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Argentina

Last Verified on Tuesday 3rd September 2019

    General

    • Argentina

      Project finance was very common during the 1990s. After the 2001 crisis, the sovereign debt default, and mainly due to the exchange controls and regulatory restrictions imposed by the national government, project finance was almost non-existent in Argentina. With the change of administration in December 2015, exchange controls were removed, new laws and regulations were passed to promote long-term foreign investments, and project finance re-appeared. In particular, project finance has become a very common structure for the financing of renewable energy projects awarded under the Renovar scheme and, most recently, also MATER projects.

      Renovar is a programme of national and international public tenders called by the Argentine government for the award of 20-year power purchase agreements (PPAs) with CAMMESA (a local entity formed by agents of the wholesale electricity market (WEM) and the government, that acts both as entity in charge of managing the WEM and also as offtaker under the PPAs). Under this program, certain government guarantees (covering CAMMESA’s payment obligations and the eventual payment of the purchase price of the project) are granted. MATER projects are projects that sell energy through corporate or “private” term market PPAs, subject to a specific legal framework enacted by the government. Unlike Renovar projects, in MATER projects the offtaker is a private company and no sovereign guarantees apply.

      Last verified on Tuesday 3rd September 2019

    • Argentina

      Most project finance transactions carried out from 2016 onwards were used to financed renewable energy projects. Considering that these were the first long-term financings in more than a decade, the initial players on the lending side were multilateral organisations and official credit institutions such as International Finance Corporation, Proparco, IDB Invest, DEG, KFW and Corporación Andina de Fomento. In some cases, local official banks, such as Banco de la Ciudad de Buenos Aires and Banco de Inversión y Comercio Exterior (Argentina) SA, joined as co-lenders. In very recent transactions, international commercial banks began participating as covered lenders (backed by export credit agency coverage). 

      On the sponsor side, we can highlight large Argentine energy companies such as Central Puerto SA or YPF Luz, local renewable IPPs such as Genneia, and international IPPs such as Jinko Solar, Goldwind, Neoen, Canadian Solar, Total Eren and Enel, among many others.

      Last verified on Tuesday 3rd September 2019

    • Argentina

      Although Argentina has recently passed regulations to foster PPP investments, market conditions made it difficult to move forward with these structures. Conversely, project finance in renewable energy projects continued unaffected. Traditional project financing fit well into these projects.

      In general, structures provided for limited recourse to the sponsors through specific contingent equity obligations to cover issues such as (among others) cost overrun, termination of the offtake contract prior to cash on delivery, or payment of certain taxes. In very limited cases, sponsors assumed full completion risk. In a few projects, EPC contractors financed all or almost all the construction with the financing being disbursed after completion and used to repay the EPC financing.

      Direct agreements with project contractors are negotiated in detail, although in general these are limited to the equipment supplier, those providing construction and related services, operation and maintenance services. Direct agreements with public parties or licensed companies (such as electricity transmission companies) are unavailable or executed in very limited terms.  

      In addition, considering that during the construction phase special purpose vehicles (SPV) pay a large amount of VAT (up to 21 per cent of construction costs), which is reimbursed at a later stage by the tax authorities, it is common to see VAT financing by either the sponsor or local banks. In the case of third-party VAT financing, the same is subordinated to the project debt, but it has direct recourse against VAT reimbursements paid by the tax authorities to the SPV.

      Last verified on Tuesday 3rd September 2019

    • Argentina

      As a general rule, local law does not require that a project company be organised in Argentina. There are no general restrictions on foreign investments or on the ownership of equity interest of local companies by foreigners.

      However, in many cases, such as public bids for certain infrastructure or energy projects, bidders (local or foreign) are required to create a local company or register a local branch. The most common vehicles are corporations, which pursuant to recent amendments may be owned by a sole shareholder, and limited liability companies. It is also possible to set the project company as a local branch of a foreign corporation. In all these cases, there is no nationality requirement in connection with the project company’s shareholders.

      Last verified on Tuesday 3rd September 2019

  • Foreign Investment

    • Argentina

      Foreign investments in Argentina are generally protected by Argentine law. In the first place, article 20 of the Argentine Constitution sets forth the principle of equal rights and treatment to nationals and foreigners and article 75(18) provides for the country’s prosperity, development, welfare and progress through, inter alia, the promotion of foreign investments in the country.

