Public-Private Partnerships Not Being Leveraged

In the four years that the law of associations between the State and private companies in El Salvador has been in effect, not a single infrastructure project has been able to materialize using this business scheme.

Wednesday, December 13, 2017

Although there are at least seven infrastructure projects that were initially proposed as being those with the highest priority and ideals to be developed under the public-private partnership scheme and with funding from Fomilenio II, none of them has managed to materialize. 

The benefits generated for economies with fiscal problems, such as El Salvador's and in general Central American economies, from the development of productive infrastructure through partnership schemes with the private sector are plentiful. The problem that occurs, as almost always with everything in the region, centers around the bureaucracy and lack of management capacity of those who lead state institutions. 

See also: "The potential of public-private partnerships"

Elsalvador.com reports that "...To date, the projects that the Export and Investment Promotion Agency of El Salvador (Proesa) is evaluating to develop using the PPP model include the Ilopango Airport, a cargo terminal at the El Salvador International Airport, a technology park in Zacatecoluca, the border crossing at La Hachadura, a wind farm in Metapán and the lighting, video surveillance and photo-fines on strategic road sections."

But according to Eduardo Escobal, international consultant for PPP structuring and investment projects, "... a strategy of attracting investments through PPPs involves structuring attractive projects and at the same time offering the best conditions for investors. 'It's not just projects that have to be attractive. A country has to have credibility, it has to be predictable. We also need a legal framework and an independent judiciary, and a mitigated social risk issue,' said Escobal, who has led and participated in the structuring of more than 50 PPPs in the Latin American region."

More on this topic

Law on Public-Private Partnerships in Panama

November 2016

The construction sector is calling for discussions to be resumed and approval given to the draft PPP law which has been in the National Assembly since 2011.

Approving the law on public-private partnerships could improve the efforts being made in infrastructure investment, as a complement by the private sector to the investment already made by the State.  

El Salvador: Infrastructure and Public-Private Partnerships

February 2016

The government has announced it will create an institution that is dedicated to facilitating the management of infrastructure projects carried out under the public-private partnership format.

We will have to wait and see how useful it will be to have a state institution dedicated to carrying out the most essential coastal infrastructure projects.

Public-Private Partnerships: Successes and Failures

August 2015

A publication by the CAF reviews the development of five projects implemented using the public-private partnership model for infrastructure investment in Latin America.

From the Presentation document by the Development Bank of Latin America (CAF):

In recent decades, many Latin American countries have launched public-private partnership projects for the construction, maintenance and operation of public infrastructure.

Reforms to Law on Public-Private Partnerships in El Salvador

January 2014

A proposal has been made to reduce the number of times a public-private partnership project would pass through the filter of the Legislative Assembly.

Among the reforms to the Law on Public-Private Partnerships that the Council for Growth has suggested to Congress is a reduction, from three to one, of the number of times a Public- Private Partnership (PPP) project should go through the filter of parliamentary approval.

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