Best Practices in PPP Financing Latin America - e-Institute - World ...

Best practices in Public-Private Partnerships financing in Latin America
Table N.7
Subsidy
Experiences
When is the
subsidy paid?
Under what
conditions?
Who checks?
Brasil Colombia México India
Operation
Performance
targets
Independent
Agent
Construction
and operation
Construction
Milestones
Performance
targets
independent
Agent
Before the
construction
(sometimes
during
operation)
Compliance
with obligations
FONADIN
Monitoring
Units
Construction
With payment
of senior debt
and after the
equity
Bank
Source: Castalia Strategic Advisors.
and the opportunity cost of the funds. Lastly, in the event
of a subsidized debt, it should consider the cost of implicit
subsidies.
Projects should continue if the total project and government
costs are less than the economic benefits. In addition, it should
take into consideration the fiscal impact of a project, and
whether or not the government can assume the responsibility.
Lessons learned
Guzman noted that simplifying the approval processes can
increase attention, as well as increase the benefits of the subsidy
program, the number of projects executed through PPPs,
thereby improving decision-making criteria to select projects.
If the Government Agency is responsible for managing the
subsidy program, then they can advise other agencies in the
project structuring process. In this manner, knowledge can be
shared and projects can be adequately structured.
De Vecchi pointed out that having financial resources is
not enough. There should be consistency among specific
infrastructure-related variables: the structural variable
- 62 -