      Second, the Foreign Investment Law No. 21,382 (1976) (as amended) was specifically created to promote and attract foreign investments. This law expressly recognised the right of foreign investors to equal treatment with local investors and stated the investors’ right to transfer corporate profits and dividends and repatriate the investment. In turn, Decree No. 1853/93 established that foreign investors would not require prior governmental authorisation solely due to their nationality and reinforced their right to equal treatment with local investors. However, there are some specific sectors in connection with which local laws have established certain restrictions against foreign investors such as broadcasting, purchase of rural land and purchase of land in frontier-areas.

      Third, Argentina has entered into more than 50 bilateral and numerous multilateral investment promotion and protection treaties that, per the Argentine Constitution, prevail over local laws. In general, these treaties establish Argentina’s obligation (i) to afford foreign investors a fair and equitable treatment, treatment equal to that offered to local investors and investors from third parties, and full protection and security, and (ii) not to expropriate (directly or through measures tantamount to expropriation) or nationalise foreign investments without payment of fair compensation. They also include the obligation to allow foreign investors to freely make transfers relating to their investments and repatriate the investment (including the repatriation of profits, compensations for expropriations or nationalisation, payments under contracts, proceeds of the sale or wind-up of an investment, etc).

      Last verified on Tuesday 3rd September 2019

    • Argentina

      Currently, there are no restrictions on payments abroad or repatriation of capital by foreign investors. However, until the first quarter of 2016 Argentina had several exchange controls in place. 

      Argentina has a long history of foreign exchange controls. Over the years, different administrations issued regulations aimed at controlling supply and demand of foreign currency. These regulations are usually issued by the Executive Branch or by the Central Bank (monetary authority in Argentina). Although these regulations varied greatly over time and were repealed, re-enacted or amended, some key elements were common to all regimes:

      • Controls affecting exports of goods or services (mandatory repatriation): under most foreign exchange regimes in force over the past decades, the government has imposed the obligation to repatriate and convert into local currency export proceeds within certain terms, to increase the supply of foreign currency in the local market. These requirements were eliminated in 2016. Currently, exporters are not subject to any restriction on their export proceeds. 
      • Controls affecting the purchase of foreign currency in Argentina (convertibility): the Argentine market has developed a strong tendency to save in foreign currency due to the various devaluations of the Argentine currency over the past decades. Therefore, in most cases, exchange controls imposed restrictions to discourage or prohibit the purchase of foreign currency for savings or investment purposes. These restrictions were eliminated in 2016. 
      • Controls affecting the transfer of funds abroad (transferability): Payment of imports, repatriation of investments, repayment of loans, payment of dividends, payments of services to non-residents, and other transactions that ordinarily require the transfer of funds out of Argentina have been subject to some restrictions and requirements. These restrictions were eliminated in 2016.

      Last verified on Tuesday 3rd September 2019

    • Argentina

      Yes. Project companies may transfer abroad and maintain offshore foreign currency accounts. This is relevant when implementing a secured account structure to protect the project’s funds.

      Last verified on Tuesday 3rd September 2019

    • Argentina

      The administration that took office in December 2015 implemented several key measures to promote foreign investments. Red tape procedures were simplified, including, for example, faster procedures to set up local vehicles, registering foreign shareholders, a digital file system within the national public sector to speed up permits and authorisations, and new laws that modernised capital markets and securities regulations. Regulators are generally open to suggestions and meetings with the private sector and are receptive to ideas that facilitate investments.

      In addition, the elimination of all exchange controls (starting in the end of December 2015 and finishing by mid-2016) greatly contributed to the increase of foreign investments. The new antitrust and fair competition law also gave more certainty and transparency to different industries.

      Also, in line with international standards, the National Congress passed in 2017 a very comprehensive anti-corruption law that penalises companies that engage in corrupt practices expressly regulating for the first time the criminal liability of legal entities. The Anti-Corruption Office has issued a set of guidelines to implement integrity programmes. 

