After a long period under study and discussion in the National Congress, finally in 2020, on February 20th, Law 47-20 on Public-Private Partnerships was enacted.
Subsequently, on September 1, 2020, the new government, sworn in on August 16, 2020, promulgated the Decree that complements the regulatory framework of the APP Law, as a sign of the government’s intention to promote this type of investment in projects of importance for the development of the various sectors of our economy.
For a few years, the Dominican Republic had a Concessions Law that had been used mainly for construction projects of public road works, as well as the concession of some public services. However, the experience in some of the projects carried out under this modality has been onerous for the Dominican Republic.
At the current times of global economic crisis, aggravated by the Covid-19 pandemic, Public-Private Partnerships are seen by the Dominican Government and the business sector as a feasible way to develop projects whose cost and maintenance if assumed in its entirety by the Dominican Government, would be very onerous for it. Thus, a joint venture with the private sector, in terms of obtaining financing, Know-How and efficient administration, could favor the development of important works of relevance.
The Law contemplates three types of APPs:
Public initiative: originating from public agents, and centralized, decentralized and independent Public Administration bodies. Includes non-financial public companies and city councils.
Private initiative: Originated in private agents that propose and submit the creation of an APP to the approval of the law process.
Non-profit: Originated in Public Agents or non-profit entities to satisfy the needs of the population. Its operation does not generate profit distribution.
For the presentation of APP projects, the law has created a General Directorate of Public-Private Partnerships, which receives and evaluates the projects that are submitted under a rigorous process established by the law. The governing body is the National Council of Public-Private Partnerships, which hierarchically depends on the Ministry of the Presidency and is made up of government officials and the General Directorate of APPs.
The process of discussion and approval of the proposals begins with the presentation of a project that must be aimed at the solution, through construction works or services of social and economic interest. It must justify the convenience of doing it through an APP and count on the feasibility, technical and financial studies that make the project viable and sustainable over time. Of vital importance in these studies is the identification of the source of financing and the environmental impact of the project. The maximum term of an APP is 40 years.
The internal discussion and approval process includes the following phases:
I. Technical Analysis.
II. Financial Analysis.
III. Risk Analysis
IV. Environmental Analysis.
Once these procedures have been exhausted, the final Decision will be made by the National Council of APPs, who may:
When it is declared a Private Initiative, the project will be submitted to public bidding. The private sector originator will have the following advantages:
In case there are no bidders, it will be awarded directly.
In the event of a tender, they will be recognized an advantage between 2% and 5% out of what is expressed in their economic offer.
In case of not being awarded, the originator will have the right to reimbursement of the costs of the studies carried out for the presentation of the initiative, which must be covered in its entirety by the successful bidder.
Finally, it is worth saying that the new law has created many expectations, but that projects have not yet been implemented under this legal framework. However, from the government level, important efforts are made to promote APP initiatives.