A general introduction to public-private partnerships in Argentina

Bizar Male

All questions

Overview

A public-private partnership (PPP) is an institution designed to develop an infrastructure project through a stable partnership between the public and private sectors, and on the grounds of joint interests and a distribution of risks.

Under a PPP regime, individuals and companies may enter into a cooperative agreement with the state to develop infrastructure projects or to provide public services.

In Argentina, the first legal framework to govern PPPs was established by Decree No. 1299/2000, ratified by Law No. 25,414 (2000). This Decree aimed at promoting private investment in public infrastructure projects that could not be afforded exclusively by the state, especially in the areas of health, education, justice, domestic transportation, airport facilities, highways and homeland security. In early 2001, Law No. 25,414 was abrogated by Law No. 25,556. Therefore, Decree No. 1299/2000 was deemed abolished.

On 16 August 2005, the Executive issued Decree No. 967/2005, published in the Official Gazette on 15 August 2005. This Decree approved the General Regime for PPP as Annex I (2005 Regime). Several provinces adhered to this Decree.

Finally, on 30 November 2016, Congress passed Law 27,328 on PPP Contracts, which became effective from 9 December 2016 (PPP Contract Law). The new regime was implemented by Executive Decree No. 118/2017 (which also abrogated Decree No. 967/2005).

The regime was conceived as the main tool to regulate and stimulate private investment in key sectors of the economy, such as infrastructure, housing, services, production, applied research and technological innovation.

Pursuant to Section 1 of Law 27,328 and the implementing decree, PPPs can pursue the following public purposes: design; construction; expansion; improvement; maintenance; exploitation; operation; financing of projects; and the supply of equipment or other goods. The contracting entity may introduce clauses of any type of contract, provided they are compatible with the PPP regime and the nature of the specific project at stake.

According to the PPP Contract Law, public-private contracts are deemed an alternative way for the state to perform public works or to develop public services, different from the administrative regime set forth in Laws No. 13,064 on Public Works, Act No. 17,520 on Concession of Public Works Act and Decree No. 1023/2001 on General Public Procurement, any of which are applicable to public-private contracts.

Like in previous regimes, the provincial states and the city of Buenos Aires were invited to join the new regime by issuing similar laws in their jurisdictions. So far, 19 provinces and the city of Buenos Aires have adhered to the PPP Contract Law.

The year in review

During 2020, PPP projects and contracts suffered from the impact of the macroeconomic and financing crisis, the covid-19 pandemic and a change of national administration.

In line with this, the Ministry of Productive Development set aside a call for national and international public bids to contract for the construction of the first stage of the Electricity Transmission Lines Project (the Extra High Voltage Line in 500kV ET Rio Diamante–New ET Charlone, Transforming Stations and Complementary Works in 132kV). The decision was based on the economic and financial problems that developed in the national economy, expressly recognised by the Argentine Congress through the enactment of Law No. 27,541 on Public Emergency in several fields, including finance, energy, tax and health. The decision made reference to the possibility of resuming the project in the future but evaluating other contracting modalities than the PPP mechanism.

Likewise, during the second half of 2020 and due to the impossibility of reaching the required financing, the government agreed to terminate PPP contracts with several contractors that had been awarded them in relation to the Highways and Safe Routes projects. While some of these contracts were terminated by mutual agreement, others have been suspended for not having reached the required financing.

Finally, the contracts awarded under the Federal Renewable Energy Programme set up by Law No. 27,191 and Decree No. 882/2016 (RenovAr) – based on a PPP model – were successively extended throughout 2020 due to the severe impact of the covid-19 pandemic on their performance.

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