About PPPs
What is a PPP?
Long-term contracts between the public and private sectors to create, improve, and maintain infrastructure and public services.
Under this partnership, objectives and risks are shared. The contractor's compensation is linked to strict compliance with service standards, taking full or partial responsibility for the financing, operation, and maintenance of the asset.
It emerged in the United Kingdom (1990s) as a tool for renewal. In Panama, it was adopted through Law No. 93 of 2019 to encourage social development.
Based on international best practices and lessons learned from nearly a decade of regulations across Latin America.
Why a PPP Framework in Panama?
Driving strategic development to transform the country's infrastructure and services.
This framework allows for the execution of projects in key areas such as energy, transportation, logistics, and social development. The goal is to balance the expectations of all stakeholders—from the State and citizens to private developers and financiers—guaranteeing sustainable benefits for users.
How does it work?
PPP projects arise from public initiatives presented by Contracting Public Entities (CPEs). To be considered, they must meet strategic requirements:
Must be part of the Five-Year Investment Plan.
Investment exceeding USD 15 million or under Law No. 93.
Want to learn more? Explore the eligibility elements here.
Process Phases
1 & 2: Pre-feasibility and Feasibility
Verified by the MEF and SNAPP.
3 & 4: Tendering and Execution
With final approval from the Regulatory Body.
The success of a PPP project lies in its proper structuring and maturation period. Experience in Peru, Colombia, and Chile shows that a project may take between six months and one year to be prepared; complex processes could require up to three years.
Download Executive Decree No. 439 (Regulation of Law 93)
Benefits and Advantages
Structuring of the project aimed at encouraging the PPP Contractor to comply with the deadlines to start the service, thus avoiding cost overruns due to longer permanence.
The goal is to provide quality services to users, with measurement criteria based on indicators to measure the PPP Contractor’s performance.
Remuneration is conditioned to infrastructure availability, service levels and quality standards at each stage of the PPP project.
The PPP Contractor executes the work with the goal of recovering the invested capital. Therefore, it will have the interest of not delaying its construction and entry into operation.
The PPP Contractor is responsible for maintaining the project in optimal condition and operation, resulting in the execution of quality works, ensuring the maintenance of these during the term of the contract and guaranteeing that the public purpose of providing the services is fulfilled.
Each risk is assigned to whoever can best manage it, either to the Contracting Public Entity and/or the PPP Contractor, unlike other traditional contracting alternatives. This risk allocation translates into benefits for the State in the development and execution of infrastructure, as well as public service in the country.
Legal Frameworks
Consult and download the regulatory base governing the PPP model in the Republic of Panama.
What is a PPP?
Public-Private Partnerships (PPP) are long-term contracts entered into between one or more public entities and the private sector to create, develop, improve and/or maintain public infrastructure for the provision of public services. Under this contractual link, objectives and risks are shared, and standards are established for service levels that must be met by the PPP Contractor and are linked to the remuneration of the latter, which is totally or partially in charge of financing the construction, exploitation, operation, and maintenance of the public asset according to the duration of the PPP contract.
This public procurement modality, which emerged in the United Kingdom in the early 1990s as a tool to renew public assets after a long period of low investment in infrastructure and to promote best practices, was created in Panama through Law No. 93 of September 19, 2019, “as an incentive for investment, social development and job creation”.
Panama’s PPP Regime regulatory framework was based on the best international practices, and on the results and lessons learned from the application of a decade of PPP regulations in Latin America.
Why a PPP Regime in Panama?
The PPP Regime allows the Government of the Republic of Panama to promote the development of infrastructure projects and services in strategic areas for the country (energy, transportation and logistics, telecommunications, social development, urban development, among others), for the benefit of the State and its inhabitants, and under conditions that meet the basic expectations of the different key players in these processes, such as the State and its citizens, private developers, financiers, and the users or beneficiaries of such infrastructure and services.
How does it work?
PPP projects arise from public initiatives submitted by the Contracting Public Entities (PCEs) –ministries, decentralized institutions, public enterprises or municipalities– for consideration by the Governing Body. These initiatives must be part of the State’s Five-Year Investment Plan and contemplate an investment of more than B/. 15 million. Another mechanism to consider an initiative as a potential PPP project is that it be included in a list prepared by the Cabinet Council, subject to compliance with Law No. 93 of September 19, 2019.
Once the CPE has identified a public initiative with the potential to be implemented under the PPP modality, it must comply with the eligibility criteria in the Prefeasibility and Feasibility phases. In these phases of the PPP Process, the CPEs prepare and structure technical reports, in coordination with the SNAPP, which the EPC will subsequently submit for consideration by the Governing Body.
Enter here to learn more about the projects elegibility criteria,
established in Article 27 of Law No. 93, 2019.
After ensuring that the public initiatives meet the technical requirements in the first two phases of the PPP Process (1: Prefeasibility and 2: Feasibility), in which the Ministry of Economy and Finance verifies, in coordination with the SNAPP, that they comply with the fiscal and budgetary limits, they move on to phases 3: Bidding and 4: Execution, if they have the pertinent approvals from the Governing Body.