      Moreover, the government issued sector specific regulations to foster investments. In this regard, we can refer to (i) the broad scope Public-Private Partnership Law No, 27,328 enacted in November 2016 (and its supplementing regulations); and (ii) the set of regulations and measures implemented as from mid-2016 to foster investments in the renewable energy sector (Decree No. 531/2016 and related regulations, the Renovar programme public bids for the award of PPAs secured by certain guarantees provided by the government, regulation of the private renewable PPA market, etc). Measures have also been implemented to foster investments in the conventional power generation market and the conventional and non-conventional hydrocarbon sectors (including, inter alia, the bids for the award of offshore hydrocarbon concessions).

      Last verified on Tuesday 3rd September 2019

  • Project and financing documents

    • Argentina

      As a rule, financing documents are not subject to filing or registration in Argentina. However, in order to be recognised as evidence before local courts documents in foreign language must be translated into Spanish by a licenced public translator and documents issued abroad are subject to consular legalisation or apostille, as applicable. In turn, documents executed in Argentina or outside Argentina but having effects within the Argentine territory may be subject to stamp taxes. Stamp tax rates depend on the relevant province. In the City of Buenos Aries, most agreements are subject to a stamp tax rate of 1 per cent of the economic value of the agreement. However, there are various exemptions available in the different jurisdictions that may apply to these financings. 

      Moreover, certain local security documents are subject to registration. In this regard, chattel mortgages on trademarks or equipment and mortgages on real estate property are subject to registration before the corresponding registries of the relevant jurisdictions. Pledges on quotas of limited liability companies must be registered with the Registry of Commerce (in the case of share pledges, the same are only registered in the books and records of the relevant company). Local trusts must be registered as well. In addition, derivative agreements must be registered with a local market to be enforceable as regards third parties in an insolvency scenario.

      Last verified on Tuesday 3rd September 2019

    • Argentina

      The issuance of Argentine-law promissory notes is customary in cross-border financings. Even if the loan documents are governed by foreign laws, an Argentine-law promissory note allows the lenders to sue the borrower through a summary proceeding with very limited defences, in which the underlying cause may not be discussed and attachment of assets is readily available. However, to that end the local promissory notes need to comply with certain particular requirements set forth under Argentine law.

      Last verified on Tuesday 3rd September 2019

    • Argentina

      Finance and project documents may be governed by foreign laws, provided there is an international element in the agreement, such as the place of incorporation of one of the parties, or the place of performance of the main obligations.

      Only a limited number of local security documents must be governed by Argentine law. For example, any agreements that include the transfer or creation of liens on real estate property located in Argentina must be governed by Argentine laws. Chattel mortgages on equipment located in Argentina must also be governed by local law because they are executed following a form provided by the Chattel Mortgages Registry.

      This notwithstanding, it is customary in local transactions for all local security documents (ie, asset pledges, share or quota pledges, guarantee, trust agreements, local promissory notes, etc) to be governed by Argentine law.

      Last verified on Tuesday 3rd September 2019

  • Collateral security

    • Argentina

      Yes. Pursuant to Law No. 27,440 (section 142) in financing agreements with more than one lender, the parties may appoint a local collateral agent in local security documents. The collateral agent will register the security interest on its name, acting for the benefit of the lenders. Lenders may assign their interest in the relevant loan without the need to amend or re-register the local security documents.

      Last verified on Tuesday 3rd September 2019

    • Argentina

      There are no general or blanket liens under Argentine law. Granting of security interests is completed separately for each type of asset. In rem rights, such as real estate property or surface rights, are usually subject to a mortgage. Security interests on equipment and trademarks are granted through a fixed chattel mortgage. Security on equity interests is granted through a share or quota pledge, as applicable. Receivables and contract rights are usually covered by local guarantee trusts.

      Usually, extending the security interest to after-acquired property requires an amendment of the original agreement and, in case of equipment, trademarks, real estate property and equity interests, proper registration. Once registration is completed, the amended security interest is enforceable as regards third parties. 

      Certain rights are considered personal in nature. For example, certain permits, licences and concessions cannot be pledged or assigned as security. In those cases, it is customary to ensure cooperation from the project company through specific covenants and the granting of an irrevocable power of attorney in favour of the collateral agent.

