- Colombia’s government has had a long history of private sector participation in infrastructure and public services.
- Following a World Bank recommendation, the government of Colombia began working on a PPP bill and in December 2011 the Parliament of Colombia approved its first PPP law.
- The World Bank’s Latin America and Caribbean Transport Unit, with WBI’s assistance helped the government set up a new PPP agency.
October 30, 2012―Colombia is Latin America’s third largest economy, but its infrastructure gap is high and delivering public services is a challenge. To meet these needs, Colombia’s government has had a long history of private sector participation in infrastructure and public services. It was the first country in Latin America that started Public-Private Partnerships (PPPs) in 1993, in its ports in Cartagena and Santa Marta. At that time most of the ports in Latin America were managed by large state owned enterprises, with high monopoly power, strong unions and large inefficiencies on logistic costs. The inefficiencies in Colombia were greater because its capital, Bogotá is deep inland, but the benefits of PPPs in its ports lowered tariffs and increased productivity.
During the late nineties Colombia expanded its PPPs to roads and today, 32% of its road network is under PPP contracts. The Government of Colombia has signed 48 PPP contracts in the transport sector. Additionally many of its municipalities are involved in PPPs, in solid waste management, urban mass transport and water and sanitation sectors.
“Even though Colombia’s PPP experience is one of the largest in the region, there were still issues in terms of lessons learned, best practices and institutional memory, in particular in the transport sector,” said Clive Harris, PPP practice manager, World Bank Institute (WBI). “Additionally, according to a report of the reform of the concession agency, the number of renegotiations and the low effectiveness of contract monitoring had affected the institutional credibility of the PPP program in Colombia.”
PPP Reforms and Creating an Agency
In October 2010 the new government in Colombia with the World Bank’s support, decided to make reforms in its PPP agenda focusing on institutional restructuring and capacity building. “For the government of Colombia, the PPP agenda is a priority and one of the key strategies to support its economic growth and trade competitiveness, in particular after the Free Trade Agreement it signed with the United States," said Daniel Alberto Benitez, Senior Transport Economist, World Bank Latin America and Caribbean Region.
Colombia’s PPP law provides a better legal and institutional framework to attract private investment in PPPs and checks and balances in the government.Phillippe Neves, Investment Officer, International Finance Corporation.
Government commitment to make significant institutional changes in the Colombia’s PPP agenda was one of the key success factors for World Bank collaboration. The World Bank’s Latin America and Caribbean Transport Unit, with WBI’s assistance helped the government set up a new PPP agency. The assistance continued with a South-South knowledge exchange on PPP institutional options learning from Chile and Peru’s experiences. In November 2011, the government created the National Infrastructure Agency to lead PPP structuring and contract management in the transport sector, including airport infrastructure.
Instituting a Legal Framework
Following a World Bank recommendation, the government of Colombia began working on a PPP bill and in December 2011 the Parliament of Colombia approved its first PPP law. In July 2012 the law’s regulations were approved by the government.
“Colombia’s PPP law provides a better legal and institutional framework to attract private investment in PPPs and checks and balances in the government,” said Phillippe Neves, Investment Officer, International Finance Corporation (IFC). Before this law, PPPs were legally under the public procurement law that had limitations.
This progress and Colombia’s PPP portfolio was presented during the PPP Days 2012 Conference jointly hosted by WBI, the United Nations Economic Commission for Europe (UNECE) and the Asian Development Bank in Geneva, in February 2012.
Building Capacity and Moving Forward
A team from the IFC joined WBI and the World Bank’s Latin America region was formed to support the PPP agency in its new challenges. The PPP portfolio managed by the PPP agency of Colombia involves around US $14.2 Billion in roads and rails projects. The agency plans to call for bids in the next six months. In this context, the challenge for Colombia is to develop financial mechanisms to mobilize funding from its pension funds.
Addressing these challenges included standardizing PPP processes, ensuring quality controls and creating a solid capacity building program to train public agency staff in Colombia in project preparation, procurement and contract management. “This program integrates
two WBI platforms - structured learning and South-South knowledge exchange,” said Clive Harris, PPP practice manager, WBI.
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