On September 16th, 2019, Resolution No. 552/2019 issued by the Secretary of Governmental Energy (in Spanish, Secretaría de Gobierno de Energía and hereinafter, the “Resolution” and “SGE”, as applicable), under the Ministry of Treasury (in Spanish, Ministerio de Hacienda), was published in the Official Gazette. In summary, the Resolution has approved budgetary transferences in favor of: (i) oil producers, (ii) provinces which act as oil-concession grantors, and (iii) biofuel producers. As further explained below, the bill will be footed by the National Treasury throughout specific budgetary allocations in the 2019 budget law.

The Resolution is enacted in the context of Decree No. 566/2019 (as complemented by Decree No. 601/2019) which enforced fuel price caps by fixing crude prices for the local market until November 13, 2019 (90-day freeze), and by setting the Brent price of US$ 59/bl and currency exchange rate of AR$ 46.69 pesos per US$.

Most relevant aspects of the Resolution are singled out below:

  1. Amounts of the subsidies

Oil producers are entitled to receive subsidies in an amount of 116.10 pesos (approximately US$ 2.06 at the current exchange rate) per barrel delivered to the local market in the month of September pursuant to the following break-down: (i) 88% will be destined to the oil companies, whereas (ii) the remainder 12% to the oil-producing provinces acting as concession grantor.

With regards to biofuel producers which act as beneficiaries under regimes set forth in Laws No. 26,093 and 26,334, these will receive subsidies in an amount equal to 6% of the price established by the SGE for the month of August, to be applied for their local production corresponding to the month of September.

  1. Request by the companies and waivers to be performed

In order to benefit from the Resolution, oil producers as well as the provinces acting as grantors, are requested to waive any and all claims that that these may have regarding Decrees No. 566/19 and 601/19, whether administrative, judiciary and/or an arbitral proceeding, in Argentina or abroad.

Furthermore, such companies must also submit an affidavit providing specific indemnity provisions in favor of the Republic of Argentina against any and all local or foreign administrative, judiciary or arbitral proceedings that may be initiated by those companies, their shareholders, controlling entities and/or affiliates, regarding Decrees No. 566/19 and 601/19.

Waivers of that nature are also mandatory for biofuel producers.

  1. Enforcement authority and budgetary allocations

The Undersecretary of Hydrocarbons and Fuel of the SGE is entrusted with all actions that may be necessary in order to implement the Resolution, and also establishes that the amounts corresponding to the subsidies foreseen in the Resolution will be footed by Treasury funds of the SGE pursuant to the 2019 budget law.

For further information, please do not hesitate to contact either Nicolás Eliaschev or Javier Constanzó.