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Preparing Effective PPP Programs: Legal Framework, Financial Regulations, and Project Selection in Chile

This guide provides essential insights for preparing Public-Private Partnership (PPP) programs in Chile. It covers critical areas, including the legal framework, project selection, fiscal support, financial regulations, and the management of contingent liabilities. Key recommendations emphasize the importance of cost-benefit analysis, value for money, and maintaining sustainability within fiscal planning. The document also highlights the necessity of transparency, risk assessment, and permanent supervision to ensure successful PPP implementation.

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Preparing Effective PPP Programs: Legal Framework, Financial Regulations, and Project Selection in Chile

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  1. Preparing PPP programs David Duarte Arancibia–dda@dipres.cl Head of Contingent Liabilities and PPPs Ministry of Finance - Chile

  2. Issues to cover • Legal framework • Project selection • Fiscal support • Financial regulations • Others

  3. Legal framework • Flexible • Open to competition • Private initiatives • Contract modifications • Possibility to terminate the concession • Dispute resolution system • Financial guarantees

  4. Institutional Design • PPP unit outside of MoF • Permanent involvement of the MoFin the projects and programs • CBA and VfM approval independent of MoF and PPP unit • Check and Balance Framework

  5. Project Selection • Cost Benefits Analysis • Value for Money • Risk allocation • Efficiency criteria, not other as accounting issues • Rational fiscal commitments • Contingent liabilities • Fiscal payments

  6. Fiscal Support • Correctly designed • Specific objective • Efficient • Aggregate economic efficiency • Sustainable • Government has to be able to afford the commitments • Program has to be congruent with fiscal planning • Stocks and cash flows has to be estimated • Avoid fiscal surprises

  7. Financial regulations • Taxation framework • Banks investment regulation • Pension found investments • Specialized financial institutions supervision

  8. Others Issues • State of law • Culture of payments • Toll roads • Land acquisition framework • Political support • PPP seems a privatization

  9. Recommendations • Correct project selection (CBA, VfM) • Realistic times • Good base studies • Specialized advisory • Permanent supervision • Transparency (contracts, agreements, fiscal commitments, etc) • Disseminate information • Contingent liabilities management • Assess risk transfer • Make sound economic decisions

  10. Preparing PPP programs David Duarte Arancibia–dda@dipres.cl Head of Contingent Liabilities and PPPs Ministry of Finance - Chile

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