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PPP in Brazil Procedures & Methodology

Marcelo de Lima e Souza PPP Unit – Economic Advisory Ministry of Planning, Budget and Management Mexico, February 23 rd 2010. PPP in Brazil Procedures & Methodology. Summary. Brazilian PPP Institutional Framework PPP Project Selection and Development Methodology & Capacity Building.

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PPP in Brazil Procedures & Methodology

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  1. Marcelo de Lima e Souza PPP Unit – Economic Advisory Ministry of Planning, Budget and Management Mexico, February 23rd 2010 PPP in BrazilProcedures & Methodology

  2. Summary Brazilian PPP Institutional Framework PPP Project Selection and Development Methodology & Capacity Building

  3. PPP Institutional Framework

  4. PPP in Brazil: a narrow definition • In many countries • Almost any kind of long-term relationship between public and private sectors • Joint ventures, leases, franchises, concessions, PFI (UK), • privatization... • In Brazil • PPP are special kinds of concessions • Common Concession – a concession of a public service in which revenues come exclusively from user tariffs • PPP and Common Concessions have similar economic structures

  5. PPP in Brazil: a narrow definition • Concessão patrocinada (Sponsored Concession) • Common concession of public services • Origin of revenue: tariff + public payments • Concessão administrativa (Administrative Concession) • Direct or indirect services to the Public Administration • Public services • Economic activities not listed as public services • Origin of revenue: public payments

  6. Revenue Generation and Type of Contract Concessions 8.987/95 9.074/95 PPP 11.079/04 and Public Tendering Law 8.666/93 PPP Law 11.079/04 Sustainable projects Independent Revenue Generation Capacity Partially sustainable projects by means of public resources Traditional projects of public investments and public procurement

  7. Legal Requirements • Law 11.079/2004: • Contract duration from 5 to 35 years • Contract Value: at least R$ 20mi (US$ 11mi) • Contract Object can’t exclusively be restricted to: • Hiring personnel • Providing and/or installing equipments • Providing Civil works

  8. PPP Project Selection and Development

  9. Key Players • CGP - PPP Council • Members: • Ministry of Planning (coordinator) • Ministry of Finance • Presidency Chief of Staff • Responsibilities: • Establishes contracting procedures • Defines PPP priority projects • Authorizes tendering processes

  10. Key Players • PPP Unit / Economic Advisory M. Planning • Technical support to the CGP • Administrative support to the CGP • Advisory to third parties • TCU – National Audit Office • Oversees the proceedings on various levels • STN – National Treasury • Fiscal controls

  11. Development of PPP Projects 1 2 …………… PPP Projects 4 3 PHASE 1 Identification of PPP projects from the Multi-Year Plan PHASE 2 Preliminary analysis and prioritization of PPP projects PHASE 3 Structuring of PPP projects - PPP Projects Portfolio Multi-Year Plan PPP Structuring Team

  12. Projects prioritization criteria 1 2 PPP Projects …………… 4 3 Development Strategy of the Federal Government Revenue generation capacity Level of project development Interest by the private sector 3

  13. Required Studies for a PPP Convenience and Opportunity Studies on Fiscal Impact Technical Studies Economic and financial feasibility Legal Studies Determine and project demand Economic/Financial Model Operational Project and Performance Indicators Legal Model and documents Business Model Engineering Project and Investment Program Financing Structure Environmental Studies Risk Analysis

  14. Methodology & Capacity Building

  15. Project ATN/MT 9587-BR • Cooperation Agreement with IADB/MIF • Consolidate the PPP Unit and provide support to sector units and to other government levels • Institutionalize PPP methodology • Structure and develop projects

  16. Consolidation and Support (2009 activities) • 01 National Training Course • II Course on PPP Development • 300 participants • 01 Regional Seminar • I Seminar on PPP • 270 Participants • 05 Local Training Courses (Aracaju, Fortaleza, Natal, São Luis, Teresina) • About 50 participants on each session

  17. Methodology Development • Development of a Value for Money Methodology • Selection of external consultants in a competitive process • Comparison of foreign methodology and best practices • UK, Ireland, Australia, Netherlands, South Africa and Canada • Creation of a quantitave and qualitative method fo • Publishing a PPP Project Analysis Manual • Creation of an Analysis Model for PPP Projects • Development of an illustrative applied model on eight projects on different economy sectors • Public officials training program • Expected conclusion date: November 2010

  18. Project Structuring • Technical Cooperation Agreements signed with states and municipalities: • Agreements with Bahia, Ceará, Manaus, Maranhão, Piauí,Rio Grande do Norte • Development of projects: • Highway (Piauí) • Logistics Plataform (Bahia) • Administrative Center (Rio Grande do Norte)

  19. Project Structuring • Technical Cooperation Agreements signed with federal organizations: • Brazilian Space Agency: geostationary satellite • Ad hoc cooperation

  20. Thank You. Marcelo de Lima e Souza Ministério do Planejamento, Orçamento e Gestão Tel: +55 61 2020-4944 Fax: + 55 61 2020-8084 E-mail: marcelo.l.souza@planejamento.gov.br

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