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exchange control conditions the development of new projects

by drbyos

The motivations for the development of electrical energy from renewable sources have a history of ups and downs in the country. As of 2019 the projects they saw new exchange controls that made their march more complex. Currently, the companies that bet on these projects in the country are local “that They have known Argentina for many years.“, detailed the specialist in energy legal matters, Jimena Vega Olmos from the MHR Legal studio.

Exchange controls for the development of new projects were intensified after the Central Bank issued communication “A” 6770 and Decree 609/2019, which established the dollar purchase restrictionthe obligation of exporters to liquidate foreign currency and the authorization to pay taxes with bonds. These controls have been modified to date.

«The reality is that all companies in the energy sector share the same problem: there are no official dollars to pay for spare parts, equipment parts, supplies and/or services from abroad“, explained the lawyer specialized in renewables, Jimena Vega Olmos in dialogue with Power On.

Added to this is the country’s macroeconomic situation. According to the specialist, it makes it difficult to access financing for the development of projects: «it is not being easy to obtain external financing to import the goods now and pay later in the terms imposed by the regulations, due to the macro situation, the credit risk in Argentina and often due to the amount of the operations,” he explained.

For this reason, the ability to finance oneself is limited: «generally the most significant import operations are implemented through financing, and this it is not available to cover the purchase of certain supplies or specific spare parts“, he expressed. Some have national production, but must meet the required characteristics of the project.

«Currently it is difficult to import spare parts or inputs for new projects. In terms of equipment there may be delays as well. Solar parks have mostly imported content. The same for wind farms: although the towers of some parks were manufactured in Argentina, in general the main components come from outside“, frame.

As of 2015, according to an analysis made by the specialist, it produced a considerable increase in projects for renewable electricity generation from the enactment of Law 27,191, the regulation of the Renewable Energy regime by decree 531/2016, the RenovAr program and the regulation of the Renewable Energy Term Market (Mater), in 2017. Many of these initiatives did not materialize.

Those that did, obtained financing from abroad. From the exchange controls that emerged in 2019 «discourage external financing for these projects. Added to other problems, the risk is so high that foreign banks decide not to finance or the cost of available financing ends up being very high“, explained the specialist.

Renewable energy projects: initiatives are usually from local companies

With the tenders carried out by Cammesa for the transport capacity of Mater «there is still interest. Companies such as YPF Luz, Central Puerto, Genneia, Petroquímica Comodoro Rivadavia, 360 Energy, Pampa and other local companies or with a very important local participation“, he detailed.

These actors “know Argentina, they have been here for many years. In addition, local companies in many cases have trapped pesos, so One way to preserve, at least partially, their value is to invest them in this type of development with the potential of having dollar-Linked contracts”.

As for the RenovAr contracts, “they are in dollars at the official exchange rate. In the case of Mater contracts there is freedom to agree the currency of the contract and payment“, he indicated.

The panorama that the specialist in renewable initiatives sees is that “there are projects that continue to advance, some of which are large. In addition to the interest in continuing to develop, it is a way of protecting the pesos. What has not been seen in recent years are projects by foreign players«.

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