Lima, MAY 4 2022 Demand for private companies to take part in the provision of basic services given the inefficiency of the public works modality

During Rumbo a PERUMIN – Consensuses for the progress of central Peru, Milton Von Hesse, former minister of housing, construction, and sanitation, pointed out that the removal of the private sector from public health care projects could compromise the quality of the health care services provided to millions of patients.

“EsSalud used to engage polyclinics to provide health care to groups of people assigned to them. At that time, the levels of service quality and patient satisfaction were fantastic. Yet, last year the government decided against the participation of the private sector in the health sector and has gone back to the traditional model of public health works,” he noted.

The organization he represents has assessed the annualized costs of similar projects for the health sector. Compared to the model of the State Procurement Law, which costs PEN 106,863, the Public-Private Associations (APP) model costs PEN 84,440, while the Service Provision Model costs PEN 73,542.

Million-dollar losses due to poorly executed public works

Von Hesse mentioned that other projects executed under the traditional public work modality are the drinking water supply service and infrastructure construction projects, which oftentimes experience delays and cost overrun, among other deficiencies, and cause the loss of millions of soles.

“We must opt for the APP model. That way we can join efforts and find solutions to the major problems facing the population, especially at a critical time when Peru ranked 64th out of the 67 countries in the PISA 2018 test, anemia prevalence among children under 3 years old is at 40.1%, and the percentages of rural population with no access to a sewage network and electricity are 81% and 20%, respectively,” he remarked.  

Infrastructure gaps total PEN 363 billion

Regarding this topic, he said that the National Infrastructure Plan for Competitiveness, devised by the central government in 2019, identified an infrastructure investment gap of PEN 363 billion.

“Still, subnational governments have made very little progress. Besides, at the pace infrastructure works are currently being executed, it will take decades to close the gaps. Therefore, it is necessary to rethink the strategy,” he concluded.

Provision of public utilities services with the involvement of the private sector

During his presentation entitled “Towards new approaches to the provision of public utility services with the involvement of the private sector,” the director of Videnza Consultores presented a solution strategy based on “Service Purchases,” which focuses not only on infrastructure but also on public utility service.

Finally, he listed the advantages of the service purchase model, which includes a scheme that revolves around the services to the user, the reduction of the time frames set for the beginning of the service, the transfer of risks to the private sector, the selection of a specialized operator and not a constructor, less scope for corruption, the transfer of paperwork duties to the private sector, and better quality at a lower cost.

Newsletter PERUMIN 35

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