Over the last four decades, there has been an exponential growth in investments in Brazil. This has not stopped the country from experiencing significant financial strains especially in the social fields’ investments. The sectors affected the most are the health, education, urban transport and sanitation sectors. They require a lot of investments to remain afloat and be useful to the public.
Felipe Montoro Jens, a specialist in Infrastructure Projects, believes that the public-private partnerships (PPP) provide a solution to this. The partnerships adequately supply the much-needed resources (time and money) to save the situation. Having been estalishedas a result of the Federal Law 11,079/04, the partnerships have sponsored important projects for the Brazilian society. Visit at baptista.com for more info.
The private sector has brought on board its expertise in infrastructure and this has greatly changed the face of the sanitation and transport networks. They have also pumped in their resources in health and education providing reprieve for members of the public.
The PPP contracts have tough penalties on private entities that fail to achieve the set quality target. This is done to ensure that only the very best services are offered. Private companies have to step up their game to ensure that they achieve the targets.
The partnerships have faced a fair number of challenges since their creation. One of this being their few numbers. Felipe Montoro Jens believes that this is brought about by the laxity of the public sector. The public partner has not been able to consistently meet their payment obligations.
A leaf can be borrowed from Peru and Chile who supported the growth of PPPs through a well elaborate framework. This allowed the public sector to honour their pledges. Private investors need solid guarantees to engage with the government on a long-term basis according to Felipe Montoro Jens.
The government could also try to lure more investors by exempting the public-private investments from taxes. The private partners have to part with close to 30% of their returns as tax to the government. As a result, they end up spending more than they desire and earn far much less than their projections. Felipe Montoro Jens adds that a balance needs to be struck so that the interests of both parties can be met.