PPP News – Stage I Safe Roads Network and LED Luminaires

  1. Highways – Final Documents and Contracting Schedule Publication

    On January 29, 2018, Resolution No. 147/2018 issued by the National Highway Administration (hereinafter, “DNV”, for its Spanish Acronym), was published in the official gazette, which: (i) initiated the national and international procedure applicable to “Highways and Safe Roads Network – Stage 1” (the “Project”), (ii) approved the final documents for the Project, and (iii) sets forth April 3, 2018, as deadline for bid submission.

    As previously indicated in the newsletter “Public-Private Partnership Agreements. Preliminary Bidding Terms of the National and International Tender: Highways and Safe Roads Network- Stage 1”, dated as of December 21, 2017, the Project is the first procedure under the PPP regime, an innovative modality in Argentina, creating a high expectative and interest in its development.

    In addition, final documents are also available in the Undersecretariat of Public-Private Partnership’s (the “UPPP”) website.
     

  2. LED Luminaries Program

    Additionally, on January 22, 2018, a preliminary document in connection to the Public Lighting Energy Efficiency Program (hereinafter, the “Program”) was published on the web site of the UPPP. This Program is the second project under the PPP regime, and its main aspects are described below:

    1. Object of the Program

      The Program seeks to develop the energy efficiency and illumination quality of the public lighting, by means of the replacement of existing luminaries, for brand new LED technology luminaries. Therefore, the energy saved by using this new technology will have a positive impact in the maintenance costs of the public lighting network, whereas these will be ultimately reduced. This saving allows to afford the new LED luminaries installation and maintenance, as the cash flow related to such energy saving will be destined -either partially or totally- to the Program.

    2. Scope of the services

      The services to be provided by those awardees comprises:

      • Design of the LED luminaries, in accordance to high-quality standards.
      • Provision of the LED luminaries.
      • Installation and commissioning of such luminaries.
      • Waste disposal.
      • Training of municipal employees.
      • Public lighting service provision during the whole term of the PPP Contract.
    3. Contractual scheme
      • The Ministry of Energy and Mining is set forth as the entity in charge of the Program.
      • The Ministry of Energy will also act as contracting party thereof, by means of the Secretariat of Strategic Planning. Different agreements will be entered by and between the respective Governmental spheres involved in the execution of the Program.
      • The PPP Contractors will be those selected bidders.
    4. Program Stages and PPP Contractor’s works and services

      Upon selection as winner in this Program, the PPP Contractors will enter into a PPP Contract, for a total term of ten (10) years from its execution thereof. This PPP Contract will comprise two different stages: (i) Main Works construction and, (ii) Main Services provision.

      During the Main Works stage, the PPP Contractor will undertake all necessary works for the construction and commercial operation of the LED Luminaries. During the Main Works construction stage, the PPP Contractor shall conduct all the necessary works and tasks to put the luminaries into operation. The term for this stage is for a term of one (1) year, following the PPP Agreement execution.

      After the Main Works stage is completed, the Main Services provision stage will take place, for a term of nine (9) years. During the Main Services provision stage, the PPP Contractor is bound to comply with the following services: (i) LED luminaries’ maintenance; (ii) municipalities and citizens queries and claims, and (iii) elaboration of daily reports.

      In addition of these Main Works and Main Services, the Program also foresees the execution of: (i) Mandatory Additional Works –in light of public interest reasons-, and (ii) Voluntary Additional Works -proposed by the PPP Contractor-. Terms and conditions in regards to the payment of these additional works and services will be subject of regulation in the final bid documents.

    5. PPP Contractor’s income

      The PPP Contractor’s income comprises the Public Contribution (Spanish: Contraprestación Pública), which includes: (i) Availabilty contribution (Spanish: Contraprestación por Disponibilidad), linked to the Main Services during the Main Services Stage (OPEX); and (ii) Investment Contribution (Spanish: Contraprestación por Inversión), linked to the Main Works during the Main Works Stage (CAPEX).

      In regards to the Availability Contribution, Payment Availabilty Titles (“TPD”, for its Spanish acronym), will be issued in favor of the PPP Contractor, on a monthly-basis, whereas with respect to the Investment Contribution, Payment Investment Titles (“TPI”, for its Spanish acronym), will be issued in favor of the PPP Contractor. This TPI will represent the actual works executed during the respective investment period.

    6. Risk mitigation

      The PPP sets forth a risk-mitigation matrix, where the different risks that comprise the Program are assigned to each contracting party. As the PPP will be executed in EDENOR’s and EDESUR’s concession areas, these companies will act as collectors of the municipal taxes that will be affected to the Program, as a way to reduce the PPP Contractors’ payment risk. Therefore, the Program foresee that such distribution companies will collect the municipal taxes in favor of the Program, and these amounts will be then allocated to the Program.

      Additionally, for those cases where the exceeding cash flow results insufficient for the payment of the respective amount, the trustee will require the Province to allocate amounts resulting from the federal co-participation quota.

    7. Expected investment

      The Program contemplates the installation of around a hundred thousand (100,000) luminaries per year, with an expected initial investment of approximately US Dollars fifty millions (US$ 50,000,000) and annual operative costs (operation and maintenance) of approximately US Dollars two millions (US$ 2,000,000).

