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22/01/2024

Executive summary:

AuthorityContentDate
LawEnactment of Law 7237/2023 "Establishing special provisions and financing for the execution and implementation of the suburban train between the city of Asunción and Ypacaraí, under the responsibility of the Ministry of Public Works and the Paraguayan Railways Company S.A.; and authorizing the respective subcontracting agreement."December 26, 2023
Call for BidsThe National Directorate of Public Procurement (“DNCP”) has published on its portal the invitation to an International Public Tender (“IPT”) for the National Route No. 17 Improvement Project, connecting Pedro Juan Caballero – Capitán Bado – Itanará – Ypejhú in the Departments of Amambay and Canindeyú.January 5, 2024
ResolutionThe Ministry of Public Works and Communications (“MOPC”) issued Resolution No. 2218 announcing the five prequalified consortia that will continue participating in the bidding process 1288 "Call DIPE 01/2023 Prequalification Public Investment Project for the Expansion and Improvement of Route PY01, in the section between Cuatro Mojones and Quiindy."December 29, 2023
LawUpdate on the status of the water and sanitation project for the Metropolitan Area of Ciudad del Este, financed by the Inter-American Development Bank (“IDB”) and the Japan International Cooperation Agency (“JICA”) for a total of USD 200,000,000.May 11, 2023
LawUpdate on the water and sanitation project for the Metropolitan Area of Asunción – Lambaré Basin, financed by the Inter-American Development Bank (“IDB”) and the Official Credit Institute of the Kingdom of Spain (“ICO”) for a total of USD 165,000,000.April 24, 2023
LawEnactment of Law 7182/2023 approving the loan agreement between the Republic of Paraguay and the Andean Development Corporation (“CAF”) for an amount of USD 160,000,000 for the financing of the water and sanitation project for the Metropolitan Area of Mariano Roque Alonso.October 18, 2023

More Information:

The Executive Branch enacted Law 7237/2023, which establishes the financing conditions for the execution and implementation of the "Suburban Train" Project.

General Aspects

On December 26, 2023, the Executive Branch enacted Law 7237/2023 (the "Law"), which provides special provisions and financing for the execution and implementation of the suburban train project, powered by renewable energy. The route will stretch between the cities of Asunción and Ypacaraí (the "Project").

The MOPC and the Paraguayan Railways Company S.A. (“FEPASA”) will be responsible for executing the Project.

Project Financing

The Law authorizes the Ministry of Economy and Finance (“MEF”) to undertake the necessary steps for Project financing. In this regard, the Law specifies that, for the credit instrument to be valid, it must receive approval from Congress. Furthermore, the MEF will assume financial commitments only after the approval of the loan agreement, which must adhere to the terms of the Law.

Establishment of Guarantee and Liquidity Trust

The Law anticipates the creation of a guarantee and liquidity trust, where the MEF will be the settlor, and the Financial Development Agency (“AFD”) will act as the trustee.

The purpose of the trust is to manage all resources generated by the Project, including those used to finance availability payments outlined in the Law. Payments will be unconditional and irrevocable. The Executive Branch will regulate the guidelines and regulatory mechanisms of the trust and availability payments; as of now, this regulation has not been promulgated.

Implementation Agreement

It is important to note that the Project is structured as a government-to-government agreement between the Republic of Paraguay and the Republic of Korea (South). The Law empowers the MOPC to sign an implementation agreement with the Korean Public Organization, Korea Overseas Infrastructure & Urban Development Corporation (KIND)[1], outlining the commitments of the parties within the Project framework.

While the Project will be governed by the Law and not by Law No. 5102/2013 "PROMOTION OF INVESTMENT IN PUBLIC INFRASTRUCTURE AND EXPANSION AND IMPROVEMENT OF GOODS AND SERVICES PROVIDED BY THE STATE" (the “PPP Law”), the final structure of the Law, once regulated, is likely to be similar to that of the PPP Law.

It is noteworthy that Article 11 of the Law states that, within the Project's development, KIND may avail itself of the benefits of Law No. 60/1990 "APPROVING, WITH AMENDMENTS, DECREE-LAW NO. 27, DATED MARCH 31, 1990, 'AMENDING AND EXPANDING DECREE-LAW NO. 19, DATED APRIL 28, 1989,' 'ESTABLISHING THE FISCAL INCENTIVE REGIME FOR INVESTMENTS OF NATIONAL AND FOREIGN ORIGIN CAPITAL.'"

