Financial balance, legal security and good customer service are essential for successful partnerships
When state and municipal investments are under pressure, models based on private sector involvement are an alternative that can help public policies, particularly in the infrastructure sectors, can be implemented properly and the general public can be properly served.
The issue was discussed during the round table for the “Investing in Public-Private Partnerships” course, which was organized by Insper in partnership with the Catholic-Lisbon School of Business & Economics and PPP Radar on August 24. In addition to Hamilton Amadeo, Aegea’s CEO, guest speakers included CLaudine Anchite, from Engie, and Paul Boschiero, from Urbeluz, private sector executives from the basic sanitation, power and public lighting sector, which hold contracts to perform public services.
As stated previously, these contracts need to use tariffs to establish a level of compensation that reflects the level of investment private sector companies need to make to provide public services. Otherwise, service quality may be affected.
As infrastructure contracts are long-term agreements – around 12 years for public lighting and 25-30 years for basic sanitation – they also need to offer legal security to ensure that changes in government over these periods do not affect project progress.
It is also important to ensure that contract development is linked with a positive public perception of the services provided. Amadeo said, “The concession agreement does not guarantee that a private company will be able to continue working in a given region. A company can only continue to offer sanitation services over a long period of time is society wants the company there. This means offering a quality service and building a relationship of trust and transparency with users”.
The Aegea CEO said users are won over during the first three years of the contract, which he referred to as winning a “social license” to operate. The sanitation company has therefore invested in improvements to its internal processes. It created an Integrity Department in 2016 and has been revising its internal and compliance policies ever since.