We are releasing in Nicaragua our new Public-Private Partnership (PPP) Law, which was approved on October 7, 2016 and came into force since its publication in the Gazette, Official Journal on the twelfth of the same month.
Its main goal is to Foster and facilitate, under the scheme of partnership, the projects and contracts to provide infrastructure and public services that may apply; regulating the participation of both the private and public sector during the formulation, contracting and financing as well as execution, operation and extinction from projects.
The PPP scheme seeks to Foster the private initiative in the projects of national interest that benefit the development of the country as well as the most efficient and effective satisfaction of the needs from the people, without detriment of the national sovereignty. In other words, granting the common good.
As is known in Nicaragua we enjoy of personal security, which if it did not exist, it could not be guaranteed by law, but a law itself can ensure legal certainty, which is granted by this law, because it guarantees and commits the State to respect constitutional guarantees and rights to all natural and legal persons participating in a tender process, these being unalterable principles and rights.
Added to this guarantee is the law commitment that the authority must follow an impeccable conduct and an honest and loyal performance of the duty or charge, being both parties committed to reject corrupt or fraudulent practices during the tender process and the execution of the projects.
Let us take into consideration that the funding of the PPP projects are clasiffied by the law as follows: a) Self-sustaining, which are those in which the income received by the private, derived from fees charged directly to users, covering all project costs during the contract period and allow the private participant profitability or financial adequate to the risk assumed; and b) Subvention, which are those for the economic sustainability of the project during all or part of the contract, require financial resources from the State in the form of transfers, guarantees or both.
The private party will see the retribution to its investment either by charging fees to users, through periodic payments made by the State expressly stipulated in the Bidding Terms and Conditions, Technical Bid and the Contract, or a combination of both, being able to impose, if so permitted the inherent profitability of the project, a particular contribution in cash or a share of their profits to the State. In the case that the remuneration includes State payments, they can be determined or contingent.
Once a year, the General Office of Public Investment (DGIP by its acronym in Spanish) from the Ministry of Finance and Public Credit (MHCP), as a body responsible for law enforcement, will open a tender for the presentation of projects of the private sector, so that private bidders propose projects, which must be accompanied by the pre-feasibility study. If the proposal is approved, the private proponent will be compensated under the terms established in the tender, which will take place within a maximum period of two years from obtaining such approval.
The PPP contracts shall be approved as a Law, entering into force after its approval by the National Congress. A clause of alternate dispute resolution mechanism shall be established to solve any disputed arising from the contract, which it can be on any matter relating to the existence, validity, termination, interpretation or performance thereof.
Much expectative has been created by both the public and private sector with this law for the development of Nicaragua through the PPP that so many benefits has given to other countries.