Public Private Contracts In Argentina: A Long-Expected New Regulation To Boost Infrastructure Development

Author:Mr Mario Eduardo Castro Sammartino
Profession:Castro Sammartino & Pierini

Law Number 27,328 regulating Public Private Contracts in Argentina (Ley de Contratos de Participación Público-Privada, hereinafter the PPPLaw) will become effective as from 9 December 2016.

The main provisions of the PPPLaw are the following:

  1. Objectives

    The participation of public and private sectors in the contracts regulated by law (hereinafter the Public Private Contracts) may serve the purpose of a project developing in the fields of infrastructure, housing, activities and services, productive investment and applied research and technology innovation (Article Number 1).

  2. Legal vehicles

    Participation of public and private interests pursuing the objectives allowed by law may be carried out through contractual and organizational schemes (such as special purpose vehicles between the public and private sectors that might be even authorized to trade their equity publicly under the Capital Markets Law Number 26,831. PPPLaw, Article 7).

  3. Public Private Contracts

    a) The parties

    Public Private Contracts in Argentina may be entered into by and between:

    i) Any public agency or entity of the federal public sector (hereinafter the Agency); and

    (ii) Any private or public entity allowed for the PPPLaw (hereinafter the Contractor) (PPPLaw, Article Number 1).

    Under Article Number 23 of the PPPLaw, certain individuals and legal entities are deemed to have conflict of interests in these kind of projects and thus banned from entering into Public Private Contracts, such as those having been hired by any Agency as consultants to implement the project (Sub-Article b) and public officials of the Contracting Agency or companies or entities the public official has interest in or is linked to as a manager or employee (Sub-Article c).

    b) The terms and conditions

    Irrespective of additional regulations to be issued in the future and of the specific contractual and bidding documents' stipulations, Article Number 9 of the PPPLaw sets forth the minimum provisions the contracts must include.

    For its importance to international investors, it is worth noting the following provisions the contracts may contain:

    i) In no case may the contractual term and potential extensions exceed in total 35 years (Sub-Article a);

    ii) The contract is to provide for the retribution to be paid for the execution of the project, either by the users, the Agency or third parties. It must also contain procedures for revision of its price so as to preserve its economic-financial equation...

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