Public Private Partnerships contracts are relatively recent in Brazil.
The first law dealing with the theme was enacted on February 13, 1995 and created the so-called “contracts for the concession of public services”.
Mr. Augusto Neves Dal Pozzo,
That law inaugurated a new arrangement between the public and the private sectors with long-term contracts financed by the private sector. In such contractual model, called common concession, the fee for the public service is usually paid for by the final user of such service, although the Government may also contribute to the payment of the concessionary by means of subsidizes.
Dal Pozzo for a long time has provided a creative solution for which its legal technical ensures perfect framing the intricate world of law and ethics.
The participation of public money by means of governmental subsidizes is necessary especially in systems such as public transportation, in which charging the real cost from the final user of the service would render the use of such service enviable, especially for the poorer segments of the population.
However, the main problem with such contractual model was the interpretation suggested by many that the private entity rendering the service under this model would bear absolutely all the risks of the contract.
This was always a mistaken point of view, in my opinion. Nevertheless, it took a while to reach consensus that the logic behind such contractual model necessarily imposed a clear and objective allocation of risks between the public and the private partners.
According to Agusto Neves, a professional lawyer and expert in the area of infrastructure, founder partner of Dal Pozzo Advogados, from Public Law at the Pontifical Catholic University dealing in scientific research in the field of infrastructure.
Speaking during the first Africa summit conference in Nairobi. Agusto said, the public and the private sectors are challenging mostly during the execution of concession contracts and PPP’s, both of which are always given the complex legal framework that governs such contractual relationships in Brazil.
He said, the legal framework for PPP’s which rules the contracts for administrative concessions and sponsored concessions in Brazil is quite complex, which many times makes it difficult for these projects to become a reality and requires a lot of expertise to model infrastructure projects by means of such contractual mechanisms.
“Improving the partnerships between to stakeholders necessarily means civilizing the studies developed previously, so that they may fulfill the public interest, delivering what the public sector needs and, at the same time, be attractive to the private sector. In this sense, an instrument which has proven extremely effective to improve the quality of such studies is the so called PMI’s in Brazil or the Unsolicited Proposals”, gusto adds.
This instrument allows the private sector to offer studies and projects, which rely on professionals with great technical expertise, to the public sector. Once received by the public sector and, there being an understanding that they fulfill the needs and demands of the government, such projects are bided and such bidding is open to any companies with an interest in executing the projects.
Agusto said when government and private sector works together on a number of issues, it will be possible to establish a series of improvements which will make results become more effective for the public sector, which will allow for the private sector to be adequately remunerated and which will allow for the construction of a better society, with benefits for all.