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Colombia: PPP bankability and Bosa Hospital tender

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    In May 2019, the Constitutional Court announced that Colombia’s law on public-private partnerships (Law No 1508/12) is to be amended to enable compensation on termination to be made available to financiers who act in good faith. This is a significant step forward in the bankability of social and transport infrastructure projects in Colombia.

    Also recently announced was pre-qualification for the new COP 305bn (USD 93.77m) Bosa Hospital PPP Project, with another hospital tender in the pipeline. These factors combined present an interesting opportunity for international investors and contractors to participate in infrastructure developments in the country.

    Lessons learned from The Royal Liverpool Hospital in the UK

    We recently advised the project company in the termination of The Royal Liverpool Hospital PFI Project, a much-publicised and ultimately successful handback of the hospital construction project to the Government following the collapse of Carillion as lead contractor. We are fully versed in the lessons learned which are of direct relevance to the financing of new social infrastructure projects around the world:

    • market-standard aspects of the compensation on termination process may not be suitable or be in the best interests of any of the parties where there is a social imperative to complete construction quickly;
    • established approaches to independent certification and technical adviser review may not be capable of drawing out potentially significant supply chain issues;
    • the approach to, structure of and cost of information flow and contingency planning requires bespoke consideration on a project-by-project basis; and
    • the outcome of a project termination can be affected by the type of insolvency process selected by the sub-contractor’s creditors.

    As our team delivered a PPP training workshop to Government authorities in Colombia in March 2019, they possess both the relevant sector and market knowledge to help guide interested parties through this process. Please do get in touch to discuss these opportunities further.