Public-Private Partnerships (PPP)

1. Project-origin pathways

Law 47-20 recognizes two:

• Public initiative: the public sector identifies a need, structures it as PPP with DGAPP support and tenders it competitively.
• Private initiative: a private proponent submits a project to DGAPP, which evaluates it. If considered of public interest, it is structured and tendered. The originator has a preferential right under conditions and, if not awarded, receives study reimbursement.

2. Contract types and modalities

Common modalities include concession contracts (DBOT, DBFOM and variants), management contracts, service-delivery contracts and combinations. The modality is selected by risk profile, payment source (users, budget, mixed) and duration.

3. Risk allocation

The technical core of a PPP is the risk matrix: identification, evaluation and allocation of each risk to the actor best placed to manage it. Typical risks include design, construction (overruns and delays), demand, operation and maintenance, regulatory, currency, financial, environmental, force majeure and political events. International best practice allocates endogenous private risks to the private side and systemic risks (regulatory, extraordinary force majeure) to the public side, with intermediate mitigations.

4. Typical financial structure

The usual structure involves a Special Purpose Vehicle (SPV) set up by the awardee, with sponsor equity and project finance debt (limited or non-recourse). The SPV signs the PPP contract with the State and commercial contracts with financiers, EPC contractors and operators. Multilateral banks (IDB Invest, IFC, CAF, World Bank), commercial banks with multilateral guarantees and bond markets are common funding sources.

5. Payments and remuneration

Private remuneration may come from:

• User fees: tolls or tariffs charged directly to service users.
• Availability payments: the State pays the private side subject to service-level compliance.
• Mixed schemes: combinations of the above.
• Special contributions: tax credit certificates, in-kind contributions or other mechanisms provided by law.

6. Investor guarantees

The PPP framework, together with Law 16-95 on foreign investment, ensures:

• Non-discriminatory treatment relative to local investors under comparable conditions.
• Free transfer and repatriation of capital and dividends, with BCRD documentation.
• Protection against arbitrary expropriation, with compensation per law and treaties.
• Contractual mechanisms for economic-financial equilibrium upon unforeseen events.
• Dispute resolution clauses, typically with international arbitration when the foreign sponsor requires.

7. Typical processes and timelines

The full process —from initiative submission to contract signing— typically takes 12 to 24 months for mid-scale projects, longer for complex ones. The structuring phase (technical, financial, environmental, legal studies) is the longest and most decisive: a well-structured project has high commercial-close probability; a poorly structured one stalls.

8. Emblematic cases

The regime is relatively young and its trajectory is being built. The first operations under 47-20 (including road, port and health projects) are practical references that allow the market to calibrate timelines, requirements and contract format. We refer to these public cases descriptively: what matters for investors is to follow the administrative jurisprudence as it develops.