    8. PPP Trust

      As in the Highways Project, Stage 1, a separate PPP Trust will be created in order to administrate the necessary flows to perform the corresponding payments by the emission of the TPIs and TPDs. The trust will be funded with: (i) local municipal taxes, and (ii) contingent public contribution. The PPP Trust parties are not detailed, but it may be assumed that the National Estate – through the Ministry of Energy and Mining – will act as trustor; a financial entity as trustee; and every PPP Contractor as beneficiary.

    9. Other relevant matters
      • A risk matrix where the risk distribution between the contracting parties is available, in accordance to Section 9, subsection b) and c) of Law No. 27,328.
      • With regards to dispute resolution mechanism, a first technical instance is prescribed, following which arbitration will take place.

From TRS&M, we are following this process with much attention and we are available to expand any point developed above.

by trsym

Bureaucracy Reduction in the Public Administration

On January 11th, Necessity and Urgency Decree No. 27/2018 (hereinafter, the “Decree”) was published on the Official Gazette. The Decree introduces a great number of amendments to current rules in order to reduce bureaucracy and simplify the procedures before the National Public Administration. The declared aim of the Decree is to promote investment, productivity, employment and social inclusion.

Decree´s main amendments

  • SENASA: Certain rules regarding food safety and quality service were abrogated in order to avoid duplicate regulation.
  • CORPORATIONS:

    • Digital Registries are established for account and corporation books as prescribed for Simplified Corporations (“SAS”, for its Spanish acronym)
    • Section 34 of Law No. 19,950 was replaced, forbidding the performance of a hidden or pretended partner. Joint liability of the pretended partner is also established.
    • The digitalization of Public Registries is also settled.
  • FONCDE: The object of the Development of Entrepreneur Capital Fund is modified, introducing the possibility to finance micro, small and medium companies.
  • ARGENTINEAN GUARANTEE FUND (FOGAR): this fund replaces the Micro, Small and Medium Company Guarantee Fund (FOGAPYME). FOGAR´s object is: (i) to grant guarantees on behalf of the ones issued by reciprocate guarantee corporations and (ii) offer direct and indirect guarantees in order to facilitate credit access for developers of economics or productivity activities.
  • EANASE: the National Air Transit Control Direction is dissolved and the Air Navigation Argentinean Company State Corporation is created under the National Ministry of Transport´s orbit, transferring the jurisdiction of the first to the latter.
  • ROAD SECURITY AND TRANSIT: The requirements that owners of vehicles destined to passenger and load transport need to comply with are amended. National Road Direction is assigned as the Enforcement Authority of road concession agreements.
  • TRADEMARK AND PATENTS: Trademark and patents’ registration procedure is amended and simplified, by the introduction of e-government systems.
  • RECIPROCATE GUARANTEE CORPORATIONS: It is strictly forbidden to grant guarantees higher than five per cent (5%) of the risk fund total value to one partner or third parties.
  • DIGITAL SIGNATURE: Electronic official documents digitally signed have the same effectiveness and probative value than their equivalents in paper format.
  • FOSSIL FUELS: the National Ministry of Energy and Mining is assigned as the Enforcement Authority of Hydrocarbons Law No. 17,319. Additionally, the Decree entitles the National Executive Branch to delegate certain powers to the Enforcement Authority.
  • GAS: Section 66 of Law No. 24,076 is amended, introducing the possibility to appeal the National Gas Regulatory Agency´s (ENARGAS, for its Spanish acronym) jurisdictional resolutions before the pertaining Federal Court of Appeal.
  • STATE´S PROPERTY ADMINISTRATION: Certain sections of Decree 1023/01 regarding public auctions as the Administration´s contracting procedure are amended. It is also foreseen the preferential application of public auction rather than direct contracting.
  • PUBLIC WORKS: Section 10 of Law No. 13,064 referred to public tenders´ publicity is amended.
  • SUSTENTABILITY GUARANTEE FUND: ANSES is now authorized to issue any financial and trading market operation allowed by regulatory authorities.
  • SECURITIES: Amendments are introduced regarding digital deliverance, endorsement, guarantee and acceptance of securities.
  • INSURANCES: Related to insurance agreement´s proof, amendments to Law No. 17,418 are introduced. Mandatory Collective Life Insurance Law No. 13,003 is abrogated prior issuance of a regulation regarding National Public Sector employee’s life insurance by National Insurance Superintendence.
  • PORTS: The authorization can now be granted by the pertaining Ministry, and not only by the Executive Branch. Regulations are issued in order to regularize the situation of existing ports and penalties are updated.
  • FINANCIAL INFORMATION UNIT: Certain sections of Law No. 25,246 are amended, settling new information obligations.
  • SOCIAL CAPITAL FUND: The idea of “extraordinary incomes” is included in the definition of “Annual Rent” settled by section 1 of Annex II of the Trust Agreement executed between the National State and FONCAP S.A. Additionally, Financial Services Secretariat is authorized to re-arrange the Trust Agreement.
  • PAINTINGS: Certain aspects related to the importation of paintings are amended.
  • METRIC SISTEM: The necessity to register in a specific registry is established.

Please, do not hesitate to contact us for further information

by trsym