1. Hidden Money, Hidden Resources Dinero oculto, recursos ocultos Presentation Aldo Caliari

2. Hidden Money, Hidden Resources Dinero oculto, recursos ocultos Features of PPP contracts that facilitate outflow of funds Fiscal incentives Overpayments Underinvestment Safety nets Contingent liabilities Contract renegotiations frequent (rarely in favor of the state)

3. Hidden Money, Hidden Resources Dinero oculto, recursos ocultos Features (II) Renegotiation is common and tends to favor private-sector operators --55 percent of all PPPs get renegotiated, on average every 2 years --increase in tariffs (62 percent of all renegotiations) --automatic pass-through to tariffs of increases in cost (59 percent) --postponement and decrease in private sector obligations (69 percent); --decrease in concession fees paid to the government (31 percent) Concessionaire may go bankrupt and requests relief from the government

4. Hidden Money, Hidden Resources Dinero oculto, recursos ocultos How financial firms see infrastructure Infrastructure assets tend to hold monopolistic or quasi- monopolistic market positions and thus enjoy high barriers to entry and sustainable competitive advantage. Infrastructure assets offer stable, predictable current returns that are frequently linked to inflation via either a regulated return framework or a contracted rate of return. These assets bear little or no risk of redundancy or of technological obsolescence and have relatively low operating risk with a demand and price profile that tends to be relatively inelastic. Thus, tolls can be raised or the rates for electricity, water, or gas can be increased without having a material negative impact on demand. (Mark Weirdorf, Chief Investment Officer of Infrastructure Investments Group and one of Managing Directors of JPMorgan Asset Management)

5. Hidden Money, Hidden Resources Dinero oculto, recursos ocultos World Bank study on disclosure of contracts “There are reasons to believe that significant disclosure can help PPP programs achieve desired value-for-money and better outcomes. Examples include how revealing information on procurement of PPPs can improve governance, disclosing information on government contributions to and risk- bearing under PPPs can improve the management of the fiscal costs of PPPs, disclosing information on the performance of PPPs provides users of services with an understanding of what levels of service they should be getting. Contract disclosure may well produce more sustainable contracts and benefit the private sector by reduced risks of renegotiation. “