      Last verified on Tuesday 3rd September 2019

    • Argentina

      The most relevant cost is stamp tax. Stamp tax is a provincial tax levied on the execution of contracts, deeds and other legal documents. It is also applicable in relation to contracts executed outside a provincial jurisdiction but with legal effects in such jurisdiction and agreements made and entered into by mail, under certain conditions.

      As it is a local tax, the rate depends on the jurisdictions but, in general, it is close to 1 per cent of the secured amount. There are several exemptions to stamp taxes. Some exemptions are “objective” and cover the transaction as a whole. For example, transactions where multilateral organisations such as the International Finance Corporation or IDB Invest participate, are exempted from stamp taxes. In some jurisdictions, the acts and contracts of companies from certain sectors (eg, power generators) are also covered by objective exemptions. In other cases, there are “subjective” exemptions pursuant to which certain borrowers or sponsors are exempted due to their activity or due to the benefits granted under certain promotional regimes. In these cases, the tax rate is reduced by 50 per cent (ie, the portion corresponding to the exempted party). 

      As a general rule, in most jurisdictions stamp taxes do not apply if the agreement is entered into through an offer letter and a separate acceptance. Trusts, assignment agreements and pledges on equity interests may be entered into following these mechanics. However, real estate mortgages and chattel mortgages cannot be implemented through offer letters because they are subject to special formalities. 

      Other relevant costs are those related to registration of real estate mortgages and notary’s fees. Such costs may be up to 1.2 per cent of the secured amount.

      Last verified on Tuesday 3rd September 2019

    • Argentina

      Under Argentine law, lenders are required to stipulate the secured amount in the relevant security documents.

      Usually, the secured amount is the amount of the whole debt. Such amount may be stated in foreign currency. In those cases where stamp taxes apply or where registration costs are high, it is customary to reduce the secured amount to the estimated value of the collateral, plus a margin in case of increase in value. The lenders usually retain the right to trigger an increase of the secured amount if the valuation of the collateral increases. To implement this, an amendment to the security agreement is required.

      The secured amount stated in the security documents determines the preference of the secured lenders on the proceeds of the foreclosure of the collateral. If such proceeds do not cover the amounts actually owed by the borrower, then the secured lenders will still have a claim against the borrower, but in that case the claim would be unsecured.

      Last verified on Tuesday 3rd September 2019

    • Argentina

      In chattel mortgages on equipment, each item of collateral needs to be individually identified by serial number, trademark, and location. In real estate mortgages, fixtures and additions to property may be covered by a general description. Moreover, with regard to assignments and trusts, the rights or contracts assigned thereunder need to be carefully and precisely described.

      Last verified on Tuesday 3rd September 2019

    • Argentina

      Liens created by agreement of the parties and liens created by court order are usually recorded in the corresponding registry, if available.

      Real estate registries and chattel mortgage registries issue certificates that inform if there are any pre-existing liens. The registry of corporations annotates liens on quotas of limited liability companies. In the case of shares of corporations, the relevant company annotates the liens on its stock ledger (however, such stock ledger is not available to the public in general). In the case of contractual rights or receivables, there is no registry. Although trusts agreements must be recorded, the available information does not allow to easily confirm whether the rights, receivables or contracts of a certain borrower are subject to other security interests or not. 

      The absence of liens is usually covered by a statement signed by the debtor of the relevant receivable or counterparty of the assigned agreement.

      Liens arising by operation of law, such as repairment or mechanic liens are not subject to registration. These are, usually, possessory liens. Contractors may validly waive these liens.

      Last verified on Tuesday 3rd September 2019

    • Argentina

      Foreclosure of pledges, chattel mortgages and mortgages is subject to a summary proceeding that allows only a limited scope of defences to be filed by the grantor (lack of jurisdiction, lack of standing of the creditor, payment receipt, lack of formalities of the title, among others). The court may take possession of the assets from the grantor or order an attachment. The foreclosure procedure usually takes one year (in case the defences opposed by the grantor are dismissed, it can file an appeal, and this takes some time). The assets may be sold under a public auction procedure or under a private sale, in both cases under the supervision of the court. Lenders may participate as buyers in the sale by bidding the debt owed by the project company to them. The sale may be conducted in foreign currency. In the case of judicial foreclosure, courts may redenominate the debt into local currency. There are no foreign exchange restrictions to convert or transfer the foreclosure proceeds to a foreign account. 

