NO

ASPECTS

DESCRIPTION

12.

Facilities Available to Support Project Structuring and offer Transaction Advisory

According to the current PPP legal framework (Legislative Decree 1012), the government may assume commitments to support the financial structuring and bankability of projects. Thus, in the case of co-financed projects through PPP, the government can make "firm commitments" to pay the investor a return for the performance of acts related to project implementation. Those commitments may include:

a) Periodical fees whose purpose is to compensate for the investment incurred by the private investor, which include the certificates that credit the payment of this installment payment by the Government in a direct, general, unconditional and irrevocable manner.

b) Periodical fees whose purpose is to compensate the exploitation and preservation activities incurred by the private investor for rendering the service.

c) Both

In the case of self-sustainable projects, the Government may take commitments on contingent payments in favor of the investor, in compliance with the guarantees that have been granted to the latter in order to improve the risk profile of the project and encourage private participation; (e.g. to guarantee a minimum annual income in order to allow for a reduction in income risks). All commitments assumed by the granting entity are backed by the Government.

13.

Role of Local Governments

Local Governments conduct private investment promotion processes which are within their jurisdiction and area of responsibility. All cofinanced private initiatives are submitted and processed only by PROINVERSION.

Under this assumption, the powers of the Private Investment Promoting Organism are directly exerted through the local government's agency appointed for said purposes. The top body for these Private Investment Promoting Organisms is the Municipal Council. Both Regional and Local Governments can ask PROINVERSION to conduct private investment promotion processes on their behalf.

Law N° 28059 (Decentralized Investment Promotion Framework Law) and Legislative Decree N° 1012 (Public-Private Partnerships Framework Law) establish the regulatory Framework so that the Government, in its three levels, may promote investment in a decentralized manner as a tool to achieve a comprehensive, harmonious and sustainable development of each region, in a strategic alliance between regional and local governments, private investment and civil society.

14.

Risk Sharing Policies / Practices

Legislative Decree N° 1012, that approves the Public-Private Partnerships Framework Law for the generation of productive employment and dictates regulations for speeding private investment promotion processes, establishes that in all the stages linked to the provision of public infrastructure and/or rendering of public services under the modality of Public Private Partnerships, five principles should be taken into account: i) Value for Money; ii) Transparency; iii) Competence; iv) Adequate risk allocation and v) Budgetary responsibility.

The principle of adequate risk allocation establishes that there should be an adequate distribution of risks between the public and private sectors. That is, risks should be allocated to the sector with the greatest capacities to manage them at a lower cost, taking into account public interest and the project's profile.

15.

Financing Options Allowed (Financing Mix)

PPP projects may access financing sources from the financial system such as the capital markets. In this way they may raise funds from local and International banks as well as institutional investors such as pension funds (AFP), among others.

16.

PPP Promotion / Marketing Mechanisms

PPP projects are mainly promoted through the organization of national and international events (roadshows) where the Private Investment Promotion Agency (PROINVERSION) disseminates its project portfolio, providing information about each project such as the expected investment, PPP modality and estimated bid dates. Additionally, in the Web page of PROINVERSION (www.proinversion.gob.pe) all the existing information about the project is made available to the market. Finally, among assignments given to External Advisors, is the task of project promotion.

Some specific actions which PROINVERSION performs for the promotion of PPP projects are:

• Design of the promotion campaign

• Permanent updating of the institutional Web page.

• Development of printed and audiovisual promotional material about the procedures for PPPs and private initiatives, favorable climate for investment and project portfolio.

• Sending e-mail alerts about the progress in each one of the portfolio projects, targeted and individualized.

• Organization of and participation in local and international events and organization of in-person or virtual bilateral meetings.

• Permanent attention to the investor, in-person and virtually.

17.

Monitoring and Evaluation

PPP contracts include the participation of an entity that supervises the fulfillment of the contractual obligations by the Concessionaire; a function which in certain sectors falls on regulatory organisms and, in others, in entities hired by the granting governmental entity to perform said function.

18.

Dispute Resolution Mechanism

Conflicts and disputes that may arise between the parties about the interpretation, execution, fulfillment and any other aspect related to the existence, validity or resolution of PPP contracts, shall be initially settled by direct dealings between the Parties. For the case of investment disputes that should be settled through International mechanisms of dispute settlement, in the direct dealing stage, there is a special multisectorial commission that will be in charge of conducting it to intend arriving to a friendly solution. According to the provisions set forth in Law N° 28933, said special commission is chaired by the Ministry of Economy and Finance and is also integrated by the Ministry of Foreign Affairs, Ministry of Justice, PROINVERSION and the entity of the sector that is involved in the dispute. In case of disputes different to those regulated by Law N° 28933, there is the possibility of the parties agreeing to the intervention of an "amiable compositeur" or that in contracts it may be considered submitting the dispute prior to arbitration to a "Dispute Resolution Council" with a determined procedure to arrive to a friendly solution of the dispute. However, the procedures for these two possibilities should still be regulated for their best application.

In the case of non-technical disputes that have not been settled through direct dealing, they shall be settled by arbitration using national or international dispute settlement mechanisms. We should mention that in PPP contracts we include a certain amount (a threshold that currently oscillates between 10 and 30 million US dollars) from which the parties should send the dispute to the international mechanism of the International Center for Settlement of Investment Disputes (ICSID). Otherwise, the parties should submit the dispute to a local center, such as the Arbitration Center of the Chamber of Commerce of Lima.

All and each one of the Technical Disputes that cannot be directly settled by the Parties within the term of direct dealing should be submitted to the decision of an expert on the matter.