IFIS and PPPs IN LAC Vanessa Torres, Asociación Ambiente y Sociedad-Colombia

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1 IFIS and PPPs IN LAC Vanessa Torres, Asociación Ambiente y Sociedad-Colombia

2 IFIS and PPPs IN LAC The International Financial Institutions (IFIs) believe that infrastructure investments are fundamental for developing countries basic service: roadways, access to water or electricity. LAC: stimulate private investment through: (a) Create regulatory and institutional capacities to develop a complete portfolio of projects: IFC promote policy frameworks or regulation for private participacion. (b) infrastructure like a private savings. 27/01/2016: The IFC created a new infrastructure debt fund designed to pension funds invest in infrastructure works (4G roadways -PPPs).

3 THE MULTILATERAL INVESTMENT FUND (FOMIN), FROM THE IDB GROUP SUPPORT FOR COLOMBIAN PPP PROGRAM: The specific objective of the program is to help increase private investment in the provision and management of productive and social infrastructure, through the consolidation of public policy for enlisting private sector participation at the national and subnational levels.

4 Infrascope Ranking 2014 País Puntaje 1 Chile 76,6 2 Brasil 75,4 3 Perú 70,5 4 México 67,8 5 Colombia 61 6 Uruguay 52,9 7 Guatemala 46,3 8 Jamaica 44,4 9 El Salvador 41,6 10 Costa Rica Honduras 37,7 12 Paraguay Trinidad y Tobago Panamá República Dominicana 24,2 16 Ecuador 22,1 17 Nicaragua 20,6 18 Argentina Venezuela 3,2 Colombia is on the five place the study's variables are: (i) legal and regulatory framework (ii) institutional framework (iii) project experiences and success (iv) investment climate (v) financial facilities (financial instruments) (vi) activity on a sub-national level.

5 Characteristics of the PPP national Law 1508 of Concept of PPPs: tools to link private capital through a contract with a public entity and the private sector for the development of public property. 2. In Colombia the PPPs are a indeterminate legal concept to expand the figure to all the infrastructure sector, not just transportation. 3. PPP will not be understood as a form of contract the PPPs are a scheme designed to: structuring payment mechanisms of government to understand the infrastructure like a service. 4. The implementation of public private partnership projects will have a maximum of thirty (30) years of implementation, including extensions. Is the regulation compatible with the environmental framework in Colombia?

6 Río Magdalena PPP project

7 Colombia: social-environmental impacts and contractual irregularities On September 13 of 2014 the PPP contract 01 of 2014 was signed between Cormagdalena and Navelena S.A.S whose majority shareholder was Odebrecht, with 87% of the society. Principal Goal: recovering the Magdalena River s navigability along a 908 kilometers section between the municipality of Puerto Salgar and Bocas de Ceniza (Barranquilla). Navelana rol: channeling and dredging to maintain a navigable channel, The contract had an approximated cost $840 million dollars. Civil society complaints: Why? the project involving Colombia's main river Río Magdalena PPP project

8 was not consulted with the surrounding communities Incomplete and insufficient environmental and social impact studies: such as improper depositing of dredged materials. And with decree 769/2014 the Ministry of Environment and Sustainable Development eliminated the environmental license requirement for this kind of dredging (una clara medida para beneficiar al sector privado y acelerar la ejecucion del proyecto). Contract's execution: ODEBRECHT CORRUPTION SCANDAL Navalena it was not able to achieve a financial closing of the contract because the Odebrecht corruption scandal exploded in the region and this company has the 87% of the society.

9 In December of 2016 the Comptroller General's Office reported that irregularities had been found in the contract's execution, since Navelena changed the materials required for the public works, for cheaper and lower quality materials that would put the stability and sustainability of works at risk. National corruption: This project is under investigation due to corruption accusations involving ex-government officials and parlamentarians, according to the Office of the Prosecutor General of the Nation (produraduria). What happend with the communities and the river? Communities and NGOs articulation: AAS and the Extractive and Environmental Group of the Magdalena Medio (GEAM) are consolidate a metodologie to monitoring the actual impacts of this project in the river, communties and the differents ecosistems in the river for example the mangroves or the wetlands.

10 Final comments The IFIs must stop indicating that a country's economic problems and inequality is only an issue of infrastructure: these entities must build institutional capacities to develop projects with transparent regulatory frameworks and improve accountability mechanisms. It is necessary that the Multilateral Banks analyze the real impact of implementing PPPs: Evaluate the effects of this private participation on: (i) Public debt, the environment, including the impact on environmental protection regulations; human rights; satisfaction of communities' basic needs, monopolization of the infrastructure sector or corruption. Is very probable that after an analysis of these topics, it is impossible to insist on the application of PPP in the region.

11 Vanessa Torres, Asociación Ambiente y Sociedad-Colombia vanessa.torres@ambienteysociedad.org.co Facebook: Asociacion-ambiente-y-sociedad