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Guatemala launches first infrastructure PPP

After struggling with past public-private partnership agreements, Guatemala now feels it has found a project that cannot fail.

When it comes to public-private partnerships (PPPs; P3s), Guatemala does not have the strongest track record – some may recall the halting of entrepreneur Henry Posner III's effort to bring the country's defunct railroad back to life in 2006 – but that isn't stopping the country's newly-formed partnership office, Anadie, from pursuing a P3 for the construction of a modern government administrative office complex in Guatemala City.

After announcing the tender for what Anadie expects to be Guatemala's first successful infrastructure P3 in December last year, the agency's plans to begin reviewing proposals this month are on schedule, according to assistant director of projects, Cecilia Pivaral.

“This is our first launch; it was launched last December and we're right now in the pre-qualification process for the investors who are invited to participate in the bidding process,” Pivaral said while speaking at the CG-LA 8th Global Infrastructure Conference in New York City last week. “We know that the public capacities are very low in terms of creativity and how to make [the project] very profitable, so […] we are inviting the private sector to come and to make a good proposal with the design, build, operate, transfer (DBOT) model.”

The project has an estimated price tag of $180 million, and its central component is the construction of an office centre able to accommodate 12,000 government officers.

Other critical aspects of the project include construction of 4,500 underground parking spaces and build-out of a new central station for the BRT, which traverses the city from north to south, Pivaral said, adding that a conservation area and part of a museum will also be located onsite.

The Ministry of Finance is the primary proponent of the new centre, as the agency notes it will allow the Guatemalan government to transfer costs of operation and maintenance from its aging, decentralised facilities, which currently accommodate 11,000 government officers all around Guatemala City, toward this new project.

“The demand risk, it's very low, because […] it's like a swap for the government,” Pivaral said. “Right now they are already paying it.” In fact, she added, “it is costing the Guatemalan government not to build this project”.

The contract calls for a three-year construction and planning period, followed by a 25-year operation and maintenance period, after which the government will assume property ownership responsibilities.

Once construction is completed, Pivaral said the government will provide the winning bidder with $30 million annually to cover a portion of the costs of maintenance, water, modifications of space, electricity, security, communications and rentals.

In addition, the winning bidder will have the option of leasing commercial space in the lobby and parking lot areas in order to bolster onsite income, Pivaral said.

The project is expected to employ 2,400 workers during the planning and construction phase. The pre-qualification period is set to end in June, and construction should begin sometime next year.