Latin America’s Infrastructure Boom Needs More Than One Kind of P3

This op-ed was authored by Marco Rodriguez and co-authored by Sofia Araujo, with editorial direction from Shuprotim Bhaumik, Ignacio Montojo, and Santiago Salamanca. Special contributions from Luis Schloeter of the Inter-American Development Bank.

Latin America is lining up a new generation of infrastructure deals. The Inter-American Development Bank has been hiring aggressively from the private sector to scale its public-private deal flow. Perú rewrote its P3 law last August. El Salvador sent a new P3 bill to the Legislative Assembly in April. The appetite for private capital is back, and ambitious. The trouble is that across most of the region, the legal and institutional plumbing for public-private partnerships was built to handle one kind of deal, and everyone is starting to notice.

For twenty years, with heavy backing from multilateral lenders, Latin American governments have treated P3s as long-term concessions: contracts of twenty or thirty years in which a private partner designs, finances, builds, operates, and maintains an asset before returning it to the state. The model works well for highways, airports, and large water treatment plants. It is, however, a single point on a much longer spectrum. Operations-and-maintenance contracts are also P3s. So are asset management agreements, master leases, joint ventures, and time-limited revenue deals that cover just one phase of an asset’s life. Each allocates risk differently, and each requires its own feasibility analysis, value-for-money model, and procurement approach.

In most of the region today, only the long concession is actually procurable.

Take El Salvador. The law governing Asocios Público Privados sets a $10 million investment floor, applies a single structuring template designed for long-term concession contracts, and, until the reforms now being debated, excluded several social sectors outright. The country’s first P3, a cargo terminal at the international airport awarded in 2020, was framed carefully by the government as preserving public ownership, precisely because the public was nervous about privatization. The framing was accurate. The law does not require asset transfer, and the state keeps formal ownership throughout. But the procedural and financial machinery around the law is still built for full-lifecycle deals. Something more modest, say a municipality bringing in a private partner to lease and program a redeveloped public market while continuing to run operations itself, has no clear route through the system. It is not quite an ordinary public procurement, and it is not quite a P3 under the current law.

Perú shows a more advanced version of the same problem. Last year’s reform expanded ProInversión, the national P3 agency, giving it authority to act as grantor on behalf of the state rather than only as a promoter. That is a real improvement, but only if the agency can actually evaluate a wide range of deal types. If it was built around concessions, centralizing authority in it just produces concessions more efficiently.

None of this is a knock on the P3 units themselves. Multilateral banks have helped governments across the region stand up technical agencies that are, in their own right, valuable institutional infrastructure. The question is what those agencies were built to do. A design-build-finance-operate-maintain concession is not the same exercise as an operations-only contract or a joint venture in which the public entity keeps the asset and the revenue stream. The analysis, risk allocation, and financial structuring look substantially different. Most P3 units in the region have been staffed and resourced for the first model, and they quietly struggle with the rest.

The narrowness has real costs. Governments lose access to partnerships that would actually suit their projects. Redeveloping a public market, activating the concourse of a new transit station, or stewarding a waterfront over a long horizon, none of these require full asset transfer, but all of them can benefit substantially from private development, leasing, or programming expertise. In San Francisco, the Salesforce Transit Center retained full public ownership of a $2.26 billion facility while contracting commercial leasing and programming to a private asset manager. Bogotá has run TransMilenio, its bus rapid transit system, for years with publicly owned infrastructure and privately operated services. Neither arrangement would fit cleanly inside most P3 frameworks in Latin America today.

The binary framing also poisons the politics. When every P3 on offer looks like a full concession, critics hear privatization, and governments, wary of the fight, default to direct public delivery even in cases where their agencies are not the right operator for the job.

What’s needed here is an institutional shift. Legal frameworks have to recognize that public-private partnership is a spectrum rather than a template, and P3 units need the staff and methodologies to structure operations contracts, asset management agreements, and hybrid joint ventures with the same rigor they already bring to concessions. Public debate also needs a vocabulary that separates private participation in a project from private ownership of the underlying asset. Latin America is about to commit to a lot of new infrastructure. Its governments will do better with those commitments with more than one tool to work with.