September 14, 2020 - Guatemala

The Quetzal will Soar its Flight: The public + The private: the winning alliance By Ignacio Grazioso
  by Ignacio Grazioso

Ten years ago, the PPP Law was approved, the regulatory framework that seeks to make the Public Private Partnerships (“PPPs”) viable as a solution to the country's infrastructure deficit.

For reasons beyond legal and economic facts, Guatemala has not yet seen its first PPP project born. However, the planets seem to be aligning to propitiate the possible detonation of investment in infrastructure and we see reasons for optimism on the horizon.

Investment in infrastructure fulfills the valuable function of guaranteeing the creation of jobs in the short term and providing the means that catalyze economic development in the medium term, emerging as the perfect antidote to the severe economic damage caused by the pandemic.

In a nutshell

· Estimated investment on PPP projects: US $ 1500+ million

· ANADIE, the private sector and the government promote infrastructure projects as part of economic reactivation

· ANADIE promotes modifications to the PPP Law to make projects feasible

· Some projects are structured under concession

· QIL + 4 is actively involved in various projects.

"The government plans to use infrastructure projects to prop up the economic recovery."

The foregoing could have an impact on the Congress of the Republic approving the PPP Contract for the Escuintla - Puerto Quetzal Highway, unlike what happened in October 2019, which resulted in its lack of approval.

The highway could meet the expectations of being the long-awaited “spearhead” project that paves the way for other PPPs.

The advanced phase in which this project is right now and the fact that another section has previously been awarded under concession and operated for almost 22 years, are the perfect context to promote its activation.

If successful, at least 6 other PPPs that are in previous planning phases and which estimated joint investment exceeds US $ 1,500 million, could have the same fate.

ANADIE has expressed interest in promoting reforms to the PPP Law to make the approval process viable, to broaden the range of projects that can be developed (and include, for example, social infrastructure projects) and to generate adequate incentives for them to secure financing.

The Municipality of Guatemala is in the bidding phase of an infrastructure project under the modality of Municipal Concession, whose purpose is the construction and operation of the Aerometer that would run through Guatemala City from east-to west. We do not discharge the possibility that future projects will be developed under this same modality.

Environment for PPP in the Central American region:

To the surprise of many, even though Guatemala has not debuted in the world of the PPPs, the 2019 Infrascope developed by The Economist, rated Guatemala in the decorous 5th place in Latin America in terms of its ability to carry out PPPs; a capacity, of course, pending to be tested.

In addition, there is interest from recognized financial and multilateral institutions to focus their resources in our country.

For these reasons, we look forward to the near future with hope and optimism, and we trust that the conditions and efforts that make these important projects viable will materialize.

At QIL + 4 ABOGADOS we have recently worked advising some of these initiatives, in whose success we are focused and committed.

Guatemala does not stop, it reinvents itself."Reactivation is everyone's commitment"