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Exclusive Q&A on Infrastructure with Teresa Empis Falcao

Posted: 16th February 2016 08:37

What markets are currently providing the best opportunities?

The European market is providing good opportunities for infrastructure investment, not only because of its long history of private investment in infrastructure, but also as a result of a stable and supportive regulatory and political setting with the governments in many European countries privatizing or selling their infrastructure assets.

This means that there are investment opportunities in brownfield investments, which remain as the most appealing due to their proven track records, but actually also in the construction of new “greenfield” projects.

Moreover, the European Commission announced its investment plan for Europe in 2014 – the so-called “Juncker Plan” – which no doubt could assist in creating significant opportunities for investors, notably in those sectors on which the plan is initially focused, such as broadband and energy networks, as well as transport infrastructure in industrial centres; education, research and innovation; and renewable energy and energy efficiency.

How can investors better assess the projects they chose to invest in?

The “optimism bias” in project assessments by governments and investors in general has often led to ineffective risk transfers and implicit liabilities such as guarantees which may result in excessively large contingent liabilities and, consequently, in governments or investors, as the case may be, making large unexpected payments. In our experience, costs and delays are systematically underestimated, and benefits (including traffic or demand) often overestimated when assessing a project.

Due diligence is, therefore, absolutely crucial in order to ensure that investors spend their resources on carefully selected projects with adequate rates of return, rather than being allocated to projects that deliver benefits far lower than those estimated.

Can you walk us through the process of gaining regulatory approval for a new project? Does this assist or hinder the ability to streamline delivery?

In Portugal, it is generally the line Ministries (energy, infrastructure, transports, health, etc.) who are responsible for the launching, licensing and major regulation of the projects, either directly or through their governmental departments.

The approval of the Ministry of Finance may also be required when the project involves public investment or, more generally, where the PPP legal framework applies. Reference should be made to UTAP(Unidade Técnica de Acompanhamento de Projetos, an administrative entity under the supervision of the Ministry of Finance recently created for the follow-up of PPP projects.

Environmental impact assessments are generally required for infrastructure projects.  The PPP law establishes that PPP procurement procedures shall only be launched after approval of the relevant environmental impact declaration.

Although the process seems rather complex, we think it helps designing bankable projects, distributing risks appropriately, and assessing technical and financial viability of projects.  

To what extent could the development of existing infrastructure help reduce infrastructure costs?

Given the difficulty in expanding existing infrastructure or financing new infrastructure, developing and maximizing the efficiency of existing infrastructure could definitely help reducing infrastructure costs.
There is room to enhance the use of existing infrastructure and such improvements are mostly related with technological developments, such as new power technologies, driverless cars and smart infrastructure in the form of digital technologies. Regulatory frameworks may help or hinder the optimisation of existing infrastructure capacity and will need to be flexible to allow innovative use of existing infrastructure. Existing infrastructure may need to be repurposed for other uses as well.

Maintaining the service level of the existing infrastructure is also an essential factor of better use. In this context, concession contracts or PPPs can assist in meeting the expected performance of infrastructure.

Can you outline the infrastructure challenges posed by global sustainability?

One of the greatest challenges posed by global sustainability is to protect infrastructure assets from physical and cyber-attacks. That challenge has been magnified not only by the escalation of geopolitical unrest and the increased sophistication of the cyber-attackers, but also by the growing interconnectivity of the systems which leads to an exponential increase in impact of any single attack, very evident in cross-border infrastructure projects.
The range of tools and compliance activities that may be necessary to protect critical infrastructure will require investments in security and inherent costs and no doubt difficult choices to the decision-making authorities between security (which will largely be invisible) and investment into expansion capacity of infrastructure.

Are there any exciting technological developments on the horizon?

Indeed there are.

Although infrastructure has remained largely unaffected by the technological revolution (other than the telecoms sector), that will clearly no longer be the case over the coming years.

Technological innovation is now due to play an important role in improving efficiency, productivity, safety, security and environmental outcomes in transport and, therefore, contributing to global sustainability.
Remarkably, much of the demand for technological advancement will be led by the consumers. That is the case of new power technologies, notably solar technologies, driverless cars and smart infrastructure in the form of digital technologies, such as automatic management systems which will enable reducing fuel consumption and travel times and, overall, a better use of the infrastructure.

Teresa graduated in Law in 1995 from the College of Law of the Portuguese Catholic University, in Lisbon. She took an LL.M in Banking and Finance Law at the London School of Economics and Political Science, in London, in 1998. 
Teresa joined the London office of Allen & Overy LLP, as a member of the Projects Group, in September 1999, where she held a variety of positions until November 2008.

Teresa joined Vieira de Almeida & Associados, RL, in December 2008, where she was a managing associate in the Projects – Infrastructure, Energy and Natural Resources practice group.

In August 2011, Teresa joined the Cabinet of the Secretary of State for Infrastructure, Transports and Communications, as a deputy, where she was actively involved in the drafting and discussions of the new PPP framework law and the renegotiation of the road and port PPPs.

She is back at VdA as an of counsel since the beginning of May 2014. She is a partner at VdA in the Projects Team since January 2016.

Teresa can be contacted on  (+351) 21 311 3478/422 or by email at

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