Public-private collaborations: a recipe for development – Oller Abogados

Costa Rica has an imminent need to develop infrastructure in all areas (roads, rail transport, ports,airports, educational and correctional facilities, etc). The Government by itself does not have the resources to meet all these needs and public interest obligations, but to do so, it can seek thecollaboration of the private sector.

Although there is a lack of an established domestic legal framework for public-private partnerships, Costa Rica can and should capitalise on the experience of countries that developed their infrastructure in partnership with the private sector. This should be complemented with existing experience in the public sector in our own country.

Public-private partnership schemes were first born in Britain and the United States. They were subsequently adopted in other European countries and recently, Latin American countries.

It is difficult to develop a definition that encompasses the meaning of such partnerships; the concept depends on the degree of development, the environment and the local legislation that regulates these partnerships in each country.

However, as indicated by Spanish authors Alberto Dorrego and Francisco Martinez, in their book La colaboración publico-privada en la Ley de Contratos del Sector Público (translated into English as Public-private partnership in the Public Contract Law),  in the public-private partnership “underlies the idea of a legal relationship, whether institutional or lighting a corporate entity associative between the public and private sector, well by formalising a contractual relationship that defines the rights and obligations of the parties with respect to a common purpose, in order to provide public goods or provide services to citizens in an efficient distributing the costs and risks of the operation”.

The Administration defines the kind of collaboration required from the private counterpart. This should take into account the elements mentioned above, namely, the distribution of risks and the type of need to satisfy.

Costa Rica can and should capitalize on the experience of countries that developed their infrastructure in partnership with the private sector. This should be complemented with existing experience in the public sector in our own country. For example, the Costa Rican Electricity Institute (ICE) pioneered the successful use of the scheme of public – private partnership called BOT (build, operate and transfer, for its acronym in English).  Later, other public institutions have used the ICE experience in this type of contract.

The experience so far in the Concession contracts for infrastructure and  public services has been a crucial challenge for our country.  Clearly, under this system, we must promote and develop clearer, more specific and efficient processes and contracts, in order to achieve an effective satisfaction of the public interest. 

Roberto Esquivel is the Director of the Public Law and Project Finance at Costa Rica-based Oller Abogados. He can be reached via resquivel@ollerabogados.com