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Guidelines for the State's Response to the Potential Impacts of the COVID-19 Pandemic on PPP Projects 

by Diana Briones

Published: August, 2020

Submission: September, 2020

 



On August 25, 2020, Board Resolution No. 003-2020-EF/68.0 was published in the Official Gazette “El Peruano”, approving the “Guidelines for the State's response to the potential impacts of the COVID-19 pandemic on Public Private Partnership projects” (the “Guidelines”).The objective of the Guidelines is to establish clear lines of work that shall allow public and private entities that make up the National System for the Promotion of Private Investment to work together to achieve agile and consistent responses to the potential impacts generated by the COVID-19 pandemic and the measures adopted by the Peruvian State in this regard, guaranteeing the sustainability of contracts and services under the regulatory framework of Public Private Partnerships ("PPP").


Among the main aspects of the Guidelines, the following stand out:1. Three elements are considered crucial for the analysis of the negative impacts that may have been generated:


(i) primacy of the concession contract;


(ii) transparency in the participation of agents, and


(iii) scope and opportunity.


2. Six criteria are recognized to be considered in the search for solutions and the treatment of PPP contracts:


(i) Compliance with the obligations and rights established in the PPP contracts, taking into consideration the allocation of risks in therein.


(ii) Importance of PPP for the private investment system, so that the solutions to be evaluated do not contravene or distort the legal framework or the object of PPP contracts and create confidence in investors.


(iii) Segmentation of the problem based on the PPP sector, concession stage, remuneration modality, dates of reactivation of the sector, provisions issued by the owners of the projects or other state entities and the type and level of affectation.


(iv) Focus on the State's decisions to fight against the COVID-19 and not on problems identified or generated before the pandemic, as well as not admitting any conditioning against it.


(v) Take as a baseline for the evaluation of the possible impacts on the operational, legal and economic-financial situation as of March 15, 2020.


(vi) Ensuring the sustainability of public finances and fiscal sustainability in the context of economic crisis.


3. Two steps must be followed for the evaluation of impacts and the search for solutions:


(i) the identification and support of the problem, as well as possible solution proposals; and


(ii) the selection and implementation of the solution path to the problem, which may be obtained through the agreed contractual mechanisms or by signing an addendum in accordance with the applicable regulations.


4. Finally, the minimum supporting information to be provided to the Grantor for its evaluation on the recovery of the economic and financial balance of PPP contracts is identified.


For further information, please do not hesitate to contact Verónica Sattler ([email protected]), Alejandro Manayalle ([email protected]) or Diana Briones ([email protected]).


 


 



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