Spotlight: Guatemala PPPs for US$1.5bn in the balance

Public-private partnership (PPP) projects in Guatemala for a combined US$1.5bn remain in limbo as a fragmented congress has the last say on when construction can begin.

PPP promotion agency Anadie's portfolio includes the MetroRiel light rail, the modernization of La Aurora international airport, the Vía Exprés highway, the Tecún Uman II intermodal logistics port, an administrative center, and the Guatemala City underground metro.

Congress voted on the most advanced PPP in the country’s 2020 spending budget in October. But not enough votes to grant funds for the US$80mn 41.2km Escuintla-Puerto Quetzal port highway were obtained, as lawmakers feared the toll road would impact the region negatively because transportation in the port area is key for commerce, daily La Prensa reported, adding that 50 representatives voted against the proposal, 32 in favor and 76 were absent.

Project	Stage	CAPEX
MetroRiel light train	Early studies	US$770mn
La Aurora international airport	Early studies	US120mn
Tecún Uman II intermodal logistics port	Early studies	US$40mn
Vía Exprés highway	Early studies	US300mn
Guatemala City underground metro	Early studies	To be determined
Government administrative center (CAE)	Ready to tender	US240mn
Escuintla-Puerto Quetzal highway	Tendered	US80mn

THE LAW

While private investors signaled interest and several administrations have promoted the PPPs, congress has not approved funds for any PPP project since the economic infrastructure development law was passed in 2010.

It stipulates that feasibility studies must be completed, public tenders have been launched and a contract to build, maintain, and operate an infrastructure must be signed before a proposal enters congress and lawmakers approve the funds. In other countries, megaprojects are approved by congress first and tendered second, and often the financing model is determined only after the pre-feasibility or feasibility studies are completed.

Critics therefore claim the lack of approval stems from Guatemala's PPP law.

To regain investors’ trust and keep his campaign promise to build infrastructure, President Alejandro Giammattei, who took office in January, asked businesspeople during a meeting with members of the industry chamber (CIG) on March 5 to send a petition to congress and persuade lawmakers to act in favor of PPPs.

Proponents have also promoted that model more forcefully over the years, especially in the wake of Giammattei's campaign promises. And Giammattei pledged to bolster Anadie, which was created under decree 16-2010 and reports to the council for the development of infrastructure partnerships (Conadie). 

The president also wants to boost infrastructure concessions and PPPs, and develop an infrastructure portfolio that can be promoted to investors.

According to local media, the government is, among other options, looking to reform the PPP law and solve the infrastructure deadlock.