Infrastructure Alert - March 2026
Works for Taxes Regulation
On March 13, 2026, Supreme Decree No. 038-2026-EF was published in the official gazette El Peruano, approving the Regulation of Law No. 29230, the law that promotes regional and local public investment with private sector participation (“OxI Regulation”).
The OxI Regulation fully replaces and repeals the previous regulation and its amendments. As the sole exception, the Fourth Complementary Transitory Provision of the OxI Regulation establishes that the new regime does not apply to selection processes that were initiated prior to its entry into force, which will continue to be governed by the regulations under which they were originally commenced.
The Works for Taxes (“OxI”) mechanism is consolidated not only as an efficient way to initiate and execute projects, but also as a strategic tool to reactivate unfinished projects and accelerate the execution of works initiated under other modalities. The new regulatory framework enables the execution of outstanding works through OxI, organizes and systematizes the rules applicable to the mechanism, and strengthens private sector participation under criteria of greater clarity, predictability, and legal certainty. This regulatory adjustment seeks to close infrastructure and public service gaps by ensuring that interventions result in completed works, operational services, and tangible improvements in the population’s quality of life.
Below are some of the most relevant provisions of the OxI Regulation:
- Services for Taxes: The OxI Regulation introduces, as its main innovation, the inclusion of service provision—referred to as “services for taxes”—in the areas of health, education, and sanitation.
- Types of interventions under the OxI mechanism: A significant conceptual change is introduced by positioning “interventions” as the central concept of the mechanism. Interventions are classified as: (i) investments, (ii) operation and/or maintenance activities, (iii) services, and (iv) rural housing construction activities.
- Financing of sanitation projects: The OxI Regulation incorporates a special regime for sanitation projects executed by Sedapal. The use of a trust administered by Banco de la Nación is authorized to guarantee the flow of resources allocated to the payment of CIPRLs associated with the executed contracts.
- Project management costs: The concept of “project management costs” borne by the private company is recognized. In this regard, it is established that the maximum amount is set during the selection process and may only vary due to modifications in the execution timeline.
- Relationship with the Public-Private Partnerships mechanism: The operation or maintenance of public infrastructure executed under the OxI mechanism may be carried out through Public-Private Partnerships (“PPPs”). For such purposes, a simplified process applies to the structuring, formulation, and transaction of the PPP.
- Incorporation of rural housing construction activities: The OxI Regulation includes a specific framework for the execution of rural housing projects, establishing particular requirements and rules for their implementation. Specifically, it requires the prior preparation and approval of an intervention form and an executive dossier, as well as compliance with territorial targeting criteria that determine the eligibility of intervention areas. It also expressly regulates the conditions for execution, supervision, and control of these projects, distinguishing them from the general regime applicable to other OxI investments.
- Strengthening of direct negotiation as a dispute resolution mechanism: It is emphasized that the Public Entity must prioritize direct negotiation over arbitration when it is more efficient from a cost-benefit perspective. Additionally, the role of ProInversión has been strengthened, as it may convene follow-up meetings within the framework of direct negotiation and, upon request of the parties, may issue a document as guiding criteria.
- Substitution of the contractor: The OxI Regulation allows for the substitution of the Contractor without complying with the ordinary prior notice requirement in exceptional circumstances, such as duly accredited force majeure events. This flexibility seeks to prevent unjustified interruptions of interventions and ensure continuity of execution, while maintaining the requirement that the new Contractor meets the technical and qualification criteria established in the bidding documents and the Investment Agreement.
- Settlement by obligation: The OxI Regulation introduces the concept of settlement by obligation, allowing each obligation assumed by the Private Company—such as the physical execution of investments, preparation of technical dossiers, provision of services, or operation and maintenance activities—to be settled individually and progressively, once completed and duly approved.