Will Paraguay achieve infra PPP ambitions?

Paraguay has yet to award a project under its public-private partnership (PPP) law, although several key transport initiatives have moved closer to becoming a reality despite political headwinds in the country.

As a means of attracting greater investment capital, to help in the execution of much-needed infrastructure projects, Paraguay's PPP law was approved in November 2013, although not without its share of opponents.

While the initiative was well received by multilateral financing institutions, the implementation of projects under the model has not lived up to expectations and the law has been met with political challenges since its enactment.

Paraguay's senate, in May, introduced a bill that would have required any proposed PPP to first be approved by congress. Although the move was ultimately voted down, the proceedings illustrated that the political lines that were present when the law was first passed are still very much in place.

The most recent move to change the law is a call for the country's executive powers to submit status reports on PPP projects to congress once every six months.

While political dickering can be expected in the coming months, BNamericas takes a look at several key projects.

LRT ASUNCIÓN-YPACARAÍ

A light rail system connecting capital Asunción with the town of Ypacaraí would drastically change the way the country moves passengers in its most highly populated areas.

The 44km electrified line would have five stations, serving an area of influence with a population of around 1mn.

The PPP would involve a JV between a private construction firm and Paraguay's state-rail operator Fepasa. The winner of the LRT's construction contract would form a special purpose vehicle, with responsibilities encompassing, among other areas, financing, construction, rolling stock supply, operation and issuing of licenses to run commercial concessions at LRT stations.

The two parties would constitute a trust to oversee the business operations of the system, while Fepasa would ultimately take over the system's operation once the concession period ends. Neither the concession duration nor referential budget was provided in the tender documents.

Some 11 foreign and domestic firms have already been prequalified for the project, including companies from Argentina, Brazil, Peru, South Korea and Spain.

SILVIO PETTIROSSI INTERNATIONAL AIRPORT

One of the most desired projects is the modernization and expansion of Paraguay's principal airport, Silvio Pettirossi.

Work under a PPP scheme would require investment of up to US$200mn to build a new terminal facility in order to handle around 2mn passengers a year.

Paraguay's public works and communications ministry MOPC will be tasked with facilitating the bidding process. Concession terms could include a range of responsibilities, including construction, rehabilitation of existing facilities, maintenance, operation and various commercial activities.

A call for bids is expected in August, BNamericas was told, while the concession period has previously been reported as 20 years.

ROUTES 2, 7 HIGHWAY EXPANSION

The project to widen highways No.2 and No.7 is reported to be the most advanced in terms of feasibility studies.

The highways, connecting the departments of Central, Cordillera and Caaguzú, will be widened to four lanes and are estimated to require investment of US$350mn.

The concession period is forecast to be 25-30 years.

A call for bids is due to be made in August. Some 11 firms, foreign and domestic, have already been prequalified.

Pictured: Paraguay's public works minister, Ramón Jiménez Gaona (CREDIT: MOPC).