Resolution No. 165/2023 of the Secretary of Energy: Amendment to Resolution No. 285/2018 of the former Ministry of Energy and Mining
On March 20, 2023, Resolution No. 165/2023 of the Secretary of Energy ("Resolution 165") was published in the Official Gazette. Resolution 165 amends Article 1 of Resolution No. 285/2018 of the former Ministry of Energy and Mining ("Resolution 285") –which in turn had been previously amended by Resolution No. 742/2021 of the Secretariat of Energy ("Resolution 742")–, in connection with the applicable monthly payment cap of penalties foreseen under the power purchase agreements from renewable sources executed under the RenovAr Program Rounds 1, 1. 5, 2 and 3 and Resolution No. 202/2016 (the "PPA").
Initially, Resolution 285 set forth rules to be implemented by Compañía Administradora del Mercado Mayorista Eléctrico S.A. ("CAMMESA") regarding the termination of the PPAs, as well as payment terms for the penalties applicable for non-compliance with commercial operation dates (“COD”) and the supply of the contracted energy.
Accordingly, Article 1 of Resolution 285 established that the amount of the penalties imposed by CAMMESA in connection with the foregoing (the latter is not applicable to projects awarded under the RenovAr Program Round 3), could be offset starting on COD date from monthly payments to be made by CAMMESA to the generator under the PPA for the supplied energy (“Energy Payments”) in: (i) 12 monthly, equal and consecutive installments; or (ii) upon generator's decision, notified to CAMMESA, in up to 48 monthly, equal and consecutive installments, bearing interest at a 1.7% per annum.
Subsequently, Resolution 742 amended Resolution 285, in order to enable the projects that had experienced delays in COD, by adding that monthly payments payable in 48 installments would be limited up to 40% of the monthly gross revenue.
Likewise, if after the installments had been paid, there would be a balance, the same payment terms would be applied until the total payment of the penalties owed under the PPA would be paid. However, under Resolution 742, installments could not exceed the tenor of the PPA.
By means of Resolution 165, generator’s alternative to pay penalties in 12 or 48 installments as foreseen under Resolution 285 is still in force. Nevertheless, Resolution 165 added the following distinction:
- The cap for monthly payments of the penalties was reduced to 20% of Energy Payments, and such cap applies until penalties are paid in full. This 20% cap will only be applicable as long as the installments for the payment of the penalties do not exceed the tenor of the PPA.
- Provided that the remaining balance exceeds the tenor of the PPA, CAMMESA is authorized to restructure the applicable conditions or to increase the cap from 20% up to40% of the Energy Payments.
For additional information, please contact Nicolás Eliaschev, Javier Constanzó, Daiana Perrone and/or Rocío Valdez.
Legal Advice in the Issuance of Loma Negra Compañía Industrial Argentina S.A.´s Series 1 Notes for $25,636,250,000 (US$133,261,858)
Counsel to Banco de Galicia y Buenos Aires S.A.U., Banco Santander Argentina S.A., Industrial and Commercial Bank of China (Argentina) S.A.U., Banco Patagonia S.A., Allaria Ledesma & Cía S.A., and Balanz Capital Valores S.A.U. as placement agents, in the issuance of Loma Negra Compañia Industrial S.A.’s floating annual interest rate equivalent to BADLAR plus 2% series 1 notes for $25,636,250,000 (equivalent to US$133,261,858), denominated and payable in Pesos, due August 22, 2024. The Series 1 Notes were issued on February 22, 2023 under the company´s global notes program for an amount of up to US$150,000,000.
Banco de Galicia y Buenos Aires S.A.U., Banco Santander Argentina S.A., Industrial and Commercial Bank of China (Argentina) S.A.U., Banco Patagonia S.A., Allaria Ledesma & Cía S.A., and Balanz Capital Valores S.A.U. acted as placement agents of the series 1notes. Banco de Galicia y Buenos Aires S.A.U. also acted as settlement agent for the series 1 notes.
