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Presidential Decree reshapes PPI and sets up a new model for contracting infrastructure projects

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06 de agosto de 2019

Presidential Decree reshapes PPI and sets up a new model for contracting infrastructure projects

Presidential Decree reshapes PPI and sets up a new model for contracting  infrastructure projects

Presidential Decree 882/2019, published on May 3rd, 2019, has enhanced the role of the Special Secretariat for the Investment Partnerships Program (PPI), linked to the Executive Office of Brazil´s Presidency of the Republic, as a core body within Brazil´s institutional framework of infrastructure and has set up a new model for contracting assessments for infrastructure projects.

The so-called “colação”, the new model, highlighted on article 16 of Chapter 5, has been inspired by a procedure of competitive dialogue, adopted by the World Bank. Under the terms of the Presidential Decree, the Brazilian National Development Bank (BNDES) is now authorized to hire external technical support from highly-skilled professionals, companies or institutions, chosen according to a mix of criteria of better price and techniques or better technique.

The Special Secretary of PPI, Martha Seillier, has clarified that "our purpose is selecting good consultants through this new model of contracting, with a reasonable timeframe and as much flexibility and legal certainty as expected in a complex object like this”. She has also highlighted that "therefore, we hope to achieve a higher quality in the assets deemed by PPI as national priorities, which will lead to better structured projects to be offered to the market, with higher financing capacity and approval by accountability bodies”, she highlights.

Besides this mechanism, with the Presidential Decree PPI has received more detailed assignments. Among them there are fostering the integration of the infrastructure sector; supporting PPI projects to financial institutions; proposing better regulatory frameworks and promoting dialogue between the public and private sectors.

Martha Seillier claims that investors face and price in several risks when deciding how they will allocate their resources on infrastructure projects, which are, by nature, capital-intensive and have longer deadlines to be amortized. "It is our duty at PPI making the decision of investing in Brazil easier and more natural, by minimizing political, environmental, regulatory, legal, financial risks of the infrastructure projects qualified in the program", as emphasized by the Special Secretary of the PPI. 

PPI is ruled by a Council (CPPI), presided over by the Chief Minister of the Executive Office, to which the program is linked. The Special Secretary of PPI serves as a secretary-general of the Council, with no right to vote. Henceforth the Council may, for instance, propose measures to integrate transportation modes and subnational-level transport policies; approve air transportation polices in remote areas; and approve National Aviation System reassessments.

The Presidential Decree 882 provides for a strategic role of BNDES in structuring the sales of state-owned companies in line with PPI. The bank will provide technical services in PPPs contracts and will be paid off through the Fund for Supporting Project Structuring (FAEP).

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