Public private partnerships for the modernization of Costa Rican infrastructure

Abstract

The term Public-Private Partnerships (PPP) is defined by the United Nations (2008) in their publication “Guide Book on Promoting Good Governance in Public-Private Partnerships”, as innovative methods used by the public sector with the objective of financing, designing, implementing, and operating projects and public services. Additionally, the European PPP Expertise Centre (2011) identifies that PPP are contracts i) based onservice provisionsthat consider the entire life cycle of the project, ii) under which risks are transferred onto the private sector, and iii) where the payment received by the private sector – be it through fees, direct government payments, or a combination of both – is directly linked to the rendered services.

With an annual investment gap in the transportation sector upwards of US$1 billion and a restrictive fiscal situation, the PPP figure is positioned as a fundamental tool for the Costa Rican government to provide its citizens and the productive sector with the platform of infrastructure services to put an end to years of lagging. However, the experience to date has been limited in terms of the reach and project quantities, given the lack of a concession system that incorporates the establishment of methodologies technically supported to select the provision model – in every project – that guaranties the maximization of the cost-benefit relationship for users and taxpayers.