Legal Advice in the Issuance of 360Energy Solar S.A. Series 2 Notes for US$20,000,000 and Series 3 Notes for US$60,000,000 Which Qualify as Green Bonds
Counsel to Banco Itaú Argentina S.A., Itaú Valores S.A., Balanz Capital Valores S.A.U., Invertir en Bolsa S.A., BACS Banco de Crédito y Securitización S.A., Banco Hipotecario S.A., Banco de Servicios y Transacciones S.A. and PP Inversiones S.A. in the issuance of 360Energy Solar S.A. 0.00% Series 2 Notes for US$20,000,000 due March 8, 2025 (the “Series 2 Notes”), and 5.00% Series 3 Notes for US$60,000,000 due March 8, 2032 (the “Series 3 Notes” and together with the Series 2 Notes, the “Notes”), issued under the Global Notes Program for an amount of up to U$S100,000,000 (or its equivalent in other currencies or other unit value). Both Series 2 Notes and Series 3 Notes qualify as Green Bonds.
The proceeds from the placement will be used to finance the construction, installation, commissioning, operation, and maintenance of the 360Energy La Rioja II Photovoltaic Solar Park.
Banco Itaú Argentina S.A., Itaú Valores S.A., Balanz Capital Valores S.A.U., Invertir en Bolsa S.A., BACS Banco de Crédito y Securitización S.A., Banco Hipotecario S.A., Banco de Servicios y Transacciones S.A. and PP Inversiones S.A. acted as placement agents of the Notes. Banco Itaú Argentina S.A. also acted as arranger and settlement agent.
Roch S.A. consent solicitation
Counsel to Roch S.A. in a consent solicitation process for the release of proceeds for an amount of AR$266,094,000 to be applied under the joint venture agreement Unión Transitoria Río Cullen, Las Violetas, La Angostura (Cuenca Austral - Tierra del Fuego Province)and for increasing the interest rates for the periods between June and December 2023, from 6.5% to 7% per annum for the US Dollar denominated debt and the margin under the Peso denominated debt from 12% to 12,5% per annum.
The transaction was conducted within the framework of the company’s judicial insolvency proceeding and allowed Roch to obtain the consents from 81.07% of the holders of the series 1 secured notes for US$16,261,578; 100% of the holders of the private secured note for US$3,413,694; and 100% from the lenders under financial loans Banco Itaú Argentina S.A., Banco de la Ciudad de Buenos Aires and Banco de Tierra del Fuego for US$9,149,905.
Albanesi Energía S.A.’s Issuance of Series VII Notes for US$ 12,913,409, Series VIII Notes for $388,552,039 and Series IX Notes for 31,588,984 UVAs
Counsel to SBS Capital S.A. and Banco de Servicios y Transacciones S.A. as arrangers, and to SBS Trading S.A., Banco de Servicios y Transacciones S.A., Balanz Capital Valores S.A.U., Facimex Valores S.A., Banco Hipotecario S.A., Nación Bursátil S.A., Banco de la Provincia de Buenos Aires, Macro Securities S.A.U., Banco Supervielle S.A., Supervielle Agente de Negociación S.A.U., BACS Banco de Crédito y Securitización S.A., Adcap Securities Argentina S.A., Petrini Valores S.A., Portfolio Investment S.A., Allaria Ledesma & Cía S.A., Global Valores S.A. and TPCG Valores S.A.U., as placement agents, in the issuance of Albanesi Energía S.A.’s 4% Series VII Notes for US$ 12,913,409, due February 13, 2025; floating annual interest rate Series VIII Notes for $388,552,039 due February 13, 2024; and 3.8% Series IX Notes for 31,588,984 UVAs, equivalent to $6,225,872,857, all of them issued under the Global Notes Program for an amount of up to US$ 250,000,000.
