On July 26, the Ministry of Energy and Mining passed resolution No. 136/2016, requiring CAMMESA to conduct the First Round of the National and International Open Call and summoning all interested parties to submit offers to enter into renewable energy supply contracts with CAMMESA in the Wholesale Electricity Market (MEM, in the Spanish acronym), according to the bidding terms and conditions approved by the resolution. The submission of offers shall take place on September 5, 2016.

Offerors may be national or foreign persons, who may participate through specific purpose companies which – if not yet incorporated – must be registered before the execution date of the supply contract.

Notwithstanding the federal regulatory electric framework, the contracts entered into under the RenovAr Program shall be subject to Argentine private law, thereby allowing arbitration (in Argentina or abroad) as a mechanism of dispute resolution and the sale of the projects under specific conditions (including breaches of CAMMESA, failure to acquire US dollars in the market or termination of guarantees granted by the National State).

Offerors shall back the performance of all the obligations assumed in the offer and subsequently in the supply contract through the establishment of a "bid bond" and a "performance bond". The value of the "bid bond" shall be of US$35,000 per MW of the power offered, whereas the "performance bond" shall be of US$250,000 per MW of the power hired (which shall be maintained for terms not shorter than one (1) year and shall be successively renewed upon its expiration).

On the other hand, the offeror shall prove a minimum net worth of US$250,000 per MW of the power offered. Should such offeror be composed of two (2) or more persons, at least one of them shall comply with this requirement (such person shall be considered the Financial Strategic Partner of the project).

The first round of the RenovAr Program identifies the different types of renewable technology used for the generation of electric energy, thereby establishing: (i) the total required power for each type of technology, (ii) the maximum power of generation of energy that each project may have according to the type of technology used (in turn, each interconnection point (PDI, in the Spanish acronym) shall have a total maximum power), and (iii) the maximum quota of tax benefits according to each type of technology used.

Offerors shall identify in the offer the amount of tax benefits that they will request.

Offerors may decide to take a guaranty of the World Bank to guarantee the performance of the National State´s obligations in case the put option of the project is exercised, upon the occurrence of a breaching event.

The maximum amount of the World Bank guarantee shall be US$500,000,000 (divided into two equal tranches), which shall be allocated to each project on the basis of the power hired, for a sum of up to US$500,000 per MW. The cost of the guaranty shall be borne by each project on the basis of the power hired, the amount and the term requested, and shall be paid to the FODER (Renewable Energies Development Fund).

Supply contracts entered into within the framework of this open call shall have a payment priority according to MEM's priority of claims.

The terms of the call includes an Agreement of Accession to the FODER Trust, in order to guarantee the payment obligations assumed by CAMMESA in the supply agreements; to accept the obligation of purchasing and paying the project in case of an early termination or rescission and to instrument the World Bank's guaranty in favor of the offerors requesting such guarantee.

The quota of tax benefits for 2016 (transferable to 2017) is US$1,700,000,000, as set forth by Emergency Decree (DNU) No. 882/2016.

Click on the following links to see the decree and the resolution:

Decree No. 882/2016

Resolution No. 136/2016

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.