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Why Implement A PPP?

Author:Mr Alejandro Sobarzo Hadad
Profession:Kuri Brena, Sanchez Ugarte y Aznar
 
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Mexico announces the launching of 14 investment projects under the figure Public Private Partnership (PPP). An investment of up to MXN$58bn during its two phases is being contemplated.

 The Public Private Partnership Law aims to promote the collaboration between the private and public sectors in activities that help the economic development of Mexico. Its focus is on construction projects and public infrastructure maintenance, applied research projects and technologic development projects.

For the implementation of an alliance between the public and private sectors under the PPP figure, it is necessary to consider, among other things, (i) the cost-benefit ratio of the project; (ii) social profitability; (iii) financial and economic profitability, and (iv) its legal feasibility.

Usually, the initiatives for the development of a PPP project, come from government agencies or entities, however, the applicable law provides that anyone interested in carrying out a PPP project may submit to the relevant agency or entity their proposed PPP project (Not Requested Proposal). In order to approve a Not Requested Proposal, there is a need to evaluate, among other things, its adequacy with the agency's guidelines, budgetary sufficiency, feasibility studies and its adequacy to the National Development Plan.

The service contract must contain, among other things, clear performance indicators that ensure the adequate service provision and that the infrastructure is maintained in optimum operating conditions.

The legislation contemplates mechanisms that give certainty for the financing of this type of projects. Among other things, it allows...

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