Since the launch of Chile's concessions program in the mid-1990's, the private sector has participated actively in the development of public infrastructure, delivering rapid progress in an area that threatened to become a bottleneck for Chile's economic expansion. In addition, by improving communications around the country, the program has had a direct impact on the quality of life in Chile's different regions.

Before offering a public-private partnership, the government makes a careful analysis of a project's private and public return, incorporating appropriate incentives and distributing the risk between the State and the private investor. Contracts that have successfully passed through this process are then included in an annual calendar of tenders, in which investors are invited to participate.

This procedure, which offers clear guarantees for the investor and transparent mechanisms for settling disputes, is recognized internationally as an effective system. Spain, a pioneer in infrastructure concessions, is currently adapting its system, both legally and financially, to incorporate some aspects of the Chilean scheme, which has also served as a model for Bolivia, Brazil, Costa Rica, Ecuador, El Salvador, Guatemala, Paraguay, Peru, Uruguay and Venezuela.

Since 1995, foreign investors have committed more than US$ 5.5 billion to public-private partnerships in Chile. The scheme initially focused on emblematic projects, principally inter-city highways and airports, designed to improve Chile's territorial integration. In most of these cases, the concession company is recouping its investment through direct charges to users, although in some cases, a shadow toll was also incorporated.

The program was subsequently extended to urban highways. These present an additional challenge because tolls on urban roads -unlike inter-city highways- are not an established practice in Chile. However, substantial improvements in the quality of these roads, combined with the use of electronic tolls, are expected to overcome this problem.

Moving on to non-traditional areas, public-private partnerships are now also being extended to new irrigation reservoirs and to improve public transport in the capital Santiago. These projects will be financed through a combination of charges to users and complementary public investment. And, in a further development, the scheme has recently been applied to facilities, such as new prisons, in which it is the State that will pay for their use.

During 2003, the government plans to put another five concession contracts, involving investments of approximately US$ 650 million, out to tender. These include a bridge to link the island of Chilo� (Region X) to mainland Chile and the construction and operation of additional prisons, as well as a provincial airport, and a new urban highway.

These contracts represent an excellent opportunity for investors to participate in a forward-looking scheme in a country that international organizations and credit-rating agencies recognize as one of the most stable in the world. Because the concessions system is flexible, we are open to new proposals for financing projects in such a way that these public-private partnerships not only improve Chile's quality of life, but also offer investors a reasonable rate of return.

-Source: CHILE, your best bet. Foreign Investment Committee