With a view to fostering private investment, Ecuador has passed a Law on Incentives for Public-Private Partnerships and Foreign Investment containing a series of tax benefits for undertaking public projects, including exemptions from income tax, foreign currency remittance tax, foreign trade taxes, and other benefits. It also guarantees legal stability of the specific, sectoral rules declared essential in the pertinent agreements or permits for operating in strategic sectors or provision of public services.
Additionally, it has issued General Regulations for Application of the Law on Incentives for Public-Private Partnerships and Foreign Investments, which introduces essential elements regarding public-private partnerships (PPPs), rules on their structuring, specific features for private initiatives, systems or mechanisms for compensation in the event of early termination, deferred payments, financing guarantees, etc.
Under this model the first PPP agreements have been signed in the ports sector, involving Puerto Bolívar, with an investment of approximately USD 750 million, and the Posorja Deep Water Port with an investment of USD 1.2 billion.
Additionally, other PPP projects are currently being promoted by the central government in the transportation area. In the maritime sector, for example, the Manta Deep Water Port and, in ground transportation, another three projects: Huaquillas-Rio 7, Naranjal-Rio 7, and Santo Domingo-Quevedo-Babahoyo-Jujan.
To facilitate identification of investment opportunities the Ministry for Strategic Sector Coordination published a Catalogue of Strategic Investments 2015-2017, identifying projects requiring direct private investment, as well as projects planned for PPP mechanisms.
Other projects requiring investment
In addition to the projects mentioned as PPP possibilities, many others are being offered by the Ecuadorian government as investment opportunities that do not establish a specific investment mechanism and that can be implemented via other alternatives including different systems of association, acquisition or purchase of the full project, participation in corporate capital, etc. The sectors involved include oil and gas, mining, electricity, telecommunications, and banking, among others. Some of these projects have arisen out of the Ecuadorian government's initiative to sell off certain government corporations, or interests in such corporations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.