What is the Brazilian Investment Partnership Program
What is the Investment Partnership Program?
The Investment Partnership Program (PPI) was created, within the scope of the Presidency of the Republic, by Law No. 13,334, of 2016 with the construction of expanding and strengthening the interaction between the State and the private sector through the signing of partnership contracts and other privatization measures.
With the law that instituted the PPI, the two structures were standard in the Federal Administration: the PPI Council and the PPI Secretariat. The Council is the collegiate body that evaluates and recommends to the President of the Republic the projects that will integrate the PPI, also deciding on issues related to the execution of partnership and privatization contracts. The Secretariat, linked to the Ministry of Economy, acts in support of Ministries and Regulatory Agencies for the execution of the Program's activities.
Purpose of the Program
The objectives of the PPI are:
• Expand investment and employment opportunities and stimulate technological and industrial development, in harmony with the country's social and economic development goals;
• Guarantee the expansion with quality of public infrastructure, with appropriate tariffs for users;
• Promote ample and fair competition in the celebration of partnerships and in the provision of services;
• Ensure the stability and legal security of contracts, with the guarantee of minimum intervention in business and investments;
• Strengthen the state's regulatory role and the autonomy of state regulatory entities.
Once the projects are qualified in the Investment Partnership Program, they will be treated as a national priority. The bodies and entities involved must act so that the processes and acts necessary for structuring, releasing and executing the project occur efficiently and economically.
The 10 guidelines of the Investment Partnership Program
Concessions will be conducted under the utmost technical rigor
Only projects with robustness, consistency and effective capacity to generate returns to society and investors will go to the market, preventing the execution of concessions from being contaminated by impulses, which often translate into risks to good governance, such as contractual additives and excessive rebalancing. .
The focus will be on improving service delivery to people and the productive sector
What we want is to guarantee the logistical and energy conditions to improve the population's life and reduce the costs of our products. We will demand improvements that serve to improve the service, according to the demand proven in each project.
To increase legal certainty, all contracts will have clear indicators
The performance clauses will protect the user by setting the quality of service as the central goal of the concession. Investors will also know exactly what goals they will have to achieve and how they will be measured.
We are going to give back to regulatory agencies the effective meaning of State
They will be strengthened so that they can fully fulfill their role of regulating, monitoring and inspecting. The autonomy of the agencies is the guarantee that they will be exclusively committed to the development of the sectors they regulate.
The public notices will only be released after going through the public debate and obtaining approval from TCU
All studies prepared for the projects will have wide publicity, through hearings and public consultations.
All notices will be published in Portuguese and English
This was one of the suggestions of the Administrative Council for Economic Defense - CADE, which has been collaborating in the development of this new model as a way of increasing transparency and facilitating the participation of foreign investors.
The minimum notice period will be expanded to 100 days
The period between the launch of the public notice and the receipt of proposals will exceed 100 days, which will allow a greater number of investors to prepare to participate in the tenders.
The environmental variable will be considered from the beginning of the structuring of projects
The guidelines for the environmental licensing of the enterprise will be presented to increase the predictability of the activities' schedules. And the environmental licensing will be closely monitored by the PPI in search of making economic and social development compatible with the maintenance or improvement of environmental quality.
The way in which long-term financing is contracted will change
The tendency is for them to be hired at the beginning of the works, eliminating the need for intermediary loans, which increase the cost and make the operations more bureaucratic. Therefore:
• We will also invest in the issuance of debentures as a funding instrument, supporting the circulation of private capital as part of the revitalization of our economy, stimulating the secondary market for these securities;
• In the construction phase, the credit risk will be assumed by the banks, including BNDES, Caixa and Banco do Brasil. The financing contracts will have conditions for the concession contract to be effective;
• Guarantees will be shared between creditors and debenture holders. Thus, the risks of long-term financiers are minimized and the opportunity is created for the financial sector, with its expertise in assessing risks, to make such financing sources viable;
• In addition to the BNDES and FI-FGTS, the new model will count on the participation of private banks and other financing sources, which requires well-qualified projects that present rates of return appropriate to the conditions for attracting the market.
For existing concessions, we will work to keep them committed to ensuring the balance of projects
In this sense, studies that are at an advanced stage seek alternatives to solve existing problems in light of the changes that are configuring the new regulatory environment. In any alternative, the government will carry out technical studies, which will be submitted to public hearings and consultations and will also have to have the approval of TCU.
More information at Projeto56