Senate approves PPP law in Argentina

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Senate approves PPP law in Argentina

The Argentine Congress has approved a bill for a new Public-Private Partnership (PPP) framework to help address the country’s existing infrastructure deficit and make banks and multilateral lending agencies more interested in financing public works.

The bill submitted by the Federal Executive Branch (known by the Spanish acronym, PEN) of the Argentine government represents a substantial improvement over the current PPP framework established by Decree No. 967/2005. The decree resulted in a deficient regulation despite having been issued in an excellent international context with an abundance of capital available for emerging markets and historically favorable trade terms for Argentina.

The new framework includes many elements that were included in Decree No. 1299/00, an excellent framework but because of the vagaries of timing as to both the international economy and Argentine politics, it was never used. For instance, it allows contracts to be assigned, thereby permitting structured financing for projects.

The bill is relatively short and allows for its provisions to be implemented through its subsequent regulations. It also allows the project to be governed by the terms of the solicitation of bids and the ultimate concession agreement.

The bill also defines PPPs broadly. They can include contracts for construction, supply, maintenance, management and/or operation of projects and thus, are not limited to infrastructure projects.

The new legal framework for PPPs may be applied to several infrastructure projects throughout Argentina.

The lack of investment in Argentina’s infrastructure is so deep and the need for capital, technology, management, and resources to overcome this deficit is so massive that neither the public nor private sector alone can provide a solution. The Argentine government is, accordingly, seeking ways to provide the infrastructure required for the country’s needs.

PPPs are an alternative to the classic public works contracting system in Argentina in which the state usually designs, finances, operates and pays, while the private party only builds.

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