Highway PPP 'marks a before and after in contracting in Guatemala'

The Guatemalan government is working to obtain approval for 11 new infrastructure projects under the public-private partnership (PPP) model after successfully carrying out the first contract of this kind in the country.

Infrastructure development agency Anadie and the consortium Autopistas de Guatemala (Convia), formed by Mexican company Marhnos and its Guatemalan counterpart Grupo Precon signed the country's first contract under this model for US$125mn, a 25-year deal for the rehabilitation, administration, operation and maintenance of the Escuintla-Puerto Quetzal toll highway. 

BNamericas spoke to the executive director of Anadie, Kevyn Valencia, to find out more about what this PPP project means to Guatemala and about the other projects that are awaiting approval from congress.

BNamericas: How long did it take to develop Guatemala's first PPP project?

Valencia: In 2016, the structuring began, with studies required by the communications, infrastructure and housing ministry. We're talking about approximately five and a half years. As for Anadie, it has been 10 years since it became the agency responsible for projects under the public-private partnership model in the country.

BNamericas: What proportions of the US$125mn investments for the Escuintla-Puerto Quetzal toll highway project is each party going to put up?

Valencia: This is a self-sustaining project that will be paid for through tolls. The Guatemalan government is only putting up the corresponding assets to be able to develop the project. In the following phases, under the provisions of the law, there's a payment directly to the agency so that it can sustain itself and continue to carry out infrastructure studies.

BNamericas: Why has it taken until now to get the first PPP project underway?

Valencia: Since the enactment of the regulation that promotes this type of contract, it was very important for the Guatemalan government to start structuring these kinds of projects. We have comparisons in some cases like Peru, Chile and Colombia, where the flow of projects under this modality began after the first PPP. That's why it was a priority for Guatemala to be able to start with this. 

The country has lagged behind a little in terms of the initiatives presented by government institutions to propose projects that could become PPPs, but since the agency began to move forward and strengthen its portfolio of projects and search for them, the portfolio began to grow they’ve become more attractive. So, government institutions are now more confident in this model. 

Without a doubt, the signing of this contract marks a before and after in contracting in Guatemala. The country's government is extremely pleased with the model and with the PPP project, which has undoubtedly been a learning exercise for all of the participants.

We’re positive about this first contract and we believe that, from this, Anadie will be positioned as the structuring agent of these projects, so much so that we already have 11 more projects in congress on which we're working.

BNamericas: What kind of initiatives are they?

Valencia: There are five urban projects in the country, most of them requested by the municipality of Guatemala City. Some involve connections within the city, as well as bridges and overpasses. The agency is also beginning to expand its limits in terms of structuring, as we've received biogas and solid waste management projects as a new alternative for the various municipalities. The ministry of economy is involved in these initiatives to support them and make them much more attractive for small and medium-sized businesses.

BNamericas: Do you think there's a lack of investment in the infrastructure sector in Guatemala?

Valencia: For us, the participation of large and international companies that are interested in acting in Guatemala is essential, and not only in these public-private partnership projects. As an agency we've dedicated ourselves to covering all transparency and control standards. We're currently very committed in these areas. We recently had meetings with the comptroller general of accounts and they're very happy with the auditing, monitoring, supervision and particularly the transparency of the processes, since we've published each one of the events related to them. We need the participation of more companies and we're giving signs that these types of projects are reliable in Guatemala.

BNamericas: Do you have any suggestions for those who wish to invest in the country?

Valencia: I would invite potential private sector investors since there are very solid foundations in Guatemala and this project is proof of that. I think there's a good economic climate, so now is the time to move forward through this model and bridge the gaps in infrastructure. 

The whole scenario is clear: the actors, the agency and the elements in terms of certainty, security and the transparency of each of the steps. We have fertile ground so they can come and trust us and the contracting modality. We're more than confident that it this is just the tip of the iceberg for future projects.