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Entrevista de Latin Lawyer - Doing the Deal: Paraguay’s first PPP

Berkemeyer Attorneys & Counsellors managing partner Hugo Berkemeyer and partner Martín Carlevaro talk to Latin Lawyer about driving through Paraguay’s first-ever public private partnership (PPP).
Hugo Berkemeyer and Martín Carlevaro

Latin Lawyer: How did you come to represent Sacyr and Rutas del Este?
Hugo Berkemeyer: When Paraguay’s PPP law was enacted, we were involved with the team charged with reviewing the draft law regulation. After that we organized some seminars to make the law more widely known. We also approached international players that might be interested in Paraguay, including some construction and concession groups that were already present in the region. Once the first PPP project was launched in 2015 (Rutas 2 & 7), we received a request for proposals from three potential clients and decided to go ahead with Sacyr. We considered the company to be a good player not only for this project, but for other projects in Paraguay too.

LL: What was the deal’s timetable and what legal work did you do at each stage?
Martín Carlevaro:
The project began with the pre-qualification phase. We analyzed the terms and conditions of the documents and the structuring. After that, we assessed the legal risks. This was in 2015. At that stage, Sacyr pre-qualified individually.

Counsel for the negotiations and drafting of the main project pre-agreements came next. We dealt with the financing term sheets as well as the shareholders’ agreement. This largely occurred in 2016.

The project was finally awarded in October 2016. Once this occurred, we advised on the creation of Paraguay’s first special purpose vehicle for a PPP. This was completed in December 2016. After that, we started working on the PPP agreement which involved several meetings with the administration, as well as the drafting of clauses. That closed in March 2017.
Nowadays we are helping them start their business in the country. The next big challenge will be to close the financing of the project, which involves US banks and multilaterals. It will be the first financing for a PPP project in Paraguay.

LL:Are there any similar deals in the pipeline?
The next PPP project to be granted is the Asunción International Airport extension. This is a 30-year contract for the extension and modernisation of Paraguay’s main international airport. It will entail an investment of US$150 million.
Berkemeyer Attorneys is also providing legal advice to a bid consortium represented by Sacyr (70%) and Chile’s Agencias Universales (30%). The offers are currently being analysed by the government.

There are several other PPPs in the pipeline as well as turn-key public works projects with private financing. First, there’s the duplication of Ruta 1, which will be launched by the second semester of 2017 and will require an investment of US$130 million.

Another upcoming PPP is the dredging and operation of the waterway between Apa and Paraná. It’s currently undergoing an update of the pre-feasibility studies and is expected to cost US$200 million.

Finally, several sewage plants are in the pre-feasibility stage. These involve the construction and operation of a potable water and sewage plants for some districts in Alto Parana. They involve investments totalling US$1.3 billion.

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