SBS Capital S.A. and Banco de Servicios y Transacciones S.A. acted as arrangers, and Banco de Servicios y Transacciones S.A. as arrangers, and to SBS Trading S.A., Banco de Servicios y Transacciones S.A., Balanz Capital Valores S.A.U., Facimex Valores S.A., Banco Hipotecario S.A., Nación Bursátil S.A., Banco de la Provincia de Buenos Aires, Macro Securities S.A.U., Banco Supervielle S.A., Supervielle Agente de Negociación S.A.U., BACS Banco de Crédito y Securitización S.A., Adcap Securities Argentina S.A., Petrini Valores S.A., Portfolio Investment S.A., Allaria Ledesma & Cía S.A., Global Valores S.A. and TPCG Valores S.A.U. acted as placement agents of Series VII Notes, Series VIII Notes and Series IX Notes.
Issuance of PyME CNV Guaranteed Class II Notes of Agro Alliance S.A. for U$S950,010
Counsel in the issuance of the PyME Guaranteed Class II Series I Notes for U$S950,010 by Agro Alliance S.A. due on February 14, 2025.
Banco Supervielle S.A., Banco Mariva S.A., and Banco de Servicios y Transacciones S.A. acted as arrangers, placement agents, and guarantee entities of Class II Series I Notes. Supervielle Agente de Negociación S.A.U. acted as placement agent of the Notes.
Adhesion to the Power Availability and Efficiency Improvement Agreement for Combined Cycles
On February 7, 2023, Resolution No. 59/2023 of the National Secretariat of Energy (the "Resolution") was published in the Official Gazette with the purpose of enabling generators owning thermal power plants whose technology is classified as combined cycle (the "CC Generators") to adhere to a Power Availability and Efficiency Improvement Agreement (the "Agreement"). This Agreement will be subscribed with the Compañía Administradora del Mercado Mayorista Eléctrico S.A. ("CAMMESA"), on behalf of Distributors and Large Users of the Wholesale Electricity Market (the "WEM"), to promote necessary investments for major and minor maintenance of the existing generation equipment not committed in power purchase agreement ("PPA"). In this regard, the Agreement will ensure the supply of demand in the medium and long term, guaranteeing lower energy production costs.
The aim of the Resolution is to establish an additional remuneration scheme to the high efficiency thermal generators with energy or power not contracted under a PPA -i.e., those who receive their remuneration under Resolution No. 826/2022 of the Secretariat of Energy (the "Resolution 826")-, that due to their age may require the performance of minor and major maintenance tasks, and bear the costs of the investments associated with such tasks.
Relevant aspects of the Resolution and the Agreement
A. Purpose of the Resolution
As described before, the purpose of the Resolution is to promote the necessary investments for the execution of minor and major maintenance to maintain the reliability and availability of power of the combined cycle equipment not committed under PPA, in order to satisfy the requirements of the electricity demand in the WEM in the medium and long term. For such purpose, the CC Generators shall sign the Agreement attached as Annex to the Resolution.
B.Relevant aspects of the Agreement
The Agreement establishes:
- The characteristics of the commitment of the qualified generator, stipulating an availability commitment of no less than 85% of the net power installed;
- The units and power committed;
- The price of the energy generated (fixed in U$S/MW-months);
- The remuneration of the committed power, which will be governed in accordance with Resolution 826, with respect to the units included in the Agreement (fixed in U$S/MW-month), excluding non-fuel costs from the remuneration (cfr. point 5.1 of Annex II of Resolution 826);
- CC Generating Agents agree to a 35% reduction on the price for the Guaranteed Capacity Offered DIGO under the terms of Resolution 826, applicable in the months of December, January, February, June, July and August, and 15% on the price for the Guaranteed Capacity Offered DIGO in the months of March, April, May, September, October and November;
- The commercial documentation and the payment to be paid by CAMMESA, with the respective applicable exchange rate (Communication "A" 3500 BCRA);
- The term, which in accordance with article 2 paragraph c. of the Resolution, may not exceed five (5) years; and
- In relation to the machines included and the terms of the Agreement, the CC Generators shall irrevocably, fully and unconditionally waive any administrative claim or judicial proceeding that it has initiated and is in progress against the National Government, the Secretariat of Energy and/or CAMMESA related to the remuneration in force or that it may initiate in the future.
