RenovAr 2 Program: Extension of intermediate milestones and COD
On February 19, 2019, Resolution No. 52/19 (hereinafter, the “Resolution”), issued by the Secretary of Government of Energy, has been published in the Official Gazette, with significant relevance towards Power Purchase Agreements (“PPA”) awarded under RenovAr 2.
This Resolution states the goal to facilitate the construction and successful commercial operation date (“COD”) of all projects acting within RenovAr 2, and therefore allows for extension of dates committed under the PPA (intermediate milestones and COD) insofar certain conditions are met, as further detailed below.
In order to apply for an extension of intermediate milestones, pertaining filings before the relevant authorities must be performed no later than April 30, 2019. COD extension shall be requested 15 business days in advance as from the original date committed for such milestone.
Below you may find an outline of most relevant aspects set forth in the Resolution:
1) Extension of PPA intermediate milestones
Upon the issuance of this Resolution, owners of RenovAr 2 projects may require an extension of 180 days of each intermediate milestone under the PPA.
Said extension of time sets forth a mandatory prior increase of the PPA Compliance Bond in force at that time, on an amount equal to thirty percent (30%) of the guarantee’s original amount. Should prior increases have been performed, the guarantee may be reduced up to the original amount plus such thirty percent (30%).
The Resolution also foresees that if such intermediate milestone elapses (including 180 day-extension) the guarantee shall also be increased in a twenty percent (20%) per milestone, over the guaranteed amount at such time.
Filings in order to apply for these extensions must be performed no later than April 30, 2019, while the increase of the compliance bond shall be in place before the execution of the relevant addendum of the PPA.
2) Extension of COD
COD may also be extended pursuant to the terms of this Resolution, for a maximum term of three hundred and sixty-five (365) days further to the original date committed for such milestone. Two of the following three conditions shall be met in order to benefit from an extension in COD:
- Achieve thirty percent (30%) of Stated Local Content (“SLC”). This condition shall be considered as fulfilled for those projects that have already committed, at least, said percentage of SLC under their PPAs. Penalties equal to forty per cent (40%) of the monthly billing under the PPA shall be applied for each percentage point of deficiency in the compliance with the SLC. Additionally, a reduction of the PPA’s term and of the Incentive Factor, in accordance with the conditions settled below, shall apply.
- Reduction of the PPA tenor: accept a proportional reduction of the PPA tenor equal to six times the amount of days that COD is extended (e.g. if the new COD is 360 days after original COD was committed, PPA should be reduced in almost six years).
- Reduction of the Incentive Factor in accordance to the formula set out therein
If COD has yet not been achieved (as this date may be extended pursuant to the above), the PPA’s cure period of one hundred and eighty (180) days shall apply (notwithstanding the obligation of paying penalties under the PPA). In case the project does not achieve its COD within said cure period, an additional cure period of extra one hundred and eighty (180) days will be applicable in accordance to Resolution No. 285/18.
COD extension must be requested fifteen (15) business days in advance of the original COD before CAMMESA. For those projects which COD is on or before March 15 2019, the referred filing shall be performed no later than March 29, 2019.
3) Execution of pending PPAs
Finally, the Resolution foresees, for those RenovAr 2 projects that have not yet executed their PPAs, the possibility to do so. Two of the following three conditions must be selected:
- Achieve thirty percent (30%) of SLC. Penalties equal to fifty per cent (50%) of the monthly billing under the PPA shall applied for each percentage point of deficiency in the compliance with the SLC. Additionally, a reduction of the PPA’s term and of the Incentive Factor, in accordance with the conditions settled below, shall apply.
- Reduction of the PPA tenor: in six (6) years, resulting in a new tenor of fourteen (14) years.
- Elimination of the Incentive Factor in accordance to the form settled by the Resolution.
The PPA’s execution shall be done on or before April 30, 2019 and it shall be requested before CAMMESA ten (10) business days in advance.
For these PPAs, intermediate milestones shall be calculated since June 1, 2018, notwithstanding IPPs right to request for an extension of these dates as described above.
Finally, the Resolutions enables to change the Strategic Partner under the PPA. Said change shall be requested fifteen (15) days in advance to April 30, 2019.
Banco de la Provincia de Buenos Aires’ Series XI and Series XII Notes Issuance for AR$ 4,880,200,000
Legal counsel to Banco de la Provincia de Buenos Aires in the Bank’s Series XI and Series XII Notes issuance for an approximate amount of AR$ 4,880,200,000. The Bank acted as issuer, arranger and lead placement agent of the transaction, while Banco de Galicia y Buenos Aires S.A., Banco Santander Río S.A., Banco Macro S.A., Macro Securities S.A. and Industrial and Commercial Bank of China (Argentina) S.A. acted as placement agents.
New guidelines applicable to the Data Protection Act
On January 16, 2019, the Argentine Data Protection Agency (the “Agency”) enacted Regulation No. 4/2019 (the “Regulation”) which established new guidelines to be applied to the Personal Data Protection Law No. 25,326 (the “Data Protection Act”), in order to enhance its implementation.
In this sense, the main relevant provisions implemented by the Agency are as follow:
- personal data owners may access to their data acquired through video surveillance, provided that, their identity is duly certified. If their request were rejected, they shall be noticed about the possibility to file a claim with the National Direction for the Personal Data Protection;
- if the recorded image identifies any other third party, the data holder shall apply a decoupling technic in order to assure that only the data owner will be identifiable;
- the data owner shall have the right to request a disclosure regarding the applicable logic in those cases in which negative legal effects, or if any other significative negative consequence, may emerge from decisions based on automatic treatment of personal data;
- biometric data identifying a person shall be deemed sensible only if it may result discriminatory to the data owner;
- data holder shall implement valid and effective identification mechanisms;
- in relation to the assignment of personal data among public offices, certain scenarios were defined in which prior consent of the data owner shall not be necessary; and
- underage may consent the treatment of their personal data, under certain conditions.
Any further information, please do not hesitate to contact Juan Pablo Bove, Federico Otero, Julián Razumny, or corporate@trsym.com.
Roch S.A. US$ 5,215,570 Class 4 Notes Issuance
Counsel to Roch S.A. in the issuance of US$ 5,215,570 Class 4 Notes under its US$ 50,000,000 Global Notes Programme.
Puente Hnos. S.A. acted as arranger and placement agent.
Co-Issuance of U$S 250,000,000 Private Notes by Rio Energy S.A., UGEN S.A. and UENSA S.A. in the International Market
Legal counsel to Rio Energy S.A., UGEN S.A. y UENSA S.A, as Co-Issuers, in the co-issuance of Secured Floating Rate Private Notes worth U$S 250,000,000, due in 2023.
Pursuant to the Note Issuance Facility Agreement, J.P. Morgan Securities LLC acted as arranger; Citibank N.A. acted as notes agent, paying agent and registrar, and La Sucursal de Citibank, N.A., established in the Republic of Argentina, acted as collateral agent and trustee.
Financial Statements´ reporting in constant currency
The enactment of Law N° 27,468 on November 15th, 2018 reestablished the effectiveness of previously abrogated Section 62 (in fine) of General Corporations Law N° 19,550 that sets forth that interim and annual financial statements are required to be reported in constant currency and delegated in the Public Registry of Commerce (“IGJ”) its effectiveness date.
In such respect, IGJ´s issuance of General Resolution N° 10/2018 (the “Resolution”) on December 28th, 2018 reestablished the effectiveness of such obligation and additionally amended General Resolution Nº 7/2015 in the following related matters:
- financial statements must be filed in constant currency (except those issued by entities subject to special control regimes)
- financial statements shall be restated in accordance with the regulations issued by the Argentine Federation of Professional Councils of Economic Sciences (FACPCE) and adopted by the Professional Council of Economic Sciences of the City of Buenos Aires (CPCECABA);
- the decisions to be adopted by governance bodies must be taken with accounting information in constant currency;
- all restatements must be expressed in their actual value;
- companies subject to the Public Registry of Commerce’s control that are controlling, controlled or affiliated to other companies subject to oversight by the National Securities Commission may adopt specific regulations applicable to the latter, explaining the reasons in the financial statements.
Any further information, please do not hesitate to contact Juan Pablo Bove, Federico Otero, Julián Razumny, or corporate@trsym.com.
Relevant News in Renewable Energies: Implementation of Distributed Generation Law No. 27,424
On December 21, 2018, Resolution No. 314/2018 (the “Resolution”) issued by the Secretary of Government of Energy (the “SGE”), under the Ministry of Treasury, was published in the Official Gazette of the Republic of Argentina.
The Resolution contains implementation rules of the Distributed Generation Law No. 27,424 (the “Law”) and its pertaining Decree No. 986/2018 (the “Decree”, and jointly with the Law and the Resolution, the “Distributed Energy Framework”).
Most relevant matters of the Resolution are outlined below:
1) Categories of users-generators and connection to the grid
The following categories of users-generators are contained in the Resolution:
- Small users-generators (UGpe, for its Spanish acronym): users connected to the distribution in low voltage, with an equipment of a nameplate capacity no greater than 3 kV.
- Medium users-generators (UGme, for its Spanish acronym): users connected to the distribution grid in low/medium voltage, with an equipment of a nameplate capacity comprised between 3 kV and 300 kV.
- Major users-generators (UGma, for its Spanish acronym): users connected to the distribution grid in low/medium voltage, with an equipment of a nameplate capacity comprised between 300 kW and 2 MW.
The Resolution also establishes that the equipment of any of the users-generators described above shall not exceed the total aggregate of 2 MW per each MW for each supply point and that such users are allowed to connect to the grid up to a nameplate capacity equivalent to the one actually contracted with the relevant distribution company (authorization of the pertaining regulatory agency is mandatory for greater installed capacity).
For those purposes, the procedure in order to connect to the grid will be carried out by means of a public access digital procedure, to be implemented by the Undersecretary of Renewable Energy (the “URE”).
Equipment already connected as of the date on which the Resolution is issued, must also follow the connection procedure to verify whether such equipment complies with legal and technical requirements set forth in the Distribution Energy Framework.
2) Distributed Generation Agreement
The distributed generation agreement will be entered by and between any of the user-generators described above and the relevant distribution company and shall become effective as of the date on which it is executed with no expiration date (except for those events allowing for termination, as further described below). This agreement will be ancillary in respect of the agreement already in place with the distributor.
Assignment of the distributed generation agreement is allowed upon prior consent of the distribution company.
Rights and obligations with respect of the user-generator and distribution company, as applicable, are foreseen in the Resolution, inter alia:
- distribution company’s right to verify compliance with the requirements set forth in the Distributed Energy Framework and to disconnect users-generators from the grid in case technical conditions are not complied with;
- distribution company’s obligation to purchase the electricity generated and injected to the grid by the user-generator;
- users-generators’ right to supply energy into the grid with no additional charges whatsoever; and
- user-generator’s ability to assign accumulated credits derived from surplus energy; accumulated credits by injected energy and receive payments from such credits.
Finally, the Resolution enables the pertaining distributor to suspend the distributed generator agreement should the user-generator fail to comply with the requirements set forth in the Distributed Energy Framework and in turn, terminate such agreement upon a material breach. Prior remedy stage and defense by the user-generator before the regulatory agency is foreseen.
3) Qualified Installer
Qualified installers shall verify that distributed generation systems comply with the requirements set forth in the Distributed Energy Framework. Professionals from different levels of education may participate as qualified installers and in order to act in such capacity, degree validated by the Ministry of Education, Culture, Science and Technology is required together with enrollment in the relevant professional association.
4) Payment structure
Payments under the Distributed Energy Framework shall be in accordance with the requirements set forth below:
- At the end of each billing period, users-generators shall receive an invoice detailing their consumption and energy injected into the grid, expressed in kilowatt-hour (kWh) with the corresponding prices of each unit expressed in argentine pesos/kWh.
- Energy injected to the grid shall be measured, registered and paid by distribution companies, which shall be duly reflected in the corresponding invoice.
- No additional charges from the distribution companies allowed.
- Should the energy injected into the grid be greater than the one consumed by the user-generator, the user-generator shall have a credit which will be taken into account for future billing periods.
- Credits in favor of users-generators shall not expire and remain in the corresponding account until they are compensated.
- Assignment of such credits to accounts of other users of the same distribution company shall be carried out in accordance with the procedure set forth by the corresponding regulatory agency.
5) Promotional Benefits
Promotional benefits shall be granted to users-generators acting under those jurisdictions which adhere to the Distributed Energy Framework. Local promotional benefits may also apply.
6) Pending Matters
Matters related to (i) the Distributed Generation Development Trust (Fondo Fiduciario para el Desarrollo de Generación Distribuida); (ii) the public access digital platform; (iii) the promotional benefits; and (iv) the fiscal credit certificates set forth in section 28 of the Law remain pending of implementation and are subject to future regulation by the URE.
At TRS&M we are available to provide clarifications or further information of any matter addressed above.
Electroingeniería S.A.’s AR$ 314,509,800 Class II Notes
Counsel in Electroingeniería S.A.’s issuance of Class II Notes for AR$ 314,509,800 under the global Program of Notes for an amount up to U$S 350,000,000. AdCap Securities Argentina S.A. acted as placement agent of the Class II Notes.
“Crescere V” Financial Trust for US$ 36.223.016
Deal counsel in the issuance and placement in Argentina of trust securities for US$ 36.223.016 issued under the “Crescere V” Financial Trust, in which Banco de Galicia y Buenos Aires S.A. acted as arranger and placement agent, TMF Trust Company (Argentina) S.A. acted as financial trustee, Syngenta Agro S.A. acted as trustor and servicer and Banco de la Provincia de Buenos Aires as placement agent.
“BeST Consumer Directo Serie III” Financial Trust for AR$ 200,000,000
Deal counsel in the issuance and placement in Argentina of trust securities for AR $ 200,000,000 issued under the “BeST Consumer Directo Serie III” Financial Trust, in which Crédito Directo S.A acted as trustor and collection and information agent, and TMF Trust Company (Argentina) S.A acted as trustee and issuer.