It is important to note that PPP projects require time and resources for their preparation. The success of a PPP project lies largely in its adequate structuring, which will require a significant investment in studies and time for maturity. The experience of other countries in the region, such as Peru, Colombia and Chile, shows that a PPP project can take between six months and a year to prepare, depending on the sector and complexity. This process could take up to three years, depending on the complexity of the project.
Main Advantages & Benefits of PPP Contracts
Structuring of the project aimed at encouraging the PPP Contractor to comply with the deadlines to start the service, thus avoiding cost overruns due to longer permanence..
The goal is to provide quality services to users, with measurement criteria based on indicators to measure the PPP Contractor’s performance.
Remuneration is conditioned to infrastructure availability, service levels and quality standards at each stage of the PPP project.
The PPP Contractor executes the work with the goal of recovering the invested capital. Therefore, it will have the interest of not delaying its construction and entry into operation.
The PPP Contractor is responsible for maintaining the project in optimal condition and operation, resulting in the execution of quality works, ensuring the maintenance of these during the term of the contract and guaranteeing that the public purpose of providing the services is fulfilled.
Each risk is assigned to whoever can best manage it, either to the Contracting Public Entity and/or the PPP Contractor, unlike other traditional contracting alternatives. This risk allocation translates into benefits for the State in the development and execution of infrastructure, as well as public service in the country.
Comparative Chart
Given that there are different types of contracts where private and public actors work together, we present a comparative (indicative) to point out some differences between PPP contracts (established in Law No. 93 of 2019) and traditional public procurements::
Contractual
Provisions
Contracting under
the PPP modality
Traditional Public
Procurement
Legal Basis
Law No. 93 of September 19, 2019, and Executive Decree No. 840 of December 31, 2020, which regulates Law 93 of September 19, 2019, modified by Executive Decree No. 119 of April 27, 2023.
Sole Text of Law No. 22 of June 27, 2006, ordered by Law No. 153, 2020, and Executive Decree No. 439 of September 10, 2020, which regulates Law No. 22, 2006.
Types of contractor selection procedures for infrastructure works, goods, and services
Bidding
Contracts with an amount of + B/. 15,000,000.00. The proposal is evaluated in two stages, compliance with the technical requirements and in the second stage the economic proposals that have complied with the technical requirements are opened.
As a rule, two types of procedures are applied:
Best Value Bidding
(BVB)
Contracts with an amount of + B/. 500,000.00. The aspects requested in the RFP will be weighted in a single stage.
Public Bidding (PB)
Contracts with an amount of + B/. 500,000.00. The price is the determining factor, provided that all requirements and technical aspects are met.
Award
The award will be made to the bidder that has complied with the technical requirements and submits the most beneficial economic offer.
In the BVB, the award will be made to the bidder that obtains the highest score according to the weighting methodology, provided that it complies with the requirements.
In the PB, the award is made to the bidder that complies with the requirements and has the lowest price.
Claims
Admit claims before the General Directorate of Public Contracting and challenges before the Administrative Tribunal of Public Contracting.
Contracts
Both are public contracts, entered into between a State Entity and a Private Party, and endorsed by the Comptroller General’s Office, from which rights and obligations arise for both parties and whose purpose is of a public nature.
Purpose
Its purpose is the provision of public goods (infrastructure) and related services.
Initiatives
Both must be created by the Public Sector.
Resources
Managed through trusts.
Usually managed by the contractor, by means of progress payments or interim financing.
Financing
The Contracting Entity does not require budgetary availability, on the understanding that it is the private party that carries out the project and recovers the cost through the payments made by the project users (self-financed). Except in the case of co-financed projects where the State contributes.
The Contracting Entity pays the contractor’s consideration through its budget.
Terms
Long-term contractual relationship, with a maximum of 30 years, extendable for an additional maximum term of 10 years.
The term is limited to the period of construction of the work and/or provision of the service.
Audit
In both cases the contracts are audited by the Comptroller General of the Republic.
Focus
Focus on results and as a central objective to provide and maintain, in the long term, a quality service in favor of the users.
Focus on complying with technical specifications.
Risk Sharing
A substantial part of the risk is transferred to the private sector.
The State shares risks with the private sector.
Legal Framework
The PPP Regime was created in Panama by Law No. 93 of September 19, 2019, regulated by Executive Decree No. 840 of December 31, 2020, amended by Executive Decree No. 119 of April 27, 2023.
• Law No. 93 of September 19, 2019, which creates the Public-Private Partnership Regime.
• Executive Decree No. 840 of December 31, 2020, which regulates Law No. 93 of 2019.
• Executive Decree No. 119 of April 27, 2023, which amends Executive Decree No. 840 of 2020.
• Law No. 22 of June 27, 2006, which regulates Public Procurement, ordered by Law No. 153 of 2020.
• Executive Decree No. 439 of September 10, 2020, which regulates Law No. 22 of 2006.
• Executive Decree No. 58 of June 26, 2025, which modifies an article of Executive Decree No. 840 of December 31, 2020.