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.
Deficiencies in the regulatory framework, lack of political will and public capacity to plan and monitor partnerships are the reasons why this model of financing has not been used more fully in the country.
A report called Infrascope, prepared by The Economist Intelligence Unit and FOMIN at the World Bank outlines the reasons why the legal concept of partnerships between state agencies and private businesses is not thriving in Costa Rica.
Excessive government guarantees and errors in the tender processes are two of the "Seven Deadly Sins of Deficient Public-Private Partnerships" says the World Bank.
A report from the institution highlights the main mistakes made in the process of building partnerships between governments and private companies for financing and developing productive infrastructure.
In Guatemala it has been proposed that private companies invest in the construction of local public works an amount equivalent to what they should pay in taxes.
The proposal put foward by the Foundation for the Development of Guatemala (Fundesa), to be officially presented in October draws on ideas in Law No. 29230 of Peru, where "... Since its implementation at least 33 projects have been completed .
Based on well-formulated laws and proper management, these agreements generate efficiency in the financing and implementation of projects.
Public -private partnerships have become a very attractive option for funding large infrastructure projects that are carried out in Panama, they generate more efficiency of funding and less bureaucratic delay in implementation.
Businessmen are working to gain the passage of the law on Public Private Partnership during 2014.
Jose Adam Aguerri, president of the Superior Council of Private Enterprise (Cosep) said they are currently working on a process that will allow the adoption of the Law on Public-Private Partnerships that respond to the needs of the country's infrastructure.
The complicated Honduran political and institutional climate is creating confusion about the role of the Commission for the Promotion of Public-Private Partnerships.
In an article in Laprensa.hn, Jose Antonio Pineda, president commissioner of the Commission for the Promotion of Public-Private Partnerships (Coalianza), when asked if "Coalianza, concessions, sells or privatizes?", responded that "we do not really do privatization because it involves transfer of assets or property of the State to private companies. We do not do that. Assets such as ports, roads, and airports always belong to the State. We form a public-private partnership (PPP) contract, where a private company invests capital in institutions, as these do not have capacity to invest themselves. It allows the investor to manage it for a period of time in order to be able to recover their investment. "
Railways, an industrial park, port terminals, and roads are concrete investment projects that will be presented during the next Guatemala Investment Summit 2013.
The National Alliance for the Development of Economic Infrastructure (ANADIE by its initials in Spanish) is preparing a series of infrastructure projects that will be presented during the 2013-Guatemala Investment Summit organized by the Chamber of Industry (CIG by its initials in Spanish) for next May, with the expectation of attracting over U.S. $1.3 billion in investments this year.
The complex would have between 30 and 35 thousand square meters and would involve a public private investment of between $60 and $250 million.
Among the plans being analyzed by the government is the construction of a convention center to which a shopping mall and hotel would be added depending on the available resources, as "with everything together, it could mean an investment of $250 million, which is more difficult", said Peter Duchez, director of the Guatemalan Institute of Tourism. The works would include a tower for parking and road works.
The Guatemalan government is committed to public-private partnerships that encourage investment in infrastructure.
Airports, ports and national highways could be built with input from the private sector through the creation of the new Council for the Promotion of Public-Private Partnerships, which aims to stimulate infrastructure projects crucial for the economic development of the country.
The country's council for development partnerships (Conadie) will be responsible for approving investment and infrastructure projects to be carried out jointly by the government and private sector.
The Ley de Alianzas ("Public Partnerships") law will make it possible for the government to invest jointly with private companies in projects to build roads, shipping terminals, airports, power grid improvements and railways, for example.
The Ministry of Finance said that the draft Law on Partnerships for Economic Development and Infrastructure must wait one to two years.
That is the time it will take to create an agency responsible for evaluating the projects, said the Minster of Finance, Rolando del Cid Pinillos.
This agency, which will be composed of members from both the public and private sector, will plan the projects, evaluate them and rank the bids submitted for tenders.
The workshop, sponsored by the IDB, aims to present methodologies based on the experiences of Mexico and Spain, for best practices in public-private partnerships.
The workshop entitled "Partnerships for Economic Infrastructure Development" started yesterday, October 18, and is being held at the Intercontinental Hotel in Guatemala City.
A press release from the Ministry of Finance of Guatemala reads: