Argentina establishes integrity framework for PPP trust

Friday, November 9, 2018

Press release from the Ministry of Transport of Argentina

(Machine translation)

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The Integrity Framework prepared by the national government to apply to the PPP Financial Assistance Trusts for the Network of Highways and Safe Routes was studied by the IDB and meets the highest international standards. With this instance the most important step to advance in the structuring of the trust is fulfilled.

Buenos Aires, November 9, 2018. The IDB (Inter-American Development Bank) delivered yesterday the reports submitted by two expert lawyers in integrity and transparency with suggestions for the integrity framework prepared by the Argentine Government to apply to the Trusts of Financial Assistance PPP. These reports indicate which clauses agree with the best international practices in the matter. The initiative is a pioneer in Latin America as an instrument to facilitate the financing of public works in the region.

"This is unprecedented, we are protagonists of an unprecedented integrity framework in Latin America with the support of the IDB, and we did it in record time." This resolves the integrity problems that threatened the progress of Public Private Participation works. start the highways and safe routes of more than 3000 km on national routes that are core and fundamental to lower logistics costs and improve road safety " - Guillermo Dietrich, Minister of Transportation of the Nation.

The integrity framework includes guidelines for the incorporation of compliance programs aimed at preventing prohibited practices. From this, the consortia that require participation in this trust must respect a series of rules and execute an integrity plan that will be monitored by an independent supervisor.

The guidelines contemplate both preventive measures and responses to eventual INTEGRITY events that may affect the development of PPPs in Argentina. In its preparation, technicians from the Secretariat of PPP, BICE, the Ministry of Transportation of the Nation, Banco Nación and the Anticorruption Office worked.

What does it consist of

The integrity framework covers three aspects:

- Determination of an integrity event: it will be considered as such when crimes against the Public Administration are committed and there is a final judicial prosecution, a judgment or there is a member of the company that accepts the regime of repentance.

- Prevention: the company must present, among other things, an integrity manual and an affidavit stating that it is not covered by integrity events.

- Repair: if an event of integrity occurs, the affected company must present an action plan and proceed to the affected person's removal. Otherwise, you will suffer the suspension of the loan and the acceleration of the repayment.

What are PPP contracts

Road contracts for Public Private Participation envisage the execution of works on more than 7,200 km of national routes, through the construction of highways, safe routes, variants and special works, within the framework of the Plan for the new Network of Highways and Safe Routes. It includes an investment of more than 12,500 million dollars. The first stage, which is already underway, included the tender of six new road corridors (A, B, C, E, F and South) covering more than 3,300 km of national routes of Buenos Aires, Cordoba, La Pampa, Mendoza and Santa Fe.

The work plan for these corridors involves works in more than 2,500 km through the construction of new highways (813 km), safe routes (1,494 km) and special works (252 km), as well as 17 variants to different locations. The total investment estimated for the first stage is more than USD 8,000 million in total. The bidding process of this stage had 32 offers made by 10 consortiums, made up of 19 national and 7 international companies.

PPP Trust

The new financing trust will be created within the framework of Law 27,328 of Public Private Participation. This trust acts as an intermediary between the financial sector and the construction companies to ensure the start of work on 6 road corridors through the PPP system, which is scheduled to start in late October and early November.

The trust will allow a loan equivalent to the necessary flow for the works of the first year, of 1,200 million dollars.