New laws have been created such as the Public Private Partnership (PPP) Temporary Employment Act (recently extended for 1 more year); Secured Transactions Law; Law on the Promotion and Protection of Investment; Law of Simplification Processes of Infrastructure; Call Centers, New Energy Law and a new Mining Law.
In this context, Honduras has realized that a country without infrastructure is a remote country in international trade and therefore has prioritized projects in the areas of roads, ports, airports and energy from renewable sources.
The PPP Law entered into force in Honduras in September 2010 and its Regulation in February 2011. It replaces the concession law and introduces a more expeditious process for the management, development and execution of public works and services through PPP contracts signed between the State and a private entity.
This law ensures strong legal framework to local and foreign investors wishing to invest in infrastructure and / or services in the country.
The law creates an autonomous and independent entity (Coalianza ) that is responsible for managing and implementing PPP projects supported by the Superintendency of PPPs .
The way a public-private partnership in Honduras can be executed varies between different legal forms: participation agreements, joint – ventures, trusts, etc. The recruitment process can be called through a tender or national or international contest or any other competitive process.
The PPP law provides investors with an arbitration procedure to resolve any dispute arising from the law or resulting from the award of the PPP contract. The Arbitration law in Honduras is based in the UNCITRAL model granting an arbitration procedure based in international statutes for the resolution of conflicts.
A great advantage of this law is that an initiative to form a PPP project may come from both the public and private sectors. This means that PPP projects for public works and for services can be presented to Coalianza either as a private initiative or as as government initiative. The projects that are presented to Colianza must comply with feasibility studies detailing the cost benefit of the association and project feasibility.
Coalianza determines whether the project is viable as a APP project and thereafter coordinates the bidding process by tender or contest. Whether the initiative comes from the private or the public sector, the contract will be awarded to the bidder which proposal complies better with the requirements of the bid and which involves a lower cost to the State.
The law allows the bidders to participate individually and or as a consortia.
Both for individual bidders and consortia, the bidder which is awarded with the PPP contract shall constitute a local company to operate the project.
Prior to operation, the agreement must be ratified by Congress and published in the Gazette to take effect.
The current PPP law was inspired by other countries like Peru that has been successful in developing PPP structures, especially in the infrastructure area.
Honduras currently faces the challenge of providing a better platform for mobilization and access to the country by improving its road, air and port infrastructure. Also, it has become imperative expanding its range of energy production at more economic and efficient costs.
It is worth to mention that PPP projects in road infrastructure (construction and maintenance of roads) and ports have already been awarded like the recent Puerto Cortes Terminal of General Cargo and Bulks. Additionally, there are other projects in the final stage of the bidding process like the Government Civic Center and some others are under study.
CENTRAL LAW Honduras