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:

  1. Clear rules of the game, including specific legislation covering independent conflict resolution mechanisms
  2. Cost benefit analysis of all projects, and a hurdle rate for approved projects, specially those that require government payments
  3. Projects have to be in final form before they are awarded, in order to reduce the scope for conflicts
  4. There should be only one principal in those projects in which more than one ministerial bureaucracy is involved
  5. 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