C. Procedure to proceed with the adhesion and signing of the Agreement
Those CC Generators interested in signing the Agreement shall submit to CAMMESA within 90 days from the publication date of the Resolution -term that, if no extension is granted, will be effective on May 7, 2023-, the following information:
- The unit/s that will assume the commitment;
- Net power of each one of the units and committed availability (which will be 85% of the net power); and
- Term of the Agreement for each of the units (which will start from the subscription of the Agreement and may not exceed 5 years).
Finally, the Undersecretary of Electric Energy is authorized to issue the complementary or clarifying rules required for the implementation of the Resolution.
For additional information, please contact Nicolás Eliaschev, Javier Constanzó, María Eugenia Muñoz and/or Rocío Valdez.
Modification of the Procedure for Certification and Authorization of Importation of Batteries
Resolution No. 31/2023, enacted by the Ministry of Environment and Sustainable Development on January 23 (“Resolution 31”), modified the provisions of Resolution No. 443/2020 of the Ministry of Environment and Sustainable Development ("Resolution 443") regarding the procedure for the certification and authorization of importation of cells and batteries.
Relevant aspects of Resolution 31
As a reminder, Resolution 443 established the guidelines for the permanent or temporary importation of primary cells and batteries.
In this regard, Resolution 31 replaced Annexes III and V of Resolution 443 by Annexes I and II, respectively, of the new resolution.
The current Annex I and Annex II establishes (a) the procedure for the certification provided for in article 6 of Law No. 26,184 (which obliges those responsible for the manufacture, assembly and importation of cells, to certify for that cells and batteries do comply with the requirements indicated in such law) and (b) the procedure to obtain the authorization to import cells and batteries.
Likewise, Resolution 31 also sets forth that the import authorizations for cells and batteries will be issued by the Secretariat for Environmental Control and Monitoring. Imports regarding devices that may include cells and batteries -whether incorporated to the device or not- will be allowed -exclusively- in case they are included by the Annex to the corresponding Certificate of Conformity, issued by the certifying entity.
In addition, Resolution 31 modifies article 14 of Resolution 443 and establishes the information that certifying entities must issue through the Distance Procedures Platform (“TAD”, for its Spanish acronym, Trámites a Distancia).
Finally, importers who were entitled with authorizations granted under the import procedure established in Annex V of Resolution No. 443 at the time of entry into force of Resolution 31 -scheduled for February 12, 2023-, may voluntarily choose to obtain new authorizations under the new regime.
For additional information, please contact Nicolás Eliaschev, Pablo Arrascaeta, María Eugenia Muñoz and/or Rocío Valdez.
Secretary of Energy Launches Tender for Renewable Energy Projects
The Secretary of Energy has opened a new tender seeking companies to build new power generation facilities totaling 620 MW.
By Resolution No. 36/2023 (“Resolution 36”), issued by the Secretary of Energy on February 2, 2023, the main rules applicable to such tender (“RenMDI”) have been approved.
RenMDI follows Resolution No. 330/2022 of the Secretary of Energy (“Resolution 330”), that called for expressions of interest (“MDI”, for its Spanish acronym, Manifestaciones de Interés) in connection with infrastructure projects that would allow the incorporation of renewable generation and/or energy storage facilities interconnected to medium-voltage transmission and/or distribution facilities. For additional information regarding Resolution 330, please visit this article published on our website.
Under the MDI, according to Resolution 36, 491 proposals were received, totaling 14,400 MW.
Moreover, RenMDI intends to continue increasing the share of renewable energy in Argentina, as mandated by Law No. 26,190 (as amended by Law No. 27,191), and implemented through successive renewable tendering processes.
Below are the key takeaways of Resolution 36.
