio worth $5 billion has been established, but this does not limit investors from submitting "unsolicited proposals".

 

As a result, the Peruvian Ministry of Economy and Finance has issued a "Methodological Guide to Private Public Partnerships". The document is part of a series of activities that the Peruvian Government is carrying out to promote investment in PPP.

 

This guide summarizes the concept, criteria, principles, structure and contractual modalities of THEPs according to Peruvian regulations. It also details the stages, procedures and actors involved in the process of developing an PPP contract. In addition, complementary definitions are established to the general regulatory framework that make it possible to understand more clearly how DPs are developed in Peru.

 

Indeed, for example, the definition of PPP according to Peruvian regulations is detailed, highlighting the basic elements that various international bodies such as the World Bank, IMF, Inter-American Development Bank and others. These elements are: Risk allocation, long term, development of public infrastructure projects, utilities services related to public infrastructure and public service, applied innovation, and/or technological innovation.

 

However, it is clearly established what type of service and/or infrastructure can be developed.

 

The following definitions are thus established:

 

'1. Public Infrastructure

·      Road and multimodal networks

·      Railways

·      Airports

·      Ports

·      Logistics platforms

·      Urban recreation and cultural infrastructure

·      Prison infrastructure

·      Irrigation infrastructure

·      Health infrastructure

·      Education infrastructure

 

2. Public Services

·      Telecommunications

·      Energy and lighting

·      Water and sanitation

·      Other services of social interest, related to education, health and the environment (such as the treatment and processing of waste), duly recognized by the current regulatory framework.

 

3. Services related to public infrastructure and public services:

·      Toll and fee collection systems

·      Centers for Better Citizen Care.

·      Other services related to the development of public infrastructure and public services.

 

4. Applied research projects:

Applied research refers to the practical use of knowledge for the benefit of society at large.

 

5. Technological innovation projects:

Technological innovation includes new products and processes, as well as significant technological changes in products and processes. An innovation has been implemented if it has been introduced to the market (product innovation). According to Supreme Decree No. 188-2015-EF, the qualification of Applied Research and Technological Innovation must be carried out by the National Council of Science, Technology and Technological Innovation (Concytec).'

 

Another example of the unifying purpose of the Guide is the following graphic showing that the process of developing an PPP contract does not result from an isolated set of rules, but responds to a comprehensive policy objective encompassed in the "National System for the Promotion of Private Investment".

 


In addition, the guide, as already mentioned, objectively details various flows of the processes to be followed for the development of an PPP. Thus, for example, the processes and flows of "private initiatives" or also known in international experience as "unsolicited proposals" and "state initiatives" are 

 

In conclusion, the "Methodological Guide to Private Public Associations" published by the Ministry of Economy and Finance aims to provide predictability in the development of APPs and thereby promote investment.

 

Likewise, it seeks to clarify possible doubts regarding the interpretation criteria that the government will have in the development and execution of a PPP.