      Enforcement is subject to the payment of a court tax (which depends on the jurisdiction of the court). In the City of Buenos Aires, court tax is 3 per cent of the amount of the claim. It can be recovered from the defendant upon foreclosure of the goods. 

      The secured creditors have priority (except for certain preferred creditors such as the costs of the auction, and taxes) to collect from the foreclosure proceeds up to the maximum secured amount set forth in the chattel mortgage agreement. 

      Foreclosure of shares or equity interests may be conducted at a public auction, or through a private sale or bidding process. This procedure may be simpler in case of project companies that have different types of assets.

      Last verified on Tuesday 3rd September 2019

    • Argentina

      There are several creditors with statutory preferences under the Civil and Commercial Code, the Bankruptcy Law and other applicable laws, such as: (i) tax authorities, (ii) labour claims, (iii) litigation costs (court tax, fees of experts, custodians, auctioneer), and (iv) repairmen’s or materialmen’s claims if they relate to the foreclosed assets (retention rights).

      Last verified on Tuesday 3rd September 2019

    • Argentina

      Lenders may be liable for foreclosure costs if the proceeds are not sufficient to pay such costs (including custody or repairs). However, they do not assume liabilities arising from the project assets (such as third-party liability).

      Last verified on Tuesday 3rd September 2019

    • Argentina

      In general, there are no restrictions for the post-foreclosure operation of the project by the lenders or its designee. As mentioned above, except for very limited sectors (broadcasting, rural land and border security zones), there are no foreign-ownership restrictions. 

      Activities such as the generation of power, or the production of oil and gas are not considered public utilities and, therefore. In general, no restrictions apply to the sale of the assets. There may be some share retention obligations until project completion (eg, in the Renovar renewable energy projects, the project’s strategic partner must hold a direct or indirect interest of at least 25 per cent until COD; however even in such case, transfer is allowed if prior authorisation is granted).

      In public utilities (such as gas or power distribution and transmission) there are heavy restrictions that may difficult the sale of the assets. In this regard, these licences or concessions include the concept of “essential assets”, which may not be disposed of nor subject to liens. However, licences usually grant the licensee the right to return the licence in the case of default by the grantor. 

      Where authorised by law, compensation for the transfer of the assets (or return of the licence or concession as applicable) will depend on the regulations applying to each project. For example, Renovar renewable energy projects provide the seller (generator) and the off-taker (CAMMESA) with certain project’s sale and purchase rights if certain events of default occur. In such case, the compensation is pre-established in the applicable PPAs based on the “approved book value” of the project (ie, the lesser value between the amounts effectively invested in the project and certain reference value per technology established in the applicable documents) and, as a principle, although denominated in dollars is payable in pesos in Argentina except in certain cases. As another example, in gas transmission projects, licences establish the price to be recognised to the licensee if it returns the license due to the grantor’s default, which is also based on the book value of the assets and payable locally and in pesos.

      Last verified on Tuesday 3rd September 2019

    • Argentina

      As a first comment, please note that in local transactions the equity holders’ commitment to make capital contributions is a commitment made to the lenders and not to the project company (and therefore, the project company does not assign any right to receive such contributions).

      Second, the answer will depend on the specific contractual arrangements. In the event the project company becomes bankrupt, the lenders will be able to collect such amounts from the equity holders in satisfaction of the debt only if the equity holders have expressly assumed the obligation to guarantee the project company’s debt by the granting of a completion guarantee or similar arrangements. Otherwise, the lenders may have recourse to the equity holders for damages if and to the extent provided for under the contractual arrangements.

      Last verified on Tuesday 3rd September 2019

  • Dispute resolution

    • Argentina

      A project company organised under the laws of Argentina may validly submit to the jurisdiction of a foreign court to the extent the underlying agreement has international elements (eg, foreign nationality of the counterparty, place of performance of the agreement outside Argentina, etc).

