In January next year, an Investment Law will be presented to underpin these processes. The goal is to sign contracts for at least $ 3 billion in the next 12 months.
After Ecuador Open for Business the Government managed to sign the contracts for $ 900 million (especially in the mining sector), within its portfolio of $ 30,000 million in Projects for the next five years.
According Roberto Salas, technical secretary from Public-Private Partnerships (PPP), By 2022 it is expected that agreements will be signed for at least $ 3 billion more.
In other words, the authorities project a growth of around 233% in the concessions Y administration delegations to the private sector for the next 12 months. “The $ 3,000 million signed can represent between $ 1,500 to $ 2,000 million in immediate revenue stream for the Government,” he said.
Legal certainty will attract investment
Salas explained that one of the pillars for APPs take off definitively in Ecuador is the strengthening of the scheme of legal security of the contracts.
“We want to go from attracting investors by tax incentives (less collection of taxes) rather to convince them by robust structuring processes and the confidence that no inconsistent changes will be made ”, he pointed out.
Andrés Villalba, corporate lawyer, commented that this approach is the correct one because the capitals for works and productive projects seek, more than reductions in tax payments, that the rules of the game established from the beginning are respected, and, in addition, that there are mechanisms efficient of conflict resolution.
“In the tax reform approved at the end of November 2021, the Lasso government has already taken concrete steps such as reducing some of the excessive tax exemptions that were established in the Lenín Moreno administration. These exemptions did not give the expected results in attracting investment, “Villalba said.
Flexibility to reach agreements
The civil servant Roberto Salas added that the contracts to be signed have a minimum term of 15 years, but can even be up to 50 years. That is why a strong but flexible legal scheme is needed to avoid conflicts very expensive to solve in the future.
“In the long term, it is normal for there to be changes. That is why flexibility is needed to adapt to those changes in the future that we do not know today. In addition, effective ways to resolve disputes must be strengthened before having to go to court, “he said.
State millionaire payments
In the last 14 years, bad management of conflicts with private investors has caused the Ecuadorian state be forced to pay millionaire compensation. One of the latest cases is the firm compensation that must be paid to the Perenco oil company.
Another fundamental step to build trust was taken in June 2021, when the current Government re-registered Ecuador as a member of the Convention on Settlement of Investment Disputes (ICSID).
Three milestones of PPPs in 2022
Salas assured that the first milestone to promote APPs will be the realization of a new investment law, which will go hand in hand with regulations and technical guides for all types of delegated management or concession.
For his part, Francisco Briones, undersecretary general of the cabinet of the Presidency of the Republic, confirmed that this new law will be sent to the Assembly during the first fortnight of January 2022.
The second important milestone will be the start of the operation of the Interinstitutional Committee of APPs. This committee will be made up of four ministers; and the technical secretariat will generate the inputs and the necessary coordination for the signing of the contracts.
Finally, the third milestone will be the development of the first multi-year plan from investments in infrastructure.
“This is super important because it would be the first time that the entire Central Government includes in the same platform all the projects that it needs to do in at least the next five years,” said Salas
The final objective is that the priorities and the fiscal sacrifice that is required are established. The fall of the public investment, since 2016, it is largely due to the fact that none of this has been done, despite having expensive public agencies such as Senplades. (JS)
Destination of resources
- 71% of the $ 30,000 million in public projects, which seek private management, is concentrated in the sectors of:
Hydrocarbons
Energy
Mining
Infrastructure
Technical Secretariat of APPs is now operational
Roberto Salas, technical secretary of APPs, assured that the agency under his charge has been in operation from the first day that the decree of its creation was signed. (November 23, 2021).
Around six people have been propping up the work in recent weeks. Three undersecretariats have been defined: regulations; economic and financial analysis and investment protection, which is involved in resolving conflicts before they cause problems.
Salas stressed that the portfolio of projects presented at the Ecuador Open for Business is only a starting point; and new proposals are being received every week.
“There will be projects that begin to be structured and then do not find a way to become viable. Therefore, it is important to improve the portfolio every week and month ”, he concluded.
Among the concessions that can be made, the government of Guillermo Lasso included three in the 2022 budget: Esmeraldas Refinery, Termogas Machala, Sopladora and Terminal Marítimo Monteverde; in addition to the sale of Banco del Pacífico.
However, “high impact” projects are also in the pipeline, especially in hospital recovery, sports, housing and the environment.
This last aspect includes a water treatment initiative for Quito.
