Comment on proposed PPP law
This paper uses the experience of Chile and other developing countries to examine the benefits and pitfalls facing a country that embarks on a wide-ranging PPP program.
This paper describes a series of recommendations in order to reduce the problems observed in Chile, as well as, even more so, in other developing and developed countries. These include:
- Clear rules of the game, including specific legislation covering independent conflict resolution mechanisms
- Cost benefit analysis of all projects, and a hurdle rate for approved projects, specially those that require government payments
- Projects have to be in final form before they are awarded, in order to reduce the scope for conflicts
- There should be only one principal in those projects in which more than one ministerial bureaucracy is involved
- There should be a well designed bidding process, with technical and financial qualification rounds before proceeding to a simple economic bid as the award condition
