Plenary 6 Making the Best of Business Opportunities

PhD. Reyes Juarez

President of Fepac

Content

1. PPPs worldwide overview

2. PPPs in Latin America

3. Why our countries require PPPs?

4. Towards best practices - do more with less

5. The role of Consulting Organizations

1. PPPs Worldwide Overview

More than 6,000 projects have been developed as worldwide PPPs in the last twenty years.

Latin America is the leading region with 30% of the number of projects and 38% in investment (more than 845 billion dollars).

The most dominant worldwide projects are in energy sector; however telecommunications have the highest investments.

Source: Private Participation in Infrastructure Projects Database, © 2014 The World Bank Group.

Number of projects Investment (millions USD)

0%10%20%30%40%50%60%70%80%90%

100% 6,146 $2´199,403

Number of projects and amount of investment by Region, 1990-2013

Middle East and North AfricaSub-Saharan AfricaEurope Central and AsiaSouth AsiaEast Asia and PacificLatin America and Caribbean

Number of p

rojec

ts

Investm

ent

(milli

ons USD

)0%

20%40%60%80%

100%

Number of projects and amount of investment in PPPs by Sector, 1990-2013

Water and sewerageTelecomTransportEnergy

2. PPPs in Latin America 1990-2013

Three Latin American countries are among those that received the highest investment in PPPs during the last 20 years.

(Brazil, Mexico and Argentina).

Source: Private Participation in Infrastructure Projects Database, © 2014 The World Bank Group.

Brazil India Russia China Mexico Turkey Argentina $-

$50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000 $450,000 $500,000

-

200

400

600

800

1,000

1,200

1,400

Main Countries by Investment Amount and Number of PPPs Projects, 1990-2013

Investment (millions USD) Number of projects

Investment by Country

Annual Investment by Sector and Country

Source: Private Participation in Infrastructure Projects Database, © 2014 The World Bank Group

Private Brazilian PPP investments have focused mainly on energy and telecommunications. In Mexico the restrictions on private participation in energy had limited the possibilities to develop PPPs (no longer the case because of recent reforms); therefore, the main sector has been telecommunications, while transportation has gotten around 1.4 billion dollars per year on private investment to develop PPPs.

Mexico Brazil Argentina Colombia Chile Peru -

1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000

679

7,624

1,398

486 792 571

1,578

3,826

624 358 538 290

3,132

7,070

1,705

734 194

625 129

537 355 41 316 23

Mean Annual Investment by Sector for Selected Countries, 1990-2013

Energy Transport Telecom Water and sewerage

Mill

ion

USD

per y

ear

3.- Why our countries require PPPs

Latin American countries in general have been significantly lagging behind in global competitiveness.

The countries of the region require to redouble investment efforts, particularly in infrastructure.

The historical resources of governments to deal with the backlog are limited and it is urgent to advance development.

In addition, there are delays in social issues that, if not addressed, endanger the social structure, to where it would be necessary to direct public budgets.

Private investments in infrastructure projects, while facilitating appropriate risk distribution can be very attractive.

Competitiveness according World Economic Forum - 2013

Source: The Global Competitiveness Report

2006 2007 2008 2009 2010 2011 2012 20132.5

3

3.5

4

4.5

5

5.5

6

Alemania

Mexico

Switzerland

United Kingdom

United States

Brazil

China

ArgentinaHonduras

El Salvador

Nicaragua

Panama

Guatemala

Chile

Paraguay

Competitiveness Global Index

Punt

aje

Infrastructure/competitiveness Note the large gap between Latin American countries in comparison with South East

Asia. Chile stands out in private investment because of (due to) retirement saving fund

systems, which occupies a position similar to those of China and Thailand.

Source: The Global Competitiveness Report 2013-2014, WEF (2014).

0 10 20 30 40 50 60 70 800

102030405060708090

100

Unites States

GermanyJapan

Taiwan

Chile

ChinaThailand

India

BrazilMexico

ColombiaPeru

Relationship Infrastructure/Competitiveness

Competitiveness Position

Positi

on o

f inf

rast

ruct

ure

endo

wm

ent

LA Countries have assigned low in infrastructure investments as GDP%.

Great Challenges

• Latin American countries have faced the challenge of insufficient financial resources to expand its infrastructure and institutional weakness to design, prepare, implement and supervise projects.

Great challenges to do more with less

Infrastructure investment faces the great challenge of doing more with less - which can only be achieved by:

Selecting projects better. Evaluating with improved methods of Cost-Benefit

Analysis. Preparing projects better and in a sustainable

environment. Choosing best methods of procurement (e.g. public vs.

PPPs). Performing them with zero tolerance to corruption.

What are LA countries doing well? Phase Mexico Brazil Chile Colombia Peru

Planning of the project portfolio

Evaluation & Prioritization

Preparation

Bidding

Performing

Follow up

Supervision of PPPs

Growth Expectations (2014): Selected Countries

The most important countries of Latin America are growing again.

1.8%

3.0%

4.5%

0.5%

3.6%

5.5 %

Source: FMI (2014)

Panamerican Federation of Consultants

Joins consulting associations in 14 countries of Latin America, including Spain and Portugal.

More than 1 200 engineering firms

About 90 000 employees

FEPAC’s role

Facilitate the exchange of skills and experiences

Adopt best practices

Spread market opportunities

Quality selection mechanisms

Stimulate and promote activity

Working Commissions in FEPAC 2012-2014

Stimulate PPPs in the region (Colombia)

Promote new activities and consultant roles (Spain)

Strengthening capabilities and strategic alliances

(Brazil)

Statutes and fees (Argentina)

Establishment of the General Secretariat in Lima (Peru)

Pan American Federation of Consultants

Federación Panamericana de Consultores

Rua Ricardo Rivera Navarrete 762, piso 11, Distrito San Isidro,Lima, Peru.

www.fepac.org