Chile's new concessions law will take at least another six months to be approved after being submitted by the senate to the lower house on Wednesday, a public works ministry (MOP) official told BNamericas.
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Authorities expect the proposal to be approved by March, at the earliest, the official added.
The country's executive power submitted the bill to the senate's public works committee. The document was reviewed and then passed on to the finance committee before being approved unanimously by the senate itself, which has now submitted it to the lower house, said the official.
The bill includes three modifications. The first is a change in the arbitration system that includes the creation of a technical committee. Another is to limit the price increase of any proposal submitted by a tender awardee to a maximum of 25%. A third change is the mandatory holding of prequalification tenders to guarantee the rigorousness of the projects submitted by firms, said the official.
"This is a major step, which will allow us to continue expanding public-private agreements that will increase investments in infrastructure, while better protecting the interests of the state and users," MOP minister Sergio Bitar said in a release.
A SLOW PATH
The idea of creating a new concessions law was first presented to the government in 2006 by then public works minister Eduardo Bitran. He initially planned to submit the document to congress in late October of that year, but it took much longer than expected as Bitran decided to discuss it with the private and legislative sectors before presenting a document that might quickly be rejected.
As co-legislator, the executive power can choose whether to submit a bill to the lower house or to the senate first, said the MOP official, adding that this decision is based on the political climate. Authorities submit the bill to the one most likely to support the initiative.
The ministry's decision to move slowly but firmly towards a new concessions framework came as a response to the private sector's hesitation to change the current law, effective since 1996 and imitated by countries all over the world.
The original concessions law permitted over US$6bn in private investment in 50 infrastructure concession contracts in only a decade, and many feared a new law would change the rules and lead to a decrease of private investment.
In September, BNamericas spoke with Chilean concessionaire association Copsa president Herman Chadwick to learn about the private sector's reaction to changes.
"I believe we should not make the law more rigid. Just as projects cannot be rigid, because they suffer modifications along their 20-25 years of development, the law should have the necessary flexibility to allow complementary agreements. But I also believe that times change and that the law has been around for many years. If we can improve it, then let's go ahead!" Chadwick said at the time.
NEW UPCOMING CONCESSION INITIATIVES
MOP officials are already working on new concession projects to be launched for tender before 2010, when President Michelle Bachelet's term ends.
The ministry will launch the tender for three highway concession projects totaling US$500mn before year-end.
These initiatives are the concession of Ruta 66, known as Camino de la Fruta, which will call for a US$300mn investment to be covered through tolls and a state subsidy. The project consists of the construction, rehabilitation and maintenance of 135km, crossing regions V, VI and the metropolitan region.
The second initiative is the concession of the Puerto Montt-Pargua stretch in region X, along the Ruta 5 national highway. The initiative will require an investment of US$186mn and contemplates the expansion of the existing route to four lanes along some 55km. Investment will be recovered through tolls and a state subsidy for construction.
The third initiative is the re-concession of the Presidente Carlos Ibáñez del Campo airport, in region XII's Punta Arenas city, whose current concession contract is coming to an end. The project will require an estimated US$15mn investment to cover the repaving of the runway and expansion of the facility by 6,000m2.
Authorities are also working on other projects expected to be called for bid before year-end. These include the crossing on the Chacao channel and the connectivity project for Puerto Montt, Chiloé and Palena, all in region X.
NEW CONCESSION AREAS
The country's concession model proved so successful that in addition to developing airports, highways, ports, railways and public transport, the state also applied the system to other types of infrastructure initiatives.
The ministry has begun to concession jails, which are more complex than highway concessions, said the official, adding that it is currently working on new projects in this area.
Concessions are also expanding to hospitals, which is "a much more complex business than jails," said the official. MOP already launched an international prequalification tender for hospital concessions in 2007, and the first actual concession tender is expected to be launched in 2009.
Currently, Chile is visited by government and private sector representatives from all over the world who wish to learn about the country's experience and its 10-year record infrastructure development.
The Chilean concession model is also referred to by countries such as Peru, Colombia, Mexico, Uruguay, El Salvador, the Dominican Republic, and even Cuba, when developing their own concessions frameworks.
