The Public-private partnerships (PPPs) raise two great concerns. On one side create a regulatory framework that is successful in attracting private investments in projects with high social interest. On the other one, do not allow this framework to consist in an instrument of abuse, used to swindle the tax and the procedural rigor normally imposed to the public administration.

As for the first concern, there is an agreement that a new legal regime, more flexible, is necessary in order to attract private investments to priority projects that do not fit in the public budget and that are not economical attractive enough so as to be feasible exclusively by the charging of tariff from the users. A greater flexibility is then necessary so the State can undertake long-term responsibilities, grant stable guarantees to the investor and enter into agreements that meet the sophistication demanded by the complicated modern reality.

Although any legal regime is free of abuses, the concern about not to favoring it is absolutely applicable. Therefore the importance of governance, supervision and monitoring instruments that assure good faith and efficiency in the PPPs programs and that hinder the political misusage and the consequent public assets wastefulness.

The bill itself establishes a series of fundamentals – from among the efficiency, rectitude and fiscal responsibility ones – that may guide the PPP programs. This limitation, however, does not end in this respect.

The PPP program is required to obey the budget fundamentals. Since it deals with long-term projects, none of them can be implemented without prior inclusion in the Multiyear Plan (PPA) and in the Budget Directives Law (LDO). The disbursement forecasted for the following fiscal year may also be accrued by specific appropriations in the Budget Law (LO). As it due to the Legislative to pass the PPA, the LDO and the LO, it is an important opportunity of monitoring the PPP programs.

Since the PPPs may entail an increase in expenses in many forthcoming fiscal years, the project must, in allegiance to the articles 16 and 17 of the Fiscal Responsibility Law, prove the sources of funds for its financing, be it trough the permanent increase of incomes, or the decrease of expenditures.

The establishment of funds or state-controlled companies, as well as the entailment of incomes in order to peg guarantees in PPPs, is contingent with a specific law, what demands over again the Legislative guarantee by aval. The administration of these funds or companies will certainly falls to bodies or individuals that will be engaged in, within the legal patterns, supplementary monitoring upon the PPPs.

The Federal bill sets forth the holding of prior public hearings to the bidding for the PPP, putting the population in the way of voicing their opinion. The bill also requires as an additional term, the presentation of a technical study that demonstrates the suitability and convenience of the project, as well as the competent authority order attesting the allegiance to the above-mentioned budget requirements.

It is also foreseen the institution of a managing body for the PPPs aiming at the selection of priority projects that will make part of the PPPs program. The aforesaid body has to send bi-annual performance reports to the Legislative. Add to this selection prepared by the managing body, the PPPs program will be liable for the domestic control of the public administration, including the ministerial control and the supervision of the regulatory agencies.

Without prejudice of the domestic control by the administration, the supervision of the regulatory agencies and of the legal limitation, the establishment and execution will be liable for external control by the Legislative, to be carried out with the technical assistance of the Public Finance Court. It’s observed that this external control may involve merit aspects, including economicity and convenience of the PPP projects; the injunction of Executive acts may arise from it.

Finally, it may be stressed the control that the Public Attorney’s Office and the population itself may perform by means of the public civil action and >
It may be concluded that the Brazilian legal system and the bill contemplate efficient supervision and monitoring instruments in order to prevent abuses and to assure that the PPP programs may be well managed, propitiating real benefits to the society.

For all that, we must seek for a modern law that is not afraid of promoting the necessary development to the active attraction of private investments, instead of supporting fearful reforms that, by not trusting the available managing instruments, intend to perpetuate all the inflexibility and obstacles of the traditional regimes.

Sources:   Valor Econômico March 12,2004 p.E2
Date of insertion:   23/03/2004 - 23:57:51