The Inter-American Development Bank today announced the approval of a $1 million contribution toward creation of an infrastructure project preparation fund for Brazil, the Brazilian PPP Development Facility.
The purpose of the Facility is to promote the development of public-private partnerships (PPP), concessions, operation and maintenance contracts and other long-term contractual mechanisms between private sponsors and government entities to foster infrastructure investment in Brazil. It will do so by financing pre-feasibility, technical, economic, environmental and legal studies and consulting services needed to develop these projects and render them financeable. Project preparation costs would be paid back to the Facility when final PPP or concession contracts are executed.
The Brazilian PPP Development Facility is a joint initiative of Brazil’s National Development Bank (BNDES), the World Bank’s International Financial Corporation (IFC) and the IDB, and will be supervised by a Board of Donors composed of representatives of the three organizations.
Total initial committed funding for the Facility will be $3.9 million, with BNDES providing $1.9 million and IDB and IFC contributing $1 million each. BNDES, IDB and IFC expect to continue to support the Facility in the future. Additionally, the Facility will be open to contributions from other donors.
This is the first operation approved by the IDB’s recently created Infrastructure Fund (InfraFund). The InfraFund was launched by the IDB in September 2006 to assist private, public and mixed-capital organizations in the identification, development and preparation of sustainable infrastructure projects in Latin America and the Caribbean.
The InfraFund is particularly interested in supporting projects that mobilize private financing and promote public-private partnerships, target sectors with significant developmental externalities like water & sanitation and transportation, are executed at the sub-national level and in poorer countries, and have a high probability of reaching financial closing.
This IDB operation is consistent with the Bank’s 2004-2007 country strategy for Brazil, which seeks to promote sustainable and more equitable growth through increased productivity and promotion of infrastructure investment, especially through public private partnership models.