Recently the Argentine Government has announced 52 new project opportunities to be developed through public-private partnerships (PPP) under a freshly Public-Private Partnership Contracts Law.
These projects cover key sectors of the economy, such as roads and motorways (13 projects), railway (5 projects), energy transmission lines and related works (8 projects), penitentiary services (3 projects), health (7 projects), housing (1 project), and water distribution and remediation (14 projects).
It is expected that the government will launch the bi- dding processes before the end of the year, in order to start and develop the projects in 2018.
As a general background, on November 30, 2016, the Argentine Congress passed Law 27,328 on PPP Contracts, which was later regulated by implemen- ting Decree 118/2017 of February 20, 2017.
The purpose of this regime is to regulate and stimu- late private investment in the areas of infrastructu- re, housing, services, production, applied research and technological innovation and following public purposes such as design, construction, expansion, improvement, maintenance, exploitation, opera- tion, financing of projects and the supply of equip- ment or other goods.
The main aspects of the new PPP regulatory fra- mework are the following:
PPP contracts are not subject to the administra- tive contract regulation (i.e. public works law, pu- blic works concession law, and public contracts general regime). PPP contracts are granted the necessary flexibi- lity to adapt it to the needs of the project and the financing, having to set a deadline that considers the investments committed, the repayment of the financing applied to the project and a reaso- nable profit. The maximum term of PPP contracts cannot exceed 35 years. PPP contracts may be structured through an existing company, a specific purpose company or through financial trusts and other types of vehi- cles or associative schemes. Both public limited companies and trusts will be entitled to make public offerings of their marketable securities in accordance with capital market Law 26,831, in or- der to improve their sources of financing. Contractor can enter into loans with financing entities, providing that in the event of a breach by the contractor, the control of the contracting company (or contract) may be transferred to the creditor(s), in order to facilitate restructuring and ensure continuity of benefits ("step in rights"). The Law authorizes the...