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Transparency in Public Private Partnerships: the case of Minas Gerais

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Is Transparency helpful to governments

Transparency in Public Private Partnerships: the case of Minas Gerais

?

1. PPPs in Brasil2. PPPs and Transparency in Brasil3. The transparency policy in Minas Gerais4. What did we learn

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Transparency in Public Private Partnerships: the case of Minas Gerais

Investment of PPP projects accumulated in Brazil (US$Bilion)

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

0

50

100

150

200

250

300

350

400

450

500

Source: PPI Data-Base

PPP contracts signed per year in Brazil

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

3 3

54

11

2

1413

16

5

Source: Radar PPP (www.radarppp.com)

76 contracts

signed

PPP project initiated per year in Brazil

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

3 4 7 8 713

3746

71

84

114

Source: Radar PPP (www.radarppp.com)

394 projects were announced

Brazil has experienced a sustained growth of private participation in infrastructure over the last 2 decades

!Source: Radar PPP (www.radarppp.com)

The Brazilian approach to transparency…

1. Identific.

2. Prepara

3. Bidding

4. Manag.

The Brazilian approach to transparency…

1. Identific.

2. Prepara

3. Bidding

4. Manag.

• Projects are required to be included in PPP plans, published in newspapers, as soon as they are selected (name of projects only).

• The unsolicited proposals, when accepted, are immediately announced in the newspapers (name of the project only)

The Brazilian approach to transparency…

1. Identific.

2. Prepara.

3. Bidding

4. Manag.

The Brazilian approach to transparency…

1. Identific.

2. Prepara.

3. Bidding

4. Manag.

• Scarce regulation on transparency in most of this stage!

• Need to a public consultation of the draft of the bidding package

• Federal level: the evaluation by Court of Auditors is mandatory

The Brazilian approach to transparency…

1. Identific.

2. Prepara.

3. Bidding

4. Manag.

• Full RFP + RFQ published (typically on-line) and at least 45 days prior to the delivery of proposals

• Communications with bidders are disclosed on-line

• Unredacted contract disclosed as an appendix of RFP

• Full content of proposals are reactively published (no commercial secrecy legally allowed)

The Brazilian approach to transparency…

1. Identific.

2. Prepara.

3. Bidding

4. Manag.

• Content of amendments (and renegotiations) do not need to be proactively published

• Contract performance are not dealt with in the regulations, and generally not disclosed

• SPV’s financial does not need to be proactively disclosed

• Fiscal commitments are disclosed for the following 10 years

The Brazilian approach to transparency…

1. Identific.

2. Prepara.

3. Bidding

4. Manag.

• All procurement documents are public

• contract draft to be disclosed with the RFP

• No commercial secrecy protection in allowed for proposals

• 10 Year Projection of direct liabilities are disclosed

+

• The actual signed contract is only disclosed reactively

• Project decisions are not observable

• Amendments are not known

• Contingent liabilities are a mystery

-

The transparency policy on Minas Gerais

Minas Gerais

The transparency policy on Minas Gerais

Maintain proactive disclosure policy (e.g. maintaining project and program hot sites) of all the information produced

Full, unredacted disclosure of programs and projects (contracts, amendments, regulatory decisions, performance reports etc.)

Recognition of different needs of different audiences

1. Identific.

2. Prepara.

3. Bidding

4. Manag.

The transparency policy on Minas Gerais

• Project descriptions and available data proactively published (e.g estimated CAPEX)

1. Identific.

2. Prepara.

3. Bidding

4. Manag.

The transparency policy on Minas Gerais

• All feasibility analysis fully published along the way

1. Identific.

2. Prepara.

3. Bidding

4. Manag.

The transparency policy on Minas Gerais

• Contract amendments proactively published on-line

• Performance reports proactively published on-line

• Project summaries produced and proactively published

The transparency policy on Minas Gerais

The transparency policy on Minas Gerais

Jan-1

0

Mar-1

0

May-

10

Jul-1

0

Sep-10

Nov-10

Jan-1

1

Mar-1

1

May-

11

Jul-1

1

Sep-11

Nov-11

Jan-1

2

Mar-1

2

May-

12

Jul-1

2

Sep-12

Nov-12

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Full time employee

Indi

vidu

al v

isito

rs

(two

mon

ths

– go

ogle

ana

lyth

ics

repo

rt)

Contracts

liabilities

Performance

The transparency policy on Minas Gerais• Minas Gerais did not disclose

– Contracts between private parties (except financial agreements)

– Personal data of the SPV managers

– Financial data of SPV before its official financial reporting to regulators

The transparency policy on Minas Gerais• Several issues arose during the

adoption of disclosure

– Claims to protect commercial secrecy

– Claims (by agencies) about loosing control of information

– Information used to criticize the PPP program

• Obtain feed back about the capacity of the project to solve the problem

Project Identification

• Assess the Commercial Feasibility• Introduce Competitive pressure during

procurementProject Preparation

• Induce a competitive procurement• Produce a leveled playing fieldProcurement

• Help to enforce private sector performance• Creates contractual stability

Contract Management

We learned that transparency, in each phase of the project cycle, helped the government to:

The transparency policy on Minas Gerais

Value for

Money

Is Transparency helpful to governments

When transparency is important?

When transparency is important?

“YES!”

Is Transparency helpful to governments

Transparency creates value for several stakeholders of the PPP project cycle

Disclosure

Governments Users

Private sector

When transparency is important?

Thank you