I. Executive summary
- RenMDI calls for interested parties to submit offers in order to enter a PPA with the Wholesale Market Administrator Company (“CAMMESA”), who will act as offtaker on behalf of the Distributors and Large Users of the Wholesale Electricity Market (“WEM”).
- Such PPA will have a tenor of 15 years as of commercial operation date (“COD”) and will be hard currency-denominated, payable in pesos at a customary exchange rate.
- RenMDI includes two lines: (i) Line 1 of renewable generation to replace forced generation, for biomass, solar photovoltaic, solar photovoltaic with storage and wind with storage (“Line 1”); and (ii) Line 2 of renewable generation to diversify the power matrix, for biogas, landfill biogas, Small Hydroelectric Developments (PAH) and biomass technologies (“Line 2”).
- The goal is to contract 500 MW for Line 1 and 120 MW for Line 2, thus totaling 620 MW.
- No payment guarantees and/or other type of guarantees from FODER are foreseen (as defined in section V).
II. Deadlines
Bidders may submit any requests for additional information or clarifications until February 24, 2023. In turn, March 1 is the date for CAMMESA to respond to any such requests.
March 15, 2023 is the deadline for bid submissions.
Selection of winners is scheduled for May 24, 2023 and the PPAs are expected to be entered no later than September 20, 2023.
III. Bidding Terms and Conditions - Most relevant Terms
Resolution 36 approves the Request for Proposals as Annex thereto (the “RfQ”), that foresees the terms and conditions to be complied by any bidder under the RenMDI.
Under the RfQ, as said before, two separate lines (please see above) are foreseen, with different technologies foreseen in each case.
Biomass projects submitted and not awarded under Line 1 will be added to the biomass projects submitted exclusively for Line 2.
Finally, bidders must submit, together with their bid, a bidding guarantee in accordance with the terms of the BTC.
IV. Terms of the PPA
The successful bidders will enter into a power purchase agreement with CAMMESA (“PPA”).
The PPA will have a term of 15 years following COD.
The price of the PPA will be fixed in U.S. dollars per Megawatt/hour and seasonality will be remunerated to encourage generation in periods of high demand.
V. Additional Matters – Differences with Prior Tenders
Power generation facilities awarded under the RenMDI will not have dispatch priority with respect to other renewable generation, self-generation or cogeneration facilities operating in the WEM in case of curtailment, except for those cases specifically provided in the RfQ.
Expansions of existing facilities (a) (A) under RenovAr 1, 1.5, 2 and 3, (B) Resolution No. 202/2016 of the former Ministry of Energy and Mining, and Resolutions No. 220/2007, 712/2000 and 108/2011 of the former Secretary of Energy, or (b) that have obtained dispatch priority in the corporate renewable term market, will not be eligible under the RenMDI.
In addition, and unlike other previous tenders, no payment guarantees by the Fund for the Development of Renewable Energies (“FODER”, for its Spanish acronym, Fondo para el Desarrollo de Energías Renovables) is foreseen for RenMDI projects.
For additional information, please contact Nicolás Eliaschev, Javier Constanzó, Daiana Perrone, María Eugenia Muñoz, Pablo Arrascaeta, Florencia Martínez, Luciana Tapia Rattaro and/or Rocío Valdez.
“AMFAyS – Serie 41” Financial Trust for AR$509,610,869
Legal advisors to StoneX Securities S.A. and Nuevo Banco de Santa Fe S.A. as arrangers and placement agents in the issuance and placement in Argentina by Asociación Mutual de las Fuerzas Armadas y de Seguridad (AMFAyS) as trustor and TMF Trust Company (Argentina) S.A. as trustee and issuer of debt securities Class 1 for AR$337,526,255 debt securities Class 2 for AR$22,143,241 and debt securities Class 3 for AR$149,941,373, under the Financial Trusts Global Program “AMFAyS – Serie 41” for an amount of up to AR$5,000,000,000.