PPP laws attracting investors to Latin America

The president of Mexico's national construction chamber CMIC, Luis Zárate, this week called on the government to pass enabling regulations for the country’s public-private partnership (PP) law to avoid investors turning elsewhere in Latin America for infrastructure projects.

While Mexico's PPP law is still in its infancy, other countries in the region already have a solid track record in privatization and concession projects.

BNamericas spoke with Abigail Rolon, senior consultant in business transactions at international engineering firm Arup, about the benefits of the country's PPP law and why the multinational is so interested in Latin America and the Caribbean.

BNamericas: What projects is Arup currently working on in Latin America?

Rolon: We're working with the [International Finance Corporation] IFC on the privatization of the Norman Manley international airport in Jamaican capital Kingston. We're acting as technical advisor, preparing all of the documentation required for the government to be able to call bids. We expect a tender by the end of the year.

The airport is Jamaica's second largest, mainly handling business passengers and cargo. In 2010, the terminal handled some 17,000t of cargo, or 70% of the country's total air freight that year.

BNamericas: Arup has a presence in a number of Latin American countries. What has attracted you to the region?

Rolon: We are very interested in the region and are optimistic about doing business there. Many Latin American countries have laws that encourage sector participation, so we see it is a key region for us. We're actively seeking projects in Mexico and are beginning to look for clients and potential projects to get involved in. We're keeping a firm eye on the project pipeline.

BNamericas: What sectors are you focused on in Mexico?

Rolon: Within infrastructure, we're focusing on transport, energy and water. We have a lot of experience in the transport sector and have been involved in projects in all three sectors in Latin America. It would be an easy jump for us to do this in Mexico. We've been less involved in the latter two sectors in Latin America, but we see huge market potential.

BNamericas: How are Mexico's PPP laws affecting investment interest in the country?

Rolon: There was definitely a need for a much more thorough framework. Some states already had laws touching on PPPs but the new one is much more comprehensive.

Particularly, it deals with rights of way - one of the big issues for Mexico's infrastructure sector. Obtaining rights of way is a significant issue in any country where you want to expropriate land. Allowing the private sector to get involved in negotiations regarding this is a much more efficient way of doing things, as the private sector is in a much better position to negotiate with the public than the government.

We're currently working on a project in Peru, under which the private sector is carrying out direct negotiations with the community. If the government had taken this on, the process would take forever.

Mexico's PPP law will also boost private investment as it establishes clear processes in terms of permitting and timeframes, which will result in well-structured projects.