Debate continues on Chile's infrastructure fund

Tuesday, October 18, 2016

Chile's proposed infrastructure fund continues to generate wide debate while its future is still uncertain in the run-up to the senate vote on it this November.

One of the main concerns is the extent to which the fund will participate in projects that already have financing, reported local daily Pulso. Added to this concern is a request that the fund should have a board independent from the governing body, in addition to worries that it could overlap in duties covered by the directorate of concessions.

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The proposed bill would involve creation of a public company to establish the infrastructure fund. It would have an initial budget of US$9bn from resources generated by road concession tolls as they conclude their concession periods.

The infrastructure fund comes in response to faults in the public works ministry's concessions system due to both internal and external reasons.

The internal causes cited for the slow-moving concessions system include the lack of clear and long-term policies, what type of projects would be offered under concession and how, as well as a general lack of projects and low investments in the study of new projects. External causes include concession companies preferring complementary agreements rather than tenders and a lack of clarity regarding whether the client is the public works ministry or users.

During the presentation of the bill to the senate public works commission, Pérez suggested the establishment of target profits for the fund and investments determined on a yearly basis, which is not currently included in the text.

He also cited lost opportunities in projects that are delayed or have not been offered under concession, such as highway No. 21 to Farellones, highway No. 66 improvements, highway No. 90, the Costanera Central highway and the Chacao bridge, among others.

The Chilean construction chamber CChc also added during the senate presentation that the infrastructure fund should operate only in providing guarantees and should not actually invest in infrastructure works.

The fund is aimed at doubling infrastructure investments from 2.8% of GDP to the Inter-American Development Bank IDB's recommended level of 5% of GDP or the 6% suggested by the UN's Economic Commission for Latin America (Eclac).