Public-Private partnership law would allow unprecedented investments

By Hugo Alexander Berkemeyer, Berkemeyer Attorneys & Counselors

The enacted law establishes a clear framework for public-private partnership contracts, regulates private initiatives and the use of trusts for the purposes specified in the law. Contracts may include management of infrastructure and services, which include road projects, rail, port, airport, waterway dredging and maintenance of the rivers which surround Paraguay, social infrastructure, electrical equipment and urban development.

The Public Private Partnership Law (1) (Ley de Alianza Publico-Privada) has been promulgated (November 4, 2013) and regulation should follow by the end of the year with the help of Chilean experts. The main objective of this law is to allow the private sector to be part of the construction of infrastructure projects urgently needed by Paraguay mainly due to the lack of resources of the government. Through this mechanism private capital is granted for the exploitation of public goods and services for a fixed period of time.

This legislation has been much discussed in both house of Congress. Some sectors of the Paraguayan legislature and society perceive it as "privatization law" and policy to deliver more power to the Executive branch (the President), given that the government has the authority to select the concession companies seen without prior approval of Congress.

This framework installed in the private sector good expectations for growth of the gross domestic product (GDP ) of Paraguay . Added to that , the buildings and investments already made , as well as advertised , cause local analysts’ projections increase the country's economic growth for 2014 , which projected 4.2 in January this year , rose to 5.8 % in September , according to the Central Bank of Paraguay ( BCP ). The report records that the monetary authority respondents hope for 2013 economic growth of 13.6 %.

Through this law, the Paraguayan government would benefit from the private sector injecting capital and increasing employment rates, to covering the needs of infrastructure and services long overdue in the country. A spillover effect of these investment in Paraguay, would create a better quality of life for Paraguayans and more transparency in the investment procedures.
 
(1) Law Nº 5.102