ProInversión: Social sustainability is central to Peru’s PPP projects | The New Economy

ProInversión: Social sustainability is central to Peru’s PPP projects | The New Economy


The New Economy: Alberto Ñecco Tello from
Peru’s private investment promotion agency ProInversión has recently completed an international
investment roadshow, seeking to keep Peru on its prosperous growth path through PPP
infrastructure projects. Peru enjoyed five percent average growth from
2000-2016; what does the country need to sustain this development? Alberto Ñecco Tello: Firstly I believe we
need to keep doing what we have been doing, which is being very constant and committed
to our macroeconomic policies, keeping an open market, keeping a friendly environment
for foreign investors. And also a very strict and disciplined fiscal
stance. Also we need to further develop our infrastructure
in Peru. That will help reduce transaction costs and
logistic costs, and therefore increase productivity. In that sense we will be able not only to
sustain, but actually even grow at a faster rate. The New Economy: Now give me some examples of how you’re embedding sustainability into your projects. Alberto Ñecco Tello: We’re doing that through
two initiatives. We are really focused on bringing much more
prepared and complex structures to the market, that really serve the market needs. We pay really close attention to what the
market is looking for; we keep an open dialogue with investors to know exactly what kind of
structures we need to bring to the market that will attract investors and bidders. All of our projects are worked with a team
of external advisors, and what we found about a year ago is that in time we had lost our
capacity to attract the best advisors in the market – mostly because we didn’t pay much
attention to the rules and the regulations around our contracting procedures. We have totally changed that; two months ago
I obtained board approval for a new set of rules for contracting advisors, and now we
have a much more market-friendly framework that will help us attract better advisors,
and therefore also bring best practices to our portfolio and our structures. And also help train and bring knowledge to
our teams. In that sense, better structures should help
us have better sustainability. That’s on the market side, but on the other
side, we’re working very actively with the communities on the social side, so that we
have a very clear – or at least, as clear as possible – read of what the actual sensitivity
of the population in the communities affected by these projects. So that we can deal with them properly, or
at least that we can make that information available to the bidders, so that they know
what the actual situation is. The New Economy: Social and environmental
management as well is core to ProInversión’s mission, so how does that affect your work,
and the way that you work with your partners? Alberto Ñecco Tello: Well, it is central
for us. We found that in many projects, most of the
concerns for the investors coming into them was social acceptance. And, you know: what was the communities…
how were the communities going to be affected by the projects? So one of the things that we have done recently
is that we have totally changed the way we’ve structured our transaction teams. And now every team has one member from our
social team doing the groundwork from the beginning. Even before we actually go to the market. When we start just doing the preliminary work
on a transaction, we have the social team involved with the communities, measuring the
temperature around these projects, so that we know what could be the possible problems
with it. And that also comes with the environmental,
because usually social and environmental kind of go hand in hand. Because environmental issues are the ones
that mostly concern the communities. So, one of the things that we’ve found is
that around 95 percent of the issues with the communities come from the information
asymmetries. So it’s not really that the projects per se
will create a negative impact that would create social problems. But it’s mostly the lack of information and
communication that leads to these situations. So, having identified the problem, we are
working very intensively on actually bringing this information, and having more acceptance,
so projects are more sustainable in time. The New Economy: What are investors looking
for when they speak with you, and what are you looking for in your investors? Alberto Ñecco Tello: Well, investors are
looking for certainty, right? I mean they’re looking for stable frameworks,
bankable contracts, and structures that will allow them to actually deliver the service
and have the returns they are expecting. And I believe that’s fair – that’s what
the market is there for! What we expect from investors are a long-term
commitment. I mean, PPP projects or asset-based projects
like mining or concession, as I said: they’re long-term contracts, so they tend to be 20-30
years. And we need investors committed on delivering
the services that are required for that period of time. Because at the end of the day, the main objective,
the reason why we do this, is to deliver services and quality of life to the population. The New Economy: Alberto, thank you very much. Alberto Ñecco Tello: Thank you. We’re running our own roadshow with ProInversión:
on World Finance we’re discussing the macro outlook in Peru and its regulations around
foreign direct investments, while at European CEO you can learn more about the projects
in ProInversión’s portfolio. Go to proinversion.gob.pe to find out even
more. Thank you for watching, and please subscribe.

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