Project Payment Mechanisms

The MEF will provide the concessionaire or sub-concessionaire with availability payments in U.S. dollars through the trust ("Payments"). However, Payments will be made only once the quality, service, and performance indicators set by the MOPC and FEPASA are met. They are the ones authorized to instruct payment to the MEF when applicable.

Payments will become unconditional and irrevocable once the compliance with quality and service indicators is approved.

Land Release for Project Execution

The MOPC and FEPASA will be responsible for: (i) land release, (ii) land acquisition, (iii) relocation, (iv) compensation, (v) cleaning of the areas involved in the Project execution, and even (vi) release of necessary dominion strips under the expropriation regime provided for in Law No. 6084/2018.

This is likely to be one of the most challenging aspects of Project realization since successful negotiation with neighbors whose properties currently occupy the dominion strip and oppose the Project with the current layout will be necessary.

Project Value, Timelines, and Scope

The Project is valued at approximately USD 550,000,000, and its construction is estimated to take around 4 years, with a sub-concession period of 30 years. In this regard, Article 5 of the Law establishes that the sub-concession contract will be granted to KIND by the Executive Branch through FEPASA (the "Contract"). Likewise, once the Contract is signed, KIND will be obligated to secure financial closure to finance the Project, in accordance with the terms established in the Contract and regulations.  

The Project will cover a distance of 43 kilometers, connecting Asunción with the towns of Luque, Yukyry, Areguá, Patiño, and Ypacaraí. The route traverses one of the country's most densely populated areas; therefore, it is expected that the Project's realization and operation will significantly reduce inbound and outbound traffic to the capital, in addition to considerably improving public transportation conditions for citizens.

► International Public Tender call for surveying, compensation, expansion, and improvement of Route PY 17 “Route of Sovereignty”

General Aspects

On January 5, 2024, the National Directorate of Public Procurement (DNCP) published on its portal the call for Tender 438107 convened under the IPT procedure for the survey, compensation, construction, and maintenance of the pavement of Route PY 17. This route connects the towns of Pedro Juan Caballero – Zanja Pyta – Capitán Bado – Itanará – Ypejhú, in the departments of Amambay and Canindeyú (the "Project").

The Project aims to improve the connection between two of the country's most important productive areas. It is estimated that it will benefit approximately 150,000 people.

The execution of the Project includes, among others, works such as: earthworks, drainage; construction of the structural package, main axis, and accesses; paving; complementary works such as construction and removal of fences, signage, lighting, weighing and toll booths, counting booths, and environmental management plan.

Investment Amount

₲1,432,191,265,000 (Approximately USD 215,000,000). The Project will be financed with a loan from the Financial Fund for the Development of the La Plata Basin (“FONPLATA”).

Maintenance Offer Guarantee

3% - insurance or bank guarantee.

Deadline for Submission of Bids

Friday, January 26, 2024. (9:00 a.m.)

Adjudication System

Per lot. The Project is divided into 4 lots. The adjudication of more than one lot to an offeror is allowed. Below is the planned length for each lot.

  • Lot 1 – 44 km
  • Lot 2 – 48 km
  • Lot 3 – 53 km
  • Lot 4 – 48,3 km

Each lot includes all aspects of the Project, i.e., surveying, compensation, construction, and maintenance of the work. The value of each lot is:

  • Lot 1 – Gs. 377.025.115.000
  • Lot 2 – Gs. 344.584.917.000
  • Lot 3 – Gs. 386.590.367.000
  • Lot 4 – Gs. 323.990.866.000

Approximately USD 53,000,000 on average, depending on the exchange rate.

Adjudication Criterion

The contracting party will award to the bidder that substantially complies with the requirements and offers the lowest evaluated price. This is subject to the bidder being considered eligible according to the criteria specified in the bidding terms and conditions.

Advance

The tender envisages granting a 15% advance to the awarded bidders.  

Works Execution Period

24 months from the start order.  

Maintenance Period for Service Levels (KPI)

60 months after the completion of the works.

Contracting Systems

  • Construction works: unit prices
  • Execution of surveying and expropriations for lands and improvements: provisional sums
  • Maintenance for service levels: lump sum

Offer Validity Period

150 calendar days counted from the deadline for bid submission.

