In an effort to foster private investment in large-scale infrastructure projects, which are much needed in Colombia, Law 1508/2012 has been passed to regulate public-private partnerships (PPPs). The law applies to all contracts whereby state-owned entities assign to a private investor the right to design and build an infrastructure project and its related services, or to carry out the construction, repair, improvement or conditioning of such a project.
Contributed by Peña Mancero
Pursuant to the new law, the private investor will enjoy the right to the economic exploitation of such infrastructure or services according to the conditions agreed with the state-owned entity. The selection process for this purpose and the rules for entering into and carrying out such PPPs will be governed by the public procurement statute, which comprises Law 80/1993, Law 1150/2007 and Decree 734/2012.
A PPP shall have a maximum term of 30 years, including any term extensions. The government budget for such projects may not exceed 20% of the estimated budget for the corresponding investment project.
The following principles apply to PPPs:
- A PPP may derive from either a public or private initiative.
- If the initiative does not result in a PPP, the studies presented will continue to be the property of their originator. However, the state shall have the right to acquire any study or information that it may deem pertinent.
- All resources derived from the PPP must be managed through a trust, regardless of whether they are of a public or private nature.
- For a PPP to be considered, it must be worth more than 6,000 times the minimum legal wage – for 2012, this is equivalent to Ps3.4 billion (approximately $1.89 million).
- Local governments shall prepare and maintain up-to-date technical inventories of projects to be developed in the short, medium and long term. Private parties may, at their sole discretion and risk, invest in studies and designs for such projects.
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