Public-Private Partnerships Law, a reality in the panamanian legislation
September 21, 2019
On Thursday, September 19, Law No. 93 of 2019 was published in the Official Gazette, which “creates the Public-Private Partnership for Development Regime as an incentive for private investment, social development, and job creation.
Public-Private Partnerships in general terms is defined by the World Bank as “an agreement between the public sector and the private sector in which part of the services or work that are the responsibility of the public sector is provided by the private sector under a clear agreement of shared objectives for the provision of the public sector or public infrastructure.
For the purposes of the recently published Law 93, its article 3 establishes that “they are modalities of linking private capital in which experiences, knowledge, equipment, technologies and technical and financial capacities are incorporated, and risks and resources are distributed, with the objective of creating, developing, improving, operating and/or maintaining public infrastructure for the provision of public services”.
This linkage is materialized in a long-term contract signed between the related public entities and a private sector legal entity, either for the design, construction, repair, expansion, financing, operation, maintenance, administration and/or supply of a good or service to the contracting public entity and/or to the end users of some type of public service.
There will be two types of PPP according to their financing:
- Self-financing: those in which all project costs are recovered with the income received by the PPP contractor in charge of providing the infrastructure or public service, through the collection of tariffs, prices, tolls, fees or charges charged directly to the end user.
- Co-financed: those that, for the economic sustainability of the project, require financial resources from the State, in any of its forms, that imply the assumption of firm or contingent commitments by the contracting public entity.
It is important to emphasize that contracts in this modality will not be allowed when the project is for a value of less than 15 million dollars, however, there will be a special regulation for municipal projects that will allow values below this figure. The law also states that the initiative to create a contract of this nature will be public, through a specific procedure.
From the institutional point of view, the PPP program will be governed by a governing body formed by the Ministry of the Presidency, the Ministry of Economy and Finance, the Ministry of Public Works, the Ministry of Commerce and Industries, the Ministry of Foreign Affairs and the Comptroller General of the Republic. In addition, there will be a National Secretariat of the PPP attached to the Ministry of the Presidency with technical and operational support functions of the governing entity.
The document can be found at the following link: