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Public works concessions in Chile: private initiatives, international tenders, the Chilean project company, compensation rules, 50 year cap and dispute panels

Last verified: 2026-10-26 · Status: Stable

Chile builds and runs roads, airports, hospitals, reservoirs and other public works through concessions under a single law administered by the Ministry of Public Works, which awards contracts by public tender open to Chilean and foreign bidders on criteria such as tariffs, term, subsidies or total revenue. The winner must set up a Chilean company or an agency of a foreign one, is paid only through the agreed tariffs, subsidies and benefits, may pledge the contract and its future flows to lenders without Ministry approval, and holds the concession for at most 50 years. Anyone may propose a project as a private initiative and earn a bidding bonus and possible reimbursement of studies, and disputes go first to a technical panel and then to an arbitral commission or the Santiago Court of Appeals.

USD figures use the dólar observado of CLP 972.60 per US dollar for 1 October 2026, the latest value shown in the SII dólar observado table on the verification date. UTM amounts use the October 2026 UTM of CLP 72,151 and UTA of CLP 865,812, and UF amounts the UF of CLP 41,221.08 for 26 October 2026, all published by the SII. Conversions are for orientation only.

Key facts

Maximum term of a public works concession	50 yearsDS MOP Nº 900 art. 25, as of 2026-10-26 · in force
Can foreign bidders take part in concession tenders?	Yes, national or international tenders textDS MOP Nº 900 art. 4, as of 2026-10-26 · in force
Contracting party required	Chilean company or agency of a foreign company textDS MOP Nº 900 art. 9, as of 2026-10-26 · in force
Deadline for the Ministry to rule on a private initiative	1 yearsDS MOP Nº 900 art. 2, as of 2026-10-26 · in force
Technical Panel recommendation deadline	30 calendar daysDS MOP Nº 900 art. 36, as of 2026-10-26 · in force
Bidding ban after a declaration of serious breach	5 yearsDS MOP Nº 900 art. 28 bis, as of 2026-10-26 · in force

The rule

1. The law governs the execution, repair, maintenance or operation of public works through concessions, and the tenders and concessions granted for them. A public work for this purpose is any real property built, repaired or maintained in exchange for the temporary concession of its operation, or on public or State land used for public infrastructure.Decreto Supremo Nº 900 of 1996, Ministerio de Obras Públicas, consolidated text of the Public Works Concessions Law (DFL MOP Nº 164 of 1991), as amended by Ley Nº 20.410, Art. 1 and art. 39, 1996-12-18 official text · verified 2026-10-26

2. Any individual or legal person may propose to the Ministry the execution of public works through concessions. The Ministry must rule on the proposal, with reasons, within one year of filing, considering regional and local planning instruments; for large, complex or very high investment projects, at the proponent's request, the period for the studies can be extended to two years in total, in stages. An approved project must be tendered within one year. The proponent receives a bonus in the evaluation of its bid, as set in the regulation and the tender rules, and the Ministry may reimburse all or part of its studies, paid by the winning bidder or by the Ministry if the project is not tendered or not awarded. Pre investment studies and projects need a report from the Ministry of Social Development based on a social evaluation.Decreto Supremo Nº 900 of 1996, Ministerio de Obras Públicas, consolidated text of the Public Works Concessions Law (DFL MOP Nº 164 of 1991), as amended by Ley Nº 20.410, Art. 2, 1996-12-18 official text · verified 2026-10-26

3. Tenders may be national or international and are open to Chilean and foreign individuals and legal persons that meet the regulation's requirements. Bidders must guarantee the seriousness of their bids as the regulation or tender rules set, and the Ministry may run a prequalification of bidders.
Cost to do it: Bid bonds and construction and operation guarantees are set in each tender's rules, not in the law (art. 6, 12 to 14).Decreto Supremo Nº 900 of 1996, Ministerio de Obras Públicas, consolidated text of the Public Works Concessions Law (DFL MOP Nº 164 of 1991), as amended by Ley Nº 20.410, Art. 4, art. 6 and art. 6 bis, 1996-12-18 official text · verified 2026-10-26

4. Tenders are decided by evaluating technically acceptable offers on one or more factors chosen in the tender rules: tariff structure, concession term, State subsidy, payments to the State, State guaranteed revenue, degree of risk assumed by the bidder, tariff adjustment formula, technical score, revenue sharing offers above a maximum return where the State guarantees revenue, additional services, environmental considerations, or total concession revenue (which cannot be combined with tariffs, term or revenue sharing).Decreto Supremo Nº 900 of 1996, Ministerio de Obras Públicas, consolidated text of the Public Works Concessions Law (DFL MOP Nº 164 of 1991), as amended by Ley Nº 20.410, Art. 7, 1996-12-18 official text · verified 2026-10-26

5. The award is made by supreme decree of the Ministry of Public Works, also signed by the Minister of Finance. The winner must, within the deadlines in the tender rules (never under 60 days), form a company of Chilean nationality or an agency of a foreign one, which becomes the contracting party, and sign three transcripts of the award decree before a notary. Failing either step voids the award, and the Ministry may retender or invite the other bidders to improve their offers within 15 days.Decreto Supremo Nº 900 of 1996, Ministerio de Obras Públicas, consolidated text of the Public Works Concessions Law (DFL MOP Nº 164 of 1991), as amended by Ley Nº 20.410, Art. 8 and art. 9, 1996-12-18 official text · verified 2026-10-26

6. The concessionaire is paid only through the agreed price, tariff or subsidy and the additional benefits expressly agreed. It may claim compensation for a supervening act of an authority only if the act occurs after the award, could not have been foreseen, is not a general law or regulation reaching beyond the concession industry, and significantly alters the contract's economics. The Ministry may change the works and services to raise service levels or for public interest, compensating the concessionaire's additional costs where appropriate, within limits set in the tender rules.Decreto Supremo Nº 900 of 1996, Ministerio de Obras Públicas, consolidated text of the Public Works Concessions Law (DFL MOP Nº 164 of 1991), as amended by Ley Nº 20.410, Art. 11, art. 19 and art. 20, 1996-12-18 official text · verified 2026-10-26

7. In its relations with the Ministry the concessionaire is governed by public law, but its economic rights and obligations with third parties are governed by private law: without prior Ministry authorisation it may pledge the contract or its future flows and income to secure concession obligations and assign or pledge State payments under the contract. Any assignment of the concession must be total and to a party that meets bidder requirements; the Ministry must accept transfers to secured lenders enforcing the special concession pledge. Assets tied to the concession cannot be sold separately or encumbered without Ministry consent.Decreto Supremo Nº 900 of 1996, Ministerio de Obras Públicas, consolidated text of the Public Works Concessions Law (DFL MOP Nº 164 of 1991), as amended by Ley Nº 20.410, Art. 15 and art. 21, 1996-12-18 official text · verified 2026-10-26

8. Concessions last for the term set in the award decree, never more than 50 years, counted as the tender rules provide and never before the decree's publication. A concession ends on expiry, by agreement (which needs the consent of pledge creditors), for serious breach declared at the Ministry's request by the Arbitral Commission, or for causes in the tender rules; after a declaration of serious breach the concessionaire and related parties cannot bid for five years. If the public interest so requires, the President may end a concession early by reasoned decree also signed by the Minister of Finance, after a report from the Council of Concessions.Decreto Supremo Nº 900 of 1996, Ministerio de Obras Públicas, consolidated text of the Public Works Concessions Law (DFL MOP Nº 164 of 1991), as amended by Ley Nº 20.410, Art. 25, art. 27, art. 28, art. 28 bis and art. 28 ter, 2010-01-20 official text · verified 2026-10-26

9. Technical or economic disagreements may be taken to a Technical Panel, which issues a reasoned but non binding recommendation within 30 calendar days, extendable once. Contract disputes may be taken to an Arbitral Commission of three professionals (at least two lawyers, one presiding), chosen from lists drawn up by the Supreme Court and the Competition Tribunal, or to the Santiago Court of Appeals; technical or economic aspects must go to the Panel first. The Ministry can go to the Commission only after final commissioning of the works, except to seek a declaration of serious breach. Claims must be filed within two years of final commissioning for construction phase events, or two years from the event during operation; challenges to Ministry resolutions within one year, or 120 days for fines.Decreto Supremo Nº 900 of 1996, Ministerio de Obras Públicas, consolidated text of the Public Works Concessions Law (DFL MOP Nº 164 of 1991), as amended by Ley Nº 20.410, Art. 36 and art. 36 bis, 2010-01-20 official text · verified 2026-10-26 · changed: Technical Panel and the current Arbitral Commission rules were introduced by Ley Nº 20.410 (Diario Oficial 20 January 2010).

Stage	What happens	Article
Proposal	Private initiative ruled on within 1 year (up to 2 years of studies for large projects)	Art. 2
Tender	National or international; bid bond; optional prequalification	Art. 4, 6, 6 bis
Evaluation	One or more factors such as tariffs, term, subsidy, total revenue	Art. 7
Award	Supreme decree signed by the Public Works and Finance Ministers	Art. 8
Set up	Chilean company or foreign agency; notarised transcripts; at least 60 days	Art. 9
Construction and operation	Guarantees; payment only through agreed tariffs, subsidies and benefits	Art. 11 to 14
Financing	Pledge of contract and future flows without Ministry approval	Art. 21
End	Maximum 50 years; early termination for public interest or serious breach	Art. 25, 27, 28, 28 ter
Disputes	Technical Panel, then Arbitral Commission or Santiago Court of Appeals	Art. 36, 36 bis

Life cycle of a concession and the governing article of DS MOP Nº 900.

Worked example

A Spanish infrastructure group proposes a toll road as a private initiative. The Ministry approves the proposal within a year; the project is tendered internationally on the lowest total revenue factor, and the proponent's bonus is applied to its bid (DS MOP Nº 900 art. 2 and 7).
After winning, the group forms a Chilean SpA within the deadline in the tender rules, signs the award transcripts, and pledges the concession and its future toll flows to a bank syndicate without needing Ministry approval (art. 9 and 21).
When a new regulation specific to toll roads raises its costs after the award, it can seek compensation only if the act was unforeseeable, not a general rule beyond the industry, and significantly alters the contract economics; it takes the dispute first to the Technical Panel and then to the Arbitral Commission (art. 19, 36 and 36 bis).

Step by step

1. Follow the Ministry of Public Works' concession pipeline or prepare a private initiative with the required studies.
2. Assemble the consortium and the bid bond; check prequalification requirements in the tender rules.
3. Price the bid on the evaluation factor chosen in the tender rules.
4. After the award decree is published, form the Chilean company or agency and sign the transcripts within the deadline.
5. Close financing with a pledge of the concession and future flows; post construction and operation guarantees.
6. Calendar dispute deadlines: two years for claims, one year to challenge Ministry resolutions, 120 days for fines.

Common traps

Missing the post award deadlines. Failure to form the company or sign the transcripts voids the award (art. 9).
Expecting compensation for any change in law. General laws or regulations reaching beyond the concession industry do not qualify (art. 19).
Skipping the Technical Panel. Technical or economic issues cannot go to the Arbitral Commission or the Court without the Panel's prior recommendation (art. 36 bis).
Late claims. Claims prescribe after two years and challenges to fines after 120 days (art. 36 bis).
Serious breach consequences. Besides losing the concession, the company and related parties are barred from bidding for five years (art. 28 bis).

Sources

← Project permits in Chile: environmental assessment (DIA and EIA) timelines, the Ley Nº 21.850 reforms to appeals and injunctions, and the new sectoral permits framework lawChoosing a legal entity in Chile: SpA, S.A., Ltda., EIRL or branch, with registry, capital, governance and annual cost rules →