      Last verified on Tuesday 3rd September 2019

    • Argentina

      In legal proceedings under local law, notices must be served following the specific requirements established under the applicable procedural codes, which only in some jurisdictions and in limited cases, allow service of process by mail.

      With regard to the appointment of process agents, it is a customary practice in transactions with local parties. However, please be advised that as to the recognition and enforcement in Argentina of foreign judgments, there have been certain precedents under Argentine law which have required that notice of a dispute (governed by foreign law and/or subject to foreign jurisdiction) should be served on the Argentine defendant at its registered domicile in Argentina.

      Last verified on Tuesday 3rd September 2019

    • Argentina

      A final and conclusive judgment of a foreign court against an Argentine party will be recognised, conclusive and enforceable against such party in the courts of the City of Buenos Aires or any Argentine federal court, provided that the requirements of section 517 of the National Code of Civil and Commercial Procedures are met:

      • the judgment, which must be final in the jurisdiction where rendered, was issued by a competent court in accordance with the Argentine conflict of laws rules regarding jurisdiction and resulted from a personal action, or an in rem action with respect to personal property which was transferred to Argentine territory during or after the prosecution of the foreign action;
      • the defendant against whom enforcement of the judgment is sought was personally served with the summons to defend against the foreign action;
      • the judgment must be valid in the jurisdiction where rendered and its authenticity must be established in accordance with the requirements of Argentine law; and 
      • the judgment does not violate the principles of public policy or simultaneous judgment of an Argentine court. 

      Enforcement of foreign rulings before provincial courts shall be subject to the rules set forth under the applicable provincial procedural codes. However, in general, the principles and conditions stemming thereunder are similar to those under federal laws.

      With regard to arbitration awards, the submission to arbitration by local parties is valid and effective under the laws of Argentina and, as a general rule, any award against a local party obtained in a foreign arbitration tribunal will be recognised and enforced by local courts without reconsideration of the merits, provided that the requirements of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral or federal International Commercial Arbitration Law No. 27,449, as the case may be, are complied with at the time of the filing of the claim or as otherwise stated below. The grounds for refusing the recognition and enforcement of foreign awards are listed in article 104 of  Law No. 27,449 and are virtually identical to those contained in article V of the 1958 New York Convention. Recognition or enforcement of an arbitral award, irrespective of the country in which it was made, may be refused only:

      1. at the request of the party against whom it is invoked, if that party furnishes to the competent court where recognition or enforcement is sought proof that:
      1. a party to the arbitration agreement was under some incapacity or capacity restriction; or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; 
      2. the party against whom the award is invoked was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; 
      3. the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award that contains decisions on matters submitted to arbitration may be recognised and enforced; or
      4. the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or
      5. the award has not yet become binding on the parties or has been set aside or suspended by a court of the country in which, or under the law of which, that award was made; or
      1. if the court finds that:
      1. the subject-matter of the dispute is not capable of settlement by arbitration under the law of Argentina; or
      2. the recognition or enforcement of the award would be contrary to Argentine international public policy.

      Notwithstanding the fact that Argentine laws on recognition and enforcement of foreign judgments and arbitral awards prohibit re-examination of the merits, the Federal Supreme Court of Justice has stated that in the event an arbitral award is contrary to Argentina’s public policy, it may be revised by local courts (José Cartellone Construcciones Civiles SA v Hidronor S. Although this decision was issued in connection with a domestic arbitration award, it may not be discarded that the Federal Supreme Court of Justice may extend this principle to awards issued in international arbitration proceedings or in connection with foreign judgments. Moreover, in recent years certain local rulings have made a broad construction of the scope of the public policy exception contained in local laws and the 1958 New York Convention to deny or limit the recognition and enforcement of foreign judgments and arbitration awards, mainly in proceedings against public parties.

      Last verified on Tuesday 3rd September 2019

  • Miscellaneous

    • Argentina

      Subordination of debt is recognised under local law and a court should respect such arrangement in an insolvency scenario. The validity of subordination arrangements is expressly recognised by the Argentine Bankruptcy Law (section 41 for reorganisation proceedings and section 250 for bankruptcy proceedings).

