IFIS and PPPs IN LACVanessa Torres, Asociación Ambiente y Sociedad-Colombia

IFIS and PPPs IN LAC• The International Financial Institutions (IFIs) believe that infrastructure

investments are fundamental for developing countries basic service:roadways, access to water or electricity.

• LAC: stimulate private investment through:

(a) Create regulatory and institutional capacities to develop a completeportfolio of projects: IFC promote policy frameworks or regulation for privateparticipacion.

(b) infrastructure like a private savings.

• 27/01/2016: The IFC created a new infrastructure debt fund designed topension funds invest in infrastructure works (4G roadways -PPPs).

THE MULTILATERAL INVESTMENT

FUND (FOMIN), FROM THE IDB GROUP

SUPPORT FOR COLOMBIAN PPPPROGRAM: The specific objective of

the program is to help increase

private investment in the provision

and management of productive

and social infrastructure, through

the consolidation of public policy

for enlisting private sector

participation at the national and

subnational levels.

Infrascope Ranking 2014

País Puntaje

1 Chile 76,6

2 Brasil 75,4

3 Perú 70,5

4 México 67,8

5 Colombia 616 Uruguay 52,9

7 Guatemala 46,3

8 Jamaica 44,4

9 El Salvador 41,6

10 Costa Rica 39

11 Honduras 37,7

12 Paraguay 37

12 Trinidad y Tobago 37

14 Panamá 34

15 República Dominicana 24,2

16 Ecuador 22,1

17 Nicaragua 20,6

18 Argentina 16

19 Venezuela 3,2

Infrascope (2014) is an index developed by The

Economist Intelligence Unit (EIU) with financial support

from IDB trought the FOMIN. Currently, it is the fourth

edition of an interactive tool that evaluates the capacity of

LAC countries to carry out PPP in infrastructure.

The study's variables are:

(i) legal and regulatory framework

(ii) institutional framework

(iii) project experiences and success

(iv) investment climate

(v) financial facilities (financial instruments)

(vi) activity on a sub-national level.

Characteristics of the PPP national Law 1508 of 2012

1. Concept of PPPs: “tools to link private capital through a contract with apublic entity and the private sector for the development of public property”.

2. In Colombia the PPPs are a indeterminate legal concept to expand thefigure to all the infrastructure sector, not just transportation.

3. PPP will not be understood as a form of contract the PPPs are a schemedesigned to: structuring payment mechanisms of government to understandthe infrastructure like a service.

4. The implementation of public private partnership projects will have amaximum of thirty (30) years of implementation, including extensions.

Is the regulation compatible with the environmental framework in Colombia?

Río Magdalena PPP project

• Colombia: social-environmental impacts and contractual irregularities

• On September 13 of 2014 the PPP contract 01 of 2014 was signed between Cormagdalena and Navelena S.A.S whose majority shareholder was Odebrecht, with 87% of the society.

• Principal Goal: recovering the Magdalena River’snavigability along a 908 kilometers section betweenthe municipality of Puerto Salgar and Bocas de Ceniza (Barranquilla).

• Navelana rol: channeling and dredging to maintain a navigable channel,

• The contract had an approximated cost $840 milliondollars.

• Civil society complaints: ¿Why?

• the project involving Colombia's main river

Río Magdalena PPP project

• was not consulted with the surroundingcommunities

• Incomplete and insufficient environmental and socialimpact studies: such as improper depositing ofdredged materials.

• And with decree 769/2014 the Ministry ofEnvironment and Sustainable Developmenteliminated the environmental license requirementfor this kind of dredging.

• Contract's execution: ODEBRECHT CORRUPTIONSCANDAL

• Navalena it was not able to achieve a financialclosing of the contract because the Odebrechtcorruption scandal exploded in the region and thiscompany has the 87% of the society.

In December of 2016 the Comptroller General's Officereported that irregularities had been found in thecontract's execution, since Navelena changed thematerials required for the public works, for cheaper andlower quality materials that would put the stability andsustainability of works at risk.

National corruption: This project is under investigationdue to corruption accusations involving ex-governmentofficials and parlamentarians, according to the Office ofthe Prosecutor General of the Nation (produraduria).

Communities and NGOs articulation: AAS and theExtractive and Environmental Group of the MagdalenaMedio (GEAM) are consolidate a metodologie to monitoringthe actual impacts of this project in the river, communtiesand the differents ecosistems in the river for example themangroves or the wetlands .

¿What happendwith the

communities and the river?

Final comments• The IFIs must stop indicating that a country's economic problems and

inequality is only an issue of infrastructure: these entities must buildinstitutional capacities to develop projects with transparent regulatoryframeworks and improve accountability mechanisms.

• It is necessary that the Multilateral Banks analyze the real impact ofimplementing PPPs: Evaluate the effects of this private participation on: (i)Public debt, the environment, including the impact on environmentalprotection regulations; human rights; satisfaction of communities' basicneeds, monopolization of the infrastructure sector or corruption.

• Is very probable that after an analysis of these topics, it is impossible toinsist on the application of PPP in the region.

Vanessa Torres, Asociación Ambiente y Sociedad-Colombiavanessa.torres@ambienteysociedad.org.co

www.ambienteysociedad.org.coTwitter: @ambienteysoc

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