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

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Best practices in Public-Private Partnerships financing in Latin America Chart N.3 CRPAO Operation US$ for CRPAO purchasing (with discount rate) Investment Banking CRPAOs US$ US$ Investors CRPAOs Ministry of Transport Government PPP operator CRPAO Payment Disbursements / financing Re paid loan Issued and CRPAO´s sell Source: Sergio Bravo. recognize the payments for construction work that is in progress. The Supervising Agency of Investment in Public Transport Infrastructure Facilities (OSITRAN) issues the WPC or CAO, which represents the physical construction in terms of quantity or as a percentage of the total project. After the issuance of the WPC, the Ministry of Transport issues the CRPAO. The CRPAO is a financial instrument with irrevocable and unconditional characteristics, payable in 15 years, on a sixmonth basis (See Chart N.3). Recognition Certificates of Investment Payments (CRPI) The main difference between CRPI and CRPAO is that the investor issues the CRPI. The CRPIs are issued depending on the WPCs, or underlying asset. The risk of the financial instrument will depend on the quality of the payment source (liquidity). In the case of Peru, the social security (ESSALUD) funds have to be separated in a former account, allowing for isolation of the economic and financial risks of the institution (See Chart N.4). CRPAO and CRRPI reduced the effect of construction risk on financers, because payments are recognized as the - 80 -
Day 1 - SIXTH SESSION Revenue Contributions of Insureds 100% 15% 85% Trust "Mother" Chart N.4 Collector Account Trust Fund "Son" Matrix Collector Account RPO Reserve Account Cash Account Manager RPI Reserve Account RPI Irrevocable Account Supervision Account VAT account Source: Presentation by S. Bravo. work progresses. Therefore, the government assumes the construction risk every time it issues the Work Progress Certificates (WPC), from which the CRPAO are derived. In the case of infrastructure bonds or CKDs, when a contract expires or terminates, there are established settlement mechanisms for each contract. In this manner, the project financer assumes the risk of lack of compliance with the total payment that was initially agreed upon. Regarding CRPAO, this situation does not occur because of their irrevocable nature with respect to the Government, which ensures payment of 100% of the obligations, in the case of the Concession Agreement being terminated. - 81 -
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BEST PRACTICES IN PUBLIC-PRIVATE PA
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Copyright © 2011 The International
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Fifth Session: Fiscal Risks and PPP
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Best practices in Public-Private Pa
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World Bank Institute Public-Private
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