      Last verified on Tuesday 3rd September 2019

    • Argentina

      Yes. To the extent the activity is a regulated activity, the regulations provide for the calculation of tariffs. This applies, for example, in connection with power and natural gas transmission or distribution tariffs. In connection with non-regulated activities (eg, power generation or oil and gas production) the situation varies. In general, save with certain exceptions (eg, corporate renewable energy PPAs), energy prices continue to be regulated in Argentina.  

      However, each service and activity is regulated differently.

      Last verified on Tuesday 3rd September 2019

    • Argentina

      No. Liability shall not extend to the lenders and, in connection with the owners, liability will not extend unless there is a piercing of the corporate veil, which is subject to stringent requirements under local law, in specific cases of breaches to antitrust laws.

      Last verified on Tuesday 3rd September 2019

    • Argentina

      In general, there are no limitations with respect to the import of equipment. However, certain particular requirements and processes apply in the case of the import of specific goods, such as used capital assets. In addition, certain promotional regimes provide incentives for the use of national components in the relevant project (eg, under the renewable energy promotional regime, achieving a national component percentage of at least 30 per cent in the electromechanical installations of the project authorises the project company to obtain a tax certificate for 20 per cent of the value of the national component to be applied against the payment of federal taxes). 

      As to incentives, there are some regimes that provide certain import-related benefits. For example, in connection with renewable energy generation projects, the applicable regulations provide for several tax benefits which, subject to the existence of approved budget allocations, include the possibility to obtain import duty exemptions in connection with the import of equipment for the construction of the project.

      Last verified on Tuesday 3rd September 2019

    • Argentina

      As to foreigners’ ownership of land, there are some limitations applying in connection with rural land and border security areas.

      Law No. 26,737 imposed restrictions on the foreign ownership of rural land. This law, for example, establishes that only 15 per cent of the rural land in the country may be owned by foreign nationals. The law also states that in no case may nationals of the same country own more than 30 per cent of the aforementioned aggregate percentage and that a foreigner may not own more than 1,000 hectares of rural land in core areas. Additionally, it states that foreigners may not own real estate property located in frontier security zones, except in accordance with the exceptions and subject to the requirements established in the applicable regulations.

      Moreover, pursuant to Decree No. 15385/44 as amended, the acquisition (and other land rights such as lease or usufruct rights) of real estate property in the frontier security zones by foreigners is subject to the prior approval of the Ministry of Security since it has been declared a matter of national convenience the fact that assets located in security zones be owned by Argentina nationals due to national security reasons. In the analysis of the authorisation application, the government must consider the strategic importance of the relevant area. The Supreme Court of Justice has opined that these restrictions are constitutional to the extent they are exercised reasonably and do not purport hostile policies against foreigners. 

      Finally, with regard to the complexity of the obtention of rights of way, it depends on the type of project. For example, the obtention of rights or way or surface rights for purposes of hydrocarbon production projects, oil and gas pipelines and power transmission lines is expressly regulated by law that – subject to the compliance of certain requirement and payment of the established compensation – oblige the land owner to grant the relevant rights and, therefore, obtention thereof is less complex than other non-regulated situations.

      Last verified on Tuesday 3rd September 2019

    • Argentina

      Unlike other jurisdictions, the pledge on bank accounts is not expressly recognised by the Civil and Commercial Code. Therefore, security on project revenues is implemented through an assignment in trust and the opening of trust accounts.

      Rights under reinsurance policies poses certain challenges because according to the laws governing local insurance, such assignment is not enforceable in the case of liquidation of local insurance companies.

      Tax on debits and credits: Debits and credits on bank accounts are subject to a 0.6 per cent tax. This has an impact in the design of the account structure of the project, because multiple transfers of the same funds may increase the cost due to this tax. Therefore, account structures try to minimise the movements in local accounts.

      Last verified on Tuesday 3rd September 2019

  • Public–private partnership (PPP)

    • Argentina

      Yes. In 2016, the National Congress passed Law No. 27,328 that approved a comprehensive legal framework for PPP at the national level. This law applies to projects by the federal government and applies generally to all sectors. Most provinces have adhered to its provisions and thus it also applies in the case of provincial procurement, subject to the implementation measures issued or to be issued at the provincial level. The law includes a wide array of possibilities for structuring the projects, including availability payment or revenue-risk projects, brownfield concessions or greenfield projects, design-build-finance-operate-maintain or variations thereof. The law does not predetermine the manner in which the PPP should be structured and admits both contractual and/or institutional techniques (ie, incorporation of corporate vehicles between the public and private sector).

