PM Network - May 2016

to wrap up a project to complete a 230-kilome- ter (143-mile) toll road connecting Kingston with Montego Bay and Ocho Rios that was originally launched in 1999. The project is being constructed by China Harbor Engineering Company (CHEC), which invested US$600 million to support the US$1 billion effort.

Once it’s completed in early 2016, CHEC will hold a 50-year concession, in which it will operate and maintain the road and collect all tolls. CHEC also owns the rights to develop 1,200 acres (485.6 hectares) of land contiguous to the highway, where it plans to build three hotels and 600 housing units. The Government of Jamaica also is moving forward with a concession for its second international airport, the Norman Manley International Airport in Kingston.

Other countries are following Jamaica’s lead. Grenada, Trinidad and Tobago, and Haiti have established PPP frameworks within their respective governments that include provisions for investors, including the legal right to establish a special-pur-pose vehicle company—a group of companies created to help finance and execute a PPP project—as well as terms and conditions under which public assets may be transferred to non-public entities. They also include provisions for governments to provide financing where relevant, for example, to provide subsidies or to make long-term commitments of public expenditure for the life of the PPP contract.

“Having the legal framework in place to support
PPPs is the most important step to getting these
projects moving,” says Daniel Melo, CEO of AG
Engenharia Peru and former project finance direc-
tor for the Latin America region, based in Lima,
Peru. “If you don’t have good rules and guidelines,
it is very difficult to get private investors interested.”
On the execution front, Cuba is talking to
global investors from the oil and gas industry
about offshore drilling opportunities. St. Lucia
began accepting bids in May 2015 to redevelop its
Hewanorra International Airport through a PPP
with a 30-year concession. And the tiny country
of Suriname is pursuing a solar energy PPP project
in conjunction with alternative energy company
WTEC from the United States. Jamaica, Grenada
and Haiti also are pursuing PPPs to expand their
ports for cruise ships.

“In the Caribbean region, where the fiscal limi-
tations are extremely high and the infrastructure
gap is great, the PPP model can help governments
reduce the gap and provide quality service to their
populations,” Mr. Melo says. “However, the lack of
knowledge and awareness of the design and imple-
mentation of this model needs to be intensively
[addressed] by the Caribbean governments.”
For example, government representatives in
ministries, regulatory agencies and utilities need
in-depth training on the PPP design and imple-
mentation process, Mr. Melo says. By developing
an overarching national development strategy,
governments can create a positive and transpar-