Too many errors seen in Peru's PPP contracts

Approximately 46% of public-private partnership contracts in Peru have to be reworked within the first three years of signing, according to the nation's comptroller Fuad Khoury, who called for capacity building at private investment promotion agency ProInversión, which manages PPP contracts.

The comptroller's office reviewed a sample of 10 PPP contracts from the health, transport, energy, communications and agriculture sectors, and found that 35 out of 39 contract addendums could have been foreseen at the original contract signing.

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At a symposium to discuss PPP contract addendums, hosted by national infrastructure association Afin, Khoury said that PPP contract errors persist and are higher than the expected margin of error, given today's sophisticated project analysis tools.

"It's also necessary to take advantage of local and international experiences to optimize the design of projects and the PPP contracts, and standardize the processes to promote the projects," Khoury was quoted as saying in an Afin release.

Meanwhile, reports of a presidential decree modifying the PPP framework are generating considerable concern within the sector, mainly because a lack of consultation with those who would be affected by such changes, said Afin head Gonzalo Prialé.

Changes to the framework should focus on improvements to the contract to align with engineering specifications, as well as clauses to cover compensation for advanced or additional project works, he added.

Among signature projects to be carried out as PPPs are Lima metro lines No.2, No.3 and No. 4, a multipurpose rail line from Huancayo to Huancavelica, and the fourth stretch of the Longitudinal de la Sierra highway.