      Last verified on Tuesday 3rd September 2019

    • Argentina

      In general, there are no constitutional or legal limitations on PPP transactions, neither generally nor in connection with any particular sector except for those activities which are considered non-delegable functions of the Argentine state (justice, safety, defence, foreign relationships and legislative powers).

      Per the applicable framework PPP schemes may be used for a great variety of purposes (eg, design, construction, extension, enhancement, supply, exploitation or operation and financing of infrastructure, services, productive investments, applied investigation, technological innovation and associated services).

      Last verified on Tuesday 3rd September 2019

    • Argentina

      As of the enactment of the PPP law, the federal government only implemented two bidding processes under the PPP scheme for the award of (i) certain highway and road concessions and (ii) the construction, operation and maintenance of a transmission line. While the highway/road concessions have been awarded, the transmission line bid is only at a very initial stage.

      Prior to the enactment of the PPP law, there were certain projects carried out through similar regimes although there is some scholar debate as to whether they fall squarely under the concept of PPP schemes or not (such as the power and gas distribution and transmission concessions granted in the context of the “privatisation programme” that took place in Argentina during the 1990s, road concessions granted under the Public Works Concession Law No. 17,520).

      Last verified on Tuesday 3rd September 2019

    • Argentina

      At the federal level, the PPP law provides for the creation of the Public Private Partnership Unit, in charge of, inter alia: (i) centralising PPP regulations; (ii) providing consulting, operational and technical support to governmental agencies with regard to project design, feasibility assessments, promotion, preparation of bidding documents and the performance of the relevant contract; (iii) advising the Federal Executive Branch in the preparation of PPP programmes, supplemental regulations, preparation of PPP manuals and guidelines; and (iv) advising the contracting agencies as to surveillance mechanisms.

      Last verified on Tuesday 3rd September 2019

    • Argentina

      PPP is quite recent in Argentina. Based on the structure of the only PPP project that has been awarded as of this date, the financing structures resorted to securitisation mechanisms and/or loans guaranteed by the TPIs (securities issued by a public trust based on the achievement of different work milestones).

      Last verified on Tuesday 3rd September 2019

    • Argentina

      In accordance with the PPP law and its implementing regulations, the selection of the private contractor must be carried out, necessarily, through a public bid or tender process. Prior to calling the bid, the contracting agency, with the prior intervention of the PPP Unit, must assess the relevant project’s technical, economic, budgetary and social feasibility and ensure its value for money. In addition to the opinion of the PPP Unit, the contracting agency must also obtain an opinion of certain bodies of the Ministry of Treasury on the reasonability of using public resources for the project, the economic and financial aspects of the relevant project; and the assumption of risks and obligations by the public sector linked to the proposed financial structure. 

      The law also allows the contracting agency to resort to a public consultation process to prepare the bidding terms and conditions, pursuant to which prior to the issuance of the definitive bidding terms, a preliminary draft is published and the public is invited to make suggestions, comments, questions and observations, some of which may be considered by the contracting agency for purpose of preparing the final documentation. 

      The contract must be awarded to the most convenient offer from a public interest standpoint. The corresponding bidding terms must include rules granting comparative advantages to local companies as regards foreign companies and small and medium-sized companies as regards larger corporations. 

      Moreover, the law states that PPP schemes are compatible with the public initiative legal framework. However, this scheme would not allow the direct award of the project to the person submitting the initiative. In the event the private initiate is accepted, a public bid must be called in which the author of the initiate may be granted certain advantages and/or recover certain costs.

      Last verified on Tuesday 3rd September 2019

    • Argentina

      The main impediments for the development of PPP projects in our jurisdiction are, mainly, the economic and political instability and the legal uncertainty that has characterised Argentina in recent decades. PPP project are capital-intensive long-term projects that require legal certainty in the long run, something that has been absent in Argentina in recent years.

      Last verified on Tuesday 3rd September 2019

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