The Salvadoran Presidential Secretariat has presented a draft Law on Public-Private Partnerships to the Legislative Assembly.
A press release from the President of El Salvador states that:
“The Technical Secretariat of the Presidency presented this week a draft Law on Public-Private Partnerships (PPPs) as a tool to enhance public and private investment, generating growth and economic development in El Salvador.
Experts from various countries have been discussing the how to make the law successful in terms of attracting foreign investment.
Flexiblity, clarity and the inclusion of detailed processes are the characteristics that should define the new public-private partnership law whose draft version is currently being re-discussed in the country.
So say experts from countries that have passed similar laws, which have proved very useful in attracting more foreign investment and setting the regulations under which those companies become established in the country.
The way that the government handles the arbitration failure at the International Chamber of Commerce on the La Geo case could dictate the success or failure of state-business partnerships.
The private-public scheme has been promoted recently by the Salvadoran government for the implementation of large public infrastructure projects because they can free the state from the significant investments that such works require.
The agreement will facilitate the provision of consulting services to regional governments to develop infrastructure projects with private participation.
This agreement seeks initiatives in renewable energy and other projects related to climate change, water treatment and solid waste management, health, education and transport.
Proponents argue that public-private partnerships allow the private sector to participate in improving public services while providing investment expertise.
Government will send to Congress a draft of a Law regulating Public Private Partnerships.
The law would regulate state participation in these associations, to establish parameters for private enterprises and the regulations regarding tendering and contracting procedures.
Alexander Segovia, Technical Secretary of the Presidency, said that the government intends to send the bill to Congress before the end of this month," reported the article in Laprensagrafica.com.
Even the modest 2.5% growth forecast for the Salvadoran economy will be difficult to achieve if the government does not undertake 10 basic tasks.
There is not much new in these 10 tasks suggested to the Funes administration by four notorious economists. The lack of political agreement is perhaps the main reason these tasks are still pending, threatening to achieve the 2.5% growth committed to the International Monetary Fund (IMF).
The assistance will help identify possible investment patterns in public-private partnerships.
As a way to revive the economy the Government is promoting investment in public-private partnerships. The president has asked the private sector to join him on this project.
La Prensa Gráfica states on its website, "On this issue, the multilateral agency is providing technical assistance to the Government in order to identify structures of this type of investment, informed the IDB representative in El Salvador. At this moment we are providing assistance for the identification of possible mechanisms for public-private partnerships," said Carmenza McLean, IDB representative in the country.
The new legal framework will give private companies authority to manage megaprojects.
Alexander Segovia, technical secretary to the president, indicated that the new law will regulate the state's participation as investor and regulating entity.
"The port of La Unión is the first megaproject that Mauricio Funes' government has announced will be carried out using the Public-Private Partnership (PPP) model.
This form of funding appears to be the most feasible for large public infrastructure works.
The limitations of the state budget to address infrastructure projects require the assistance of private capital, and the securitization trust model is being adopted by Costa Rican public institutions to finance these works.
There are 11 projects in various stages of the formation process of securitization trusts in various sectors such as energy, telecommunications, health, and education.
There's been an increase in multisectoral participation as a means of improving both infrastructure and services in various parts of the world, writes Lourdes Fernández in Costa Rica's newspaper La Republica.
This trend has been driven by technological innovations, she continues, as well as budget restrictions, expansion of international markets, growing public-private participation, but above all the application of the premise "there's strength in numbers", to which I add: and they encourage the achievement of important goals.