📋 Tender Overview
The Government of Costa Rica announced the creation of a Public-Private Partnership (PPP) Project Preparation Facility (PPF) to leverage public and private sector resources to develop sustainable and efficient infrastructure projects.
This initiative will take place in the context of the Resilience and Sustainability Facility (RSF) arrangement approved by the International Monetary Fund (IMF)’s Executive Board in November 2022, in the amount of US$ 725 million at the time of approval of the arrangement. [1] > The RSF arrangement supports reforms to integrate climate risks into fiscal planning, strengthen public investment and infrastructure resilience to climate change, support its decarbonization efforts, and reinforce the ability of its financial sector to assess and manage climate-related risks. RSF reforms include developing and publishing guidelines to include climate change criteria in project appraisal and selection; adopting regulation to facilitate private-sector power generation from renewables; and introducing feebates to incentivize the purchase of low-pollution vehicles. The reform package will support creating an enabling environment to help catalyze critical climate financing from other official and private partners.
Establishing a Project Preparation Facility
The Inter-American Development Bank (IDB) will coordinate the establishment of the PPF jointly with the Government of Costa Rica that would become a multi-donor facility with the participation of other stakeholders. The PPF will follow international best practices for sustainable project preparation and will leverage IDB’s expertise on the PPP PPF set-up in the region (Brazil, Colombia, Jamaica). The PPP PPF will also build on IDB’s current technical assistance to the country, where it works upstream closely with the government (Ministry of Finance and Ministry of Public Works’ Consejo Nacional de Concesiones) to develop and update the institutional coordination guidelines, the implementation manuals, and PPP best practices to ensure sustainable development of PPPs—environmental and social sustainability of infrastructure projects.
The PPP PPF will provide both financial, on a contingent recovery basis, and technical support that will help to create capacity and in-house technical expertise in Costa Rica to achieve the Sustainable Development Goals (SDGs). The facility will have four areas of intervention: upstream support (regulatory and institutional PPP reforms required, as well as capacity building), sustainable project identification and prioritization, sustainable project structuring (including potential de-risking support to strengthen project bankability), and private sector support.
The PPP PPF has the potential to catalyze up to USD 1.2 billion in private sector resources for projects in sustainable public infrastructure sectors such as sustainable transport and energy, water and sanitation, and social infrastructure by 2030. The facility also aims to optimize strategies for risk allocation and mitigation, and to mainstream sustainability criteria and fiscal responsibility requirements.
Establishing a Financing Facility
The European Investment Bank (EIB) announced the creation of a regional financing facility that will support sustainability-related projects in the areas of energy, transport, water and sanitation, and environmental conservation, among others. Through this facility, the EIB expects to crowd-in additional resources to support high-impact climate and environmental initiatives and enhance Costa Rica’s ability to mitigate and adapt to the effects of climate change. In coordination with the European Union (EU) Delegation in Costa Rica, the EIB expects to work closely with national institutions, EU national development entities, and multilateral partners on the implementation of the facility.
The World Bank (WB) has been actively engaged in supporting climate finance in the country, including through supporting disaster risk management and climate adaptation activities. Recently, the WB agreed to provide technical assistance to El Instituto Costarricense de Electricidad, the state energy company, on green bond issuance, among other areas. The WB has also agreed to provide financing to Costa Rica for up to US$ 60 million for reducing emissions from deforestation and forest degradation (REDD+). The first payment was made in August 2022. Building on the experience accumulated in related incentive mechanisms in the forest area, the WB is supporting the development of an innovative Payment for Marine Ecosystems Services program. Discussions with the authorities on further collaboration on fostering green finance in Costa Rica are ongoing given its importance to national development.
The World Bank Group’s International Finance Corporation (IFC) is also continuing to bolster climate resilience in Costa Rica through multifaceted initiatives to support the private sector. These include developing a green taxonomy at a Central America regional level to help channel financing into a range of climate-friendly projects, coordinating the structuring process to sustainably modernize and expand Puerto Caldera—the main freight port in the Pacific side of the country—, and designing and implementing financing solutions to help transform the agribusiness sector.
Developing a Sovereign Thematic Bond Strategy to Support Climate Goals
Costa Rica is committed to environmental protection and has implemented a comprehensive strategy to achieve its goals. This strategy includes potentially issuing sovereign bonds that are recognized for the country’s overall climate and social credentials.
