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Ivan E Mattei and Armando Rivera Jacobo

Debevoise & Plimpton LLP

Thursday 25 October 2018

The term public-private partnership (PPP) refers not to a single form of contract, but rather to a broad range of contractual arrangements that allow public entities to pursue economic activities with the long-term participation of the private sector. Even though there is no uniform statutory definition (for those jurisdictions in which there is a statute governing this type of transaction) or scope of the parties’ roles throughout jurisdictions, the common features that can be found in transactions designated as PPPs include a long-term contract for a combination of design, construction, finance, operation or maintenance activities, related to infrastructure that is, or will become, the property of the government and to be performed by a private party. Notwithstanding the above, the scope of roles typically delegated by the public authority to the private entity through PPP agreements varies among jurisdictions. Particularly, in some jurisdictions it is common for the public sector to play a significant role in arranging the financing of the projects. For example, in the United States a significant portion of the financing of transportation projects takes the form of loans arranged by the procuring authority under the Transportation Infrastructure Finance and Innovation Act federal loan programme and tax-exempt public activity bonds issued by states, the proceeds of which are onlent to the project company. In Brazil, prearranged financing by Brazilian Development Bank (BNDES) at very attractive rates continues to be a significant source of funds for PPP projects, although some people have expected BNDES’ role to wane in the short- to medium-term owing to Brazil’s current sociopolitical and economic circumstances.

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