PPP PROJECTS IN BRAZIL: OPPORTUNITIES AND CHALLENGES FOR THE CONSTRUCTION AND ENGINEERING INDUSTRIES

Abstract

Over the last decades governments have been struggling to achieve economic development and competitiveness through improving their basic infrastructure. Increasingly governments are turning to the private sector for the financing, design, construction and operation of infrastructure projects. Once rare and limited, these public-private partnerships (PPPs) have emerged as an important tool for improving economic competitiveness and infrastructure services.Brazilian PPP Law defines PPP as “Public-Private Partnership is an administrative concession contract that may assume the form of either a sponsored or an administrativeconcession contract.” PPPs are expected to be implemented concurrently with existingconcession contracts, focusing on infrastructure projects. PPP Law provides for sponsored concession and administrative concession and applies to government entities (including mixed-capital companies) directly or indirectly controlled by the Federal Government, States, Federal District and Municipalities.There are various types of PPPs, established for different reasons, across a wide range of market segments, reflecting the different needs of governments for infrastructure services. A strong PPP allocates the tasks, obligations, and risks among the public and private partners in an optimal way. The public partners in a PPP are government entities, including ministries, departments, municipalities, or state-owned enterprises. The private partners can be local or international and may include businesses or investors with technical or financial expertise relevant to the project. The structure of the partnership should be designed to allocate risks to the partners who are best able to manage those risks and thus minimize costs while improving performance.