States lead in public private partnerships

Overview

Although Brazil passed legislation to establish a legal framework for public private partnerships in 2004, the federal government has failed to move ahead with any projects. But the states of Sao Paulo and Minas Gerais have taken the lead in developing a workable model already applied in toll-road and municipal transport projects, with a pipeline that includes prisons, higher education and water treatment.

This model reduces risks for private investors by creating mechanisms to guarantee contracts will survive political transitions. The model also protects the states through service agreements guaranteeing that projects will be completed and maintained. Other states governed by opposition parties are watching Sao Paulo and Minas closely and are likely to move ahead with their own PPP programmes to attract much-needed investment.