The Bukele administration plans to develop five infrastructure projects in El Salvador under the Public-Private Partnership model, which would require an investment of approximately $545 million.
The works of illumination of highways, the construction of a terminal of load and an administrative center, are some of the projects that the administration Bukele plans to tender and award in El Salvador, under the format of Public Private Partner.
When public resources are very limited, as it happens in Central American countries, association schemes between the State and the private sector become essential for developing the infrastructure that the region so badly needs.
A report from the Secretariat of Economic Integration (Sieca) states that "...In Central America, growing fiscal constraints faced by the countriespublic sectors make it increasingly difficult to achieve efforts for long-term infrastructure projects.In this context, Public-Private Partnerships (PPP) become relevant as an alternative measure of financing where private participation sector is facilitated in partnership with the government, with the aim of improving quality of services, reducing operating costs and capital, generating additional income, improving public management and minimizing budget spending.
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.
Private sector operators see in the Law of Public-Private Partnerships serious deficiencies which would prevent the bill from obtaining the desired results.
"The law, as it has been approved, will not achieve the expected results, we believe that it is not a good law, it has serious deficiencies that will make it very difficult to obtain the expected results," said Javier Castro, director of Department of Legal Studies (DEL) of the Salvadoran Foundation for Economic and Social Development (FUSADES).
Salvadoran Congress has passed a law that will allow public institutions to form partnerships with private companies for infrastructure and public services projects.
From a press release issued by the Legislative Assembly of El Salvador:
In order to establish the regulatory framework for the development of projects for the provision of infrastructure and public services of general interest effectively and efficiently, the Legislative Assembly in Plenary approved with 84 votes in favor, the "Special Law on Public Private Partnerships"(PPP).
The expansion of the International Airport of El Salvador and energy projects are some of the works that the State plans to make in conjunction with private companies.
In reference to the Public-Private Partnerships Bill under study in the Legislature, the Technical Secretary of the Presidency, Alexander Segovia, said there are many infrastructure needs that the state can not meet in the short or long term and in which private enterprises could intervene, "under appropriate legislation."
Private investment projects taking place in the coastal area of El Salvador will be supplemented by $50 million in additional projects.
An article in Laprensagrafica.com quotes the U.S. ambassador in El Salvador, Mary Carmen Aponte, reaffirming U.S. support through the Millennium Fund.
The ambassador announced yesterday that they "had an approval of a second donation of Millennium funds, this would be accompanied by $50 million to support with additional works investment projects implemented by private companies. 'The public-private partnerships will be very important and FOMILENIO II will have a component of $50 million. Once received the FOMILENIO II the fund will be available to help private enterprise '. "
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.
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.