Infrastructure

Public Private Partnership Act

On November 30th, 2016 the National Congress enacted Law 27,328 which regulates the Public Private Partnership Regime (“PPP Regime”) allowing the Federal State to select from different alternatives for contracting private interested parties, in order to develop, finance and execute investment projects within a flexible legal framework, attractive to private investors, aim at expanding public infrastructure, along with an efficient allocation of risks between private and public parties. 


In such context, the PPP Regime turns in a welcome renovation of the former attempts [1] , but this time as a law enacted by the National Congress,  providing specific regulations applicable to partnerships between the State and private parties, among which we highlight the following aspects:  

(a) Wide range of projects to be involved, including public infrastructure, public utilities, services, productive investments, applied research, technological innovation, and related services;

(b) Possibility for sponsors or private interested parties to use a Special Purpose Vehicle (SPV) to contract with the State, who will be in charge of developing and executing the whole project; the PPP Regime also allows the SPV going public;

(c) A general rule of competition among possible bidders to been selected as private contractor, compatible with private initiative proceedings;

(d) Option to call for a competitive dialogue when the complexity of the project requires it;

(e) Possibility to use trusts in order to execute the projects, and flexibility to use suitable mechanisms of payment and/or guarantees adjusted to the needs and features of a specific project;

(f) Creation of a new administrative body, invested with specific powers of regulations, including the obligation of creating a website with open access to all related PPP information;

(g) Steps in right in favor of investors and/or third parties if the contractor fails to fulfill its obligations under the project;

(h)  Definition on the national budget for 2017, of a 5% cup to be used in PPP projects to be developed next year;

(i) Arbitration as a dispute resolution procedure, and also the option to appoint a dispute board for resolution of technical issues during the execution of the project.  

According to the Federal Government’s investment plan, PPP Regime will help to develop and execute several investment projects in different productive areas, which are already in progress or to be launched the following years. Said projects range from infrastructure-based services to technological and financing collaboration on the energy area (nuclear, hydrocarbons, and renewable), and health and social services, such as: 

(i) Construction, extension, and renovation of the national railroad grid; 

(ii) Modernization and operation of the port of Buenos Aires, the largest in the country; 

(iii) Financing, construction and operation of a waste-to-energy power plant in the City of Buenos Aires; 

(iv) Construction and extension of aqueducts for the provision of drinking water in different provinces; 

(v) Expansion, and refurbish of sewage plant in the Province of Mendoza, including the construction and expansion of related sewage pipeline; 

(vi) Construction of public hospitals;

(vii) Social housing schemes; 

(viii) Partnership for exploration and exploitation of conventional and non-conventional hydrocarbons, especially in the Vaca Muerta shale basin, located in the Province of Neuquén; 

(ix) Technological collaboration for the development of nuclear energy and renewable energy production obtain from natural resources (wind, solar power, water, etc.); 

(x) Expansion of Argentina’s cell coverage by construction and installation of cell towers/sites; 

(xi) Promotion of national and provincial tourism, by the expansion and development of key tourism centers, including eco-tourism in national protected areas along the country, giving special emphasize to the environment protection; among many others. 

The PPP Regime may be applied to short term projects as indicated above, but also, depending on the public purposes backed up by a public sustainable policy, such partnerships are suitable for long-term projects where value for money has preponderance in the provision of services, especially in public infrastructure-based services [2]. Value for money is the key feature of PPP’s success, along with the understanding from both sides (public and private) that the sharing of responsibility and allocation of risks allow the final execution of projects that, otherwise, by means of the traditional public procurement regime will not be attractive for the private collaboration. 

For further information on the PPP Regime and its application, please contact María Morena Del Río or Anabela M. Mengoni. 

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[1] In the past, the Federal Government has tried to promote similar partnerships with private parties by issuing Executive Decree 1299/00 and Executive Decree 967/05, which lacked of practical application.
[2] Grimsey Darrin – Lewis, Mervyn K., “Public Private Partnerships. The worldwide revolution in infrastructure provision and project finance”, Edward Elgar, Cheltenham, UK – Northampton, MA, USA, 2007. 



For further information on this topic please contact María Morena Del Río and Anabela M. Mengoni