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Opening the Black Box of Contract Renegotiations: An Analysis of Road Concessions in Chile, Colombia and Peru

Author

Listed:
  • Eduardo Bitran

    (University Adolfo Ibáñez)

  • Sebastián Nieto-Parra

    (OECD)

  • Juan Sebastián Robledo

    (OECD)

Abstract
This paper studies the renegotiations of road concessions in Chile, Colombia and Peru for the period 1993-2010. First, it analyses the legal framework, the institutional design and the types of concessions of these countries and second, it uses a novel data composed of a sample of 61 of the 62 road concession contracts to explore the renegotiation of these concessions. 50 out of 61 contracts have been modified at least once, resulting in more than 540 renegotiations. All modified contracts were changed for the first time less than 3 years after the initial signing of the concession. Empirical analysis suggests that State-led renegotiations, which were more common than firm-led renegotiations, were motivated by the opportunistic behaviour of governments. State-led renegotiations that added new stretches of roads and that included additional complementary works during governments’ last year in office were costlier than other renegotiations. Finally, governments deferred a larger share of renegotiation’s fiscal costs in State-led renegotiations that took place during their last year in office. Cet article étudie les renégociations des concessions routières au Chili, en Colombie et au Pérou pour la période 1993-2010. Il analyse d’abord le cadre juridique et institutionnel, ainsi que les types des concessions de ces pays, puis il utilise un ensemble de nouvelles données composées d'un échantillon de 61 des 62 contrats de concession du réseau routier afin d’examiner la renégociation de ces contrats. 50 contrats ont été modifiés au moins une fois, ce qui a entraîné plus de 540 renégociations. Tous les contrats modifiés ont été renégociés pour la première fois moins de trois ans après la signature initiale de la concession. L'analyse empirique suggère que les renégociations menées par l'État ont été plus fréquentes que les renégociations entamées par les entreprises et qu’elles ont été motivées par un comportement opportuniste des gouvernements. Les renégociations débutées par l’État qui ont ajouté de nouvelles tranches sur le réseau routier et qui ont inclus des travaux complémentaires pendant la dernière année au pouvoir ont été plus coûteuses que les autres renégociations. Enfin, les gouvernements ont reporté au futur une plus grande partie des coûts budgétaires quand les renégociations ont été motivées par l'État pendant la dernière année au pouvoir.

Suggested Citation

  • Eduardo Bitran & Sebastián Nieto-Parra & Juan Sebastián Robledo, 2013. "Opening the Black Box of Contract Renegotiations: An Analysis of Road Concessions in Chile, Colombia and Peru," OECD Development Centre Working Papers 317, OECD Publishing.
    • Handle: RePEc:oec:devaaa:317-en
    DOI: 10.1787/5k46n3wwxxq3-en
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    Citations

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    Cited by:

    1. Eduardo Engel & Ronald Fischer & Alexander Galetovic, 2015. "Soft Budgets and Renegotiations in Public-Private Partnerships: Theory and Evidence," Documentos de Trabajo 317, Centro de Economía Aplicada, Universidad de Chile.
    2. Marcelo Selowsky & Claudio Loser, 2015. "Improving Microeconomic Efficiency of Latin American Economies," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 7(2), pages 121-149, May.
    3. Engel, Eduardo M.R:A. & Fischer, Ronald & Galetovic, Alexander, 2019. "Soft budgets and endogenous renegotiations in transport PPPs: An equilibrium analysis," Economics of Transportation, Elsevier, vol. 17(C), pages 40-50.
    4. Pessino, Carola & Izquierdo, Alejandro & Vuletin, Guillermo, 2018. "Better Spending for Better Lives: How Latin America and the Caribbean Can Do More with Less," IDB Publications (Books), Inter-American Development Bank, number 9152, November.
    5. Ronald Fischer & Nicolás Campos & Eduardo Engel & Alexander Galetovic, 2019. "Renegotiations and Corruption in Infrastructure: The Odebrecht Case," Documentos de Trabajo 346, Centro de Economía Aplicada, Universidad de Chile.
    6. Dejan Makovšek & Marian Moszoro, 2018. "Risk pricing inefficiency in public–private partnerships," Transport Reviews, Taylor & Francis Journals, vol. 38(3), pages 298-321, May.
    7. Ms. Valerie Cerra & Mr. Alfredo Cuevas & Carlos Góes & Ms. Izabela Karpowicz & Mr. Troy D Matheson & Issouf Samaké & Svetlana Vtyurina, 2016. "Highways to Heaven: Infrastructure Determinants and Trends in Latin America and the Caribbean," IMF Working Papers 2016/185, International Monetary Fund.
    8. -, 2013. "Perspectivas económicas de América Latina 2014: logística y competitividad para el desarrollo," Coediciones, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 1504 edited by Ocde.
    9. Dimas de Castro e Silva Neto & Carlos Oliveira Cruz & Joaquim Miranda Sarmento, 2017. "Understanding the patterns of PPP renegotiations for infrastructure projects in Latin America," Competition and Regulation in Network Industries, , vol. 18(3-4), pages 271-296, September.
    10. Engel,Eduardo & Ferrari,Martín & Fischer,Ronald & Galetovic,Alexander, 2022. "Managing the Fiscal Risks Wrought by PPPs : A Simple Framework and Some Lessons from Chile," Policy Research Working Paper Series 10056, The World Bank.
    11. José Luis Benavides, Editor, 2020. "Fallos referentes en contratación estatal," Books, Universidad Externado de Colombia, Facultad de Derecho, number 1244.
    12. Engel, Eduardo & Fischer, Ronald D. & Galetovic, Alexander, 2024. "The company you keep: Renegotiations and adverse selection in transportation infrastructure," Economics of Transportation, Elsevier, vol. 38(C).
    13. Duncan Melville, 2016. "Public–Private Partnerships in Developing Countries," Review of Market Integration, India Development Foundation, vol. 8(3), pages 152-169, December.
    14. Antonio Estache, 2016. "Institutions for Infrastructure in Developing Countries: What We Know and the Lot We still Need to Know," Working Papers ECARES ECARES 2016-27, ULB -- Universite Libre de Bruxelles.

    More about this item

    Keywords

    Amérique latine; concession contracts; contrats de concession; Latin America; partenariats public-privé; public private partnerships; renegociation; renégociation;
    All these keywords.

    JEL classification:

    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning

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