Offer Maintenance Guarantee Validity Period

180 days counted from the submission of bids.

Presentation to the Tender

National or foreign companies, individually or in consortia, with legal, economic-financial, and technical capacity.

Subcontracting

Subcontracting for the execution of some planned works is allowed, but the amount of subcontracted work cannot exceed 40% of the total contract amount. However, the awarded company must obtain prior authorization from the contracting entity.   

► Awarding for the Design of the Expansion and Improvement Project of the “Silvio Pettirossi” International Airport

General Aspects

In late October 2023, the National Directorate of Civil Aviation (“DINAC”) announced that the architectural firm BMA, Carlos Ott, and Carlos Ponce de León were awarded the design of the new “Silvio Pettirossi” International Airport, as a result of the international selection process carried out for the project. Once the design is analyzed, the Executive Branch will issue the call for the construction and operation tender for the airport (the "Project").

Investment Amount and Project Dimensions

The Project's implementation will cost approximately USD 242,000,000. The dimensions of the works are estimated to be between 40,000 m2 and 78,000 m2. It is expected that the Project will double the terminal's capacity movement within a period of 10 years.

Contracting Authority

The MOPC. 

Financing

The financing modality is not yet defined; however, it is most likely to be under the Public-Private Partnership (PPP) modality. The construction of the Project is estimated to take approximately 3 years, and if a concession is chosen, the contract could extend for up to 30 years.  

► Prequalification for the Expansion and Improvement Project of Route PY 01, Cuatro Mojones - Quiindy Section

General Aspects

Early last year, the DNCP published Tender 1288convened by the MOPC for prequalification for the expansion and maintenance project of Route PY 01 (the "Tender"). The Tender aims to form the list of prequalified bidders for the awarding of a Public-Private Partnership (PPP) contract governed by Law 5102/2013 ("PPP Law") to carry out the design, financing, construction, operation, and maintenance of Route PY 01 in the Cuatro Mojones – Quiindy section (the "Project").

Project Length

108 km.

Investment Amount

Approximately USD 445,000,000.

Concession Period

30 years.

  • Design and construction – 44 months.
  • Operation and maintenance – 26 years and 4 months. 

Contracting Authority

The MOPC.

Legal Framework

Public-Private Partnership – Law No. 5102/13

Project Payment Mechanisms

  • Deferred Investment Payments (DIP): 15 fixed, irrevocable, non-updatable payments guaranteed by milestone completion.
  • Availability Payment (AP): Fixed payments during the operation stage, updatable and subject to deductions for non-availability and service and quality levels.
  • Traffic-Linked Payments (TLP): Variable payments subject to traffic demand risk that complement the AP and are based on the traffic effectively counted, based on the existing toll in the city of Itá.

Prequalified Consortia

By Resolution No. 2218 dated December 29, 2023, the MOPC announced the five prequalified consortia that will continue participating in the Tender:

  • Desarrollo Vial al Sur (Sacyr Concesiones S.L. y Ocho A S.A.)
  • Rutas del Mercosur (Tecnoedil S.A., Alya Constructora S.A., Construpar S.A. y Semisa Infraestructura S.A.)
  • AG – Tocsa (AG Construções e Serviços S.A. y Tocsa S.A.)
  • Rutas del Sur (Cointer Concesiones S.L., Azvi S.A.U. y Constructora Heiseke S.A.)
  • Rutas del Sur (Acciona Concesiones S.L., Rovella Carranza S.A. y Concret Mix S.A.)

Next Steps

The next step is the opening of the competitive dialogue between the prequalified consortia and the MOPC, during which the parties can discuss the Project's tender documents (e.g., the bidding terms and conditions, the contract, among others). The competitive dialogue phase will conclude with the final version of the Project's tender documents. It is estimated that this stage will take place in February 2024. Finally, it is important to mention that only prequalified consortia can be awarded the Project.

► Drinking water and sanitation project for the Metropolitan Area of Ciudad del Este ("Project”)

General Aspects

The Project aims to tender for works including: (i) the design and construction of a sanitary sewer system, (ii) a wastewater treatment plant, and (iii) improvement of the drinking water system for Ciudad del Este and three neighboring communities. The Project is currently completing the Prequalification Phase No. 784 through which the convener issued Call 58/2023 for expressions of interest for the hiring of consulting services for the oversight of the design and construction of the Project (the "Consultancy").

Project and Consultancy Financing

Inter-American Development Bank (IDB) and Japan International Cooperation Agency (JICA). Approved by Law No. 7088/2023.

Estimated Project Value

USD 200,000,000, of which USD 115,000,000 is granted by the IDB and USD 63,000,000 by JICA; of these, USD 1,600,000 will be allocated for the Consultancy.

Contracting Authority

The MOPC through the Directorate of Drinking Water and Sanitation (the “DAPSAN”).

Modality

International Public Tender.

Legal Framework

Law No. 7021/2022 on Supply and Public Procurement.

Status

The deadline for expressing interest expires on January 24, 2024; after this, the MOPC will form a shortlist of bidders and proceed with the awarding of the Consultancy. The Consultancy is expected to last approximately 45 months.

As for the Project, based on the latest information available, it is likely that the IPT will be called in the first quarter of 2024.

► Drinking Water and Sanitation Project for the Metropolitan Area of Asunción - Lambaré Basin ("Project")

General Aspects

The Project aims to tender for (i) the design and (ii) the construction of sanitary sewer collectors for the Metropolitan Area of Asunción (Lambaré Basin). The Project aims to eliminate 13 discharges of untreated sewage that currently flow directly into the Paraguay River and install a wastewater treatment plant. The Project is estimated to benefit around 300,000 people in the localities of Asuncion, Lambaré, Villa Elisa, and Fernando de la Mora.

Currently, the Project is in the final stages of Prequalification Phase 785 through which the contracting party issued Call No. 60/2023 for expressions of interest in the hiring of consulting services for the supervision of the design and construction of the Project ('Consultancy').

Financing

Inter-American Development Bank (IDB) and the Official Credit Institute of the Kingdom of Spain (ICO). Approved by Law No. 7074/2023. It is worth noting that the financing amount covers the entire project. 

Estimated Value

USD 165,000,000, of which USD 2,300,000 will be allocated to the Consultancy.

Contracting Authority

The MOPC through the Directorate of Drinking Water and Sanitation (the “DAPSAN”).

Modality

International Public Tender.

Legal Framework

Law No. 7021/2022 on Supply and Public Procurement.

Status and Next Steps

The deadline for expressing interest expires on January 22, 2024; after this, the MOPC will form a shortlist of bidders and proceed with the awarding of the Consultancy. The Consultancy is expected to last approximately 45 months.

As for the Project, based on the latest information available, it is likely that the IPT will be called in the first quarter of 2024.

► Promulgación de la Ley 7182/2023 que aprueba el contrato de préstamo entre la República del Paraguay y CAF para financiar el proyecto de agua potable, alcantarillado y saneamiento para el Área Metropolitana de Mariano Roque Alonso (“Proyecto”)

General Aspects

The loan granted by CAF will be used for the construction project and system of sanitary sewerage, wastewater treatment plant, and improvement of the drinking water system for the Mariano Roque Alonso basin. The Project's funds are intended for equipment works; acquisition of goods; environmental and social management; supervision and oversight; institutional management and improvement; tax payments; hiring of studies and consulting; audits; and financing of evaluation expenses. The Project's infrastructure includes 447 km of sewerage networks, the construction of a wastewater treatment plant, and 10 pumping and treatment stations.

Financing

CAF – Latin American and Caribbean Development Bank.

Estimated Value

USD 160,000,000, of which approximately USD 151,000,000 will be allocated to the Project works, and the remaining USD 9,000,000 to the administration and management of the Project.

Contracting Authority

The MOPC through the Directorate of Drinking Water and Sanitation (the “DAPSAN”).

Modality

Once the Project is ready, the convener will launch an IPT.

Legal Framework

Law No. 7021/2022 on Supply and Public Procurement.

Status

The IPT is scheduled for the second quarter of 2024.

For further information on any of the topics covered in this edition of our newsletter, please contact our experts: Silvia Benítez (sbenitez@vouga.com.py); Manuel Acevedo (macevedo@vouga.com.py); Rodolfo G. Vouga (rgvouga@vouga.com.py); Lucas Rolón (lrolon@vouga.com.py).  


[1] KIND is an organization founded in 2018 by the Government of the Republic of Korea with the aim of promoting infrastructure projects worldwide under the Public-Private Partnership (PPP) model. Additionally, it supports Korean companies in developing these projects (KIND WEB)

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