Argentina: News on Renewable Energy
On July 22nd, Emergency Decree No. 822/16 (the “Decree”) was published, introducing important changes regarding electricity generation from renewable sources. The declared purposed is to provide legal certainty and enable financing for both local and foreign investors.
The Decree introduces changes to Law No. 27,191 and regulates provisions related to the Procedure for the Open Call to supply in the Wholesale Electricity Market (“MEM”, for its acronym in Spanish language) electricity from renewable generation sources denominated the “RenovAr Program (Round 1)” (“RenovAr”).
The main aspects of the Decree are set out below.
- A budget cap of U$S 1,700,000,000 has been established to be assigned to promotional benefits under Law No. 27,191 for the current fiscal year. It is foreseen that the surplus shall be automatically transferred to the upcoming fiscal year.
- A maximum term of 30 years has been prescribed for: i) renewable power purchase agreements (“Renewable PPA”) to be signed with the Wholesale Electric Market Management Company (“CAMMESA”, pursuant to its acronym in Spanish language) and, consequently, ii) agreements signed between the Argentinean State or the Trust Fund for the Development of Renewable Energy (“FODER” for its acronym in Spanish language) and beneficiaries of the tax incentive regime (“Tax Incentive Regime”).
- Additional termination events to enable the owners to exercise a Put Option and transfer the Project, apart from those already foreseen in the Draft PPA, have been included. For instance: i) termination of the State´s or FODER´s Guarantees, ii) total or partial lack of payment of 4 consecutive Sales Liquidation or 6 Sales Liquidation, which is not limited to one year, iii) the possibility to include additional events is foreseen in order to minimize risks and facilitate financing terms.
- The State or FODER is entitled to transfer the Projects, when exercised the right to Purchase or Sell, to third parties, prior call of a Public Tender.
- Arbitration can be convened in Argentina or abroad, both in the Renewable PPA and in the agreement signed with the State or the FODER.
- The Trust Agreement can be structured into different Public Trusts with the sole purpose of: i) granting payment of the Sales Liquidation, ii) funding the financial instruments prescribed in Law No. 27,191, iii) granting the Purchase or Sell Price of the Project and iv) issuing debt securities.
- Debits and/or credits for accounts used by public trust funds under the FODER and trustee´s transactions involving those accounts shall be exempted from the tax imposed by Law No. 25,413.
- Indemnity clauses can be established in favor of the trustee, its directors and/or related companies in the Trust Agreement and/or Contract of Adherence to the FODER. The Ministry of Energy and Mining´s (“MEYM” for its Spanish acronym) budget resources shall be used, not being able to affect trust funds.
- The Ministry of Treasury and Public Finance is entitled to issue Treasury Bills up to U$S 3,000,000,000 as a guarantee of the FODER. Certificates shall be issued to be used as a guarantee of the Purchase Price of the Project. Treasury Bills shall be issued for the total price of the insured Projects.
- The MEYM can issue supplementary regulations.
For further information, please contact us.
Argentina: Important News on Criminal Exchange Proceedings
The Board of Directors of the Argentine Central Bank (the “Central Bank”) announced important news on criminal exchange investigations. In this connection, the Superintendence of Financial and Exchange Institutions (the “Superintendence”) was instructed to apply the legal principle of retroactivity of the “more favorable criminal law”, on the ground of law precedents set forth by the Supreme Court of Justice (in re “Cristalux” and “Docuprint”). According to this principle, subsequent rules which are more favorable to the prosecuted persons or entities apply to cases that were before deemed a criminal offence by the Criminal Exchange Regime.
The Central Bank estimates that about 60,000 persons will be released from current criminal exchange proceedings and shall cease to be prosecuted for transactions made in the past that are now fully permitted, particularly, for minor infractions which, from a legal standpoint, can be deemed not subject to sanctions due to their insignificance.
In this way, proceedings followed for infractions that are no longer in force will cease. This would include, among other situations, the purchase of foreign currency for travels without evidence of the trip, extraction of foreign currency from ATMs abroad in excess of the permitted amounts, excess of remittances of foreign currency for family assistance, etc.
It is expected that this decision will allow the Superintendence to focus its resources and efforts on the investigation of serious exchange infractions, as well as to accelerate these proceedings.
“BeST Consumer Directo Serie I” Financial Trust for AR$ 89,000,000
Deal counsel in the issuance and placement in Argentina of trust securities for AR $ 89,000,000 issued under the “BeST Consumer Directo Serie I” Financial Trust, in which Crédito Directo S.A acted as trustor and servicer, Banco de Servicios y Transacciones S.A. as arranger, collection agent and placement agent, and TMF Trust Company (Argentina) S.A acted as trustee.