BNDES and IFC presented thorough study on PPP project structuring

The Brazilian Development Bank (BNDES) and the International Finance Corporation (IFC) had launched a study “Structuring PPP and Concession Projects in Brazil: Diagnosis of the Brazilian model and proposals for improvement”. The IFC is part of the World Bank Group and is the world’s largest developed institution dedicated to the private sector in emerging markets. The study encompasses a map of expansion models for private participation projects in Brazil and worldwide. A forerunner in Brazil, the study coordinated by the IFC and supported by the BNDES offers a thorough analysis of Brazil’s project development model, as well as proposals to improve laws, current administrative practices and legal instruments applied when preparing concession and PPP projects. The paper also maps out and evaluates international experiences, such as the cases in Colombia, Peru and Chile, and examines guidelines approved in these countries. The document shows the correlation between investment in infrastructure, economic growth and poverty reduction. Hence, freeing up planning, preparation and financing processes for infrastructure projects has become a priority in Brazil and worldwide. The study specifies three main approaches that the government may apply in concession and PPP project feasibility studies: structures fully implemented by the public sector; technical support from external consultants to structure all work fronts required to structure a project, usually by means of service agreements in accordance with the Procurement Act (Lei de Licitações); conducting studies by means of an authorization instrument, as provided for by the Concessions Act (Nº. 8,987/95), which enables the State to authorize the private sector to conduct feasibility studies, whose costs will be subsequently reimbursed by the winner in the PPP/Concession project procurement process. The study also presents a series of suggestions intended at improving the effectiveness of the concession and PPP model in Brazil. The proposals also include drafts prepared by legal consultants: one for the concession authorization model, and another for the decree-law that proposes the creation of a specific regulation when procuring technical feasibility studies for complex infrastructure projects. These recommendations purpose to ease possible conflicts of interest; minimize costs, thus avoiding waste of public funds; promoting greater agility, quality and legal certainty when procuring consultants.   Source: