New Law on Public Private Partnerships

February 27, 2012
New Law on Public Private Partnerships

On January 16, 2012, the Official Journal of the Federation published a Decree promulgating the Public PrivatePartnership Law (LAPP, for its acronym in Spanish) and amending the Public Works and Related Services Lawwith such, among other provisions. In accordance with LAPP, its purpose is to regulate the framework for thedevelopment of projects by public private partnerships, subject to articles 25 and 134 of the Constitution of theUnited Mexican States. Furthermore, under the LAPP, public private partnership projects are defined as thosecreated under any framework to establish a contractual long term relationship between entities in the public andprivate sectors for the provision of services to the public sector or the end user using infrastructure completely orpartially provided by the private sector for the purpose of increasing social well-being and investment in thecountry. In addition, it is established that these projects should be justified accordingly, specify the intendedbenefit to society and demonstrate their financial benefit as compared to other forms of financing. It should benoted that in accordance with the LAPP, the Procurement, Leasing and Public Sector Services Law and the Public Works and Related Services Law, their regulations and provisions will not be applied to this type of project unless expressly indicated by the LAPP. The LAPP expressly excludes substantive productive activitiesreferred to by articles 3 and 4 of the Regulatory Law of Constitutional Article 27 of the Petroleum Sector, as wellas those cases in which the applicable provisions establish that the private sector may not intervene. The LAPPcame into effect on the day following its publication, January 17, 2012, and is expected to have an importantimpact on the structuring of projects with a social impact for the benefit of Mexico’s national infrastructure.

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