Argentina is trying to reduce its energy dependency with the development of an oil refinery supported by the International Finance Corporation (IFC) and the launch of a tender for 1GW of renewable energy projects.

In the refinery deal, the IFC has arranged a long-term loan of US$378mn to Argentina’s Axion Energy for the expansion of its oil-refining capacities in Campana and to help its adoption of higher environmental standards.

The financing package is composed of an eight-year US$78mn loan from the IFC itself, and US$300mn from various commercial banks including ICBC, Santander, BBVA, Crédit Agricole and Citi, with tenors of five to six years.

The deal marks Argentina’s return to long-term syndicated loans, and will help the country to reduce its dependency on imported fuels, according to the IFC.

In parallel, Axion will invest US$1.5bn of its own capital into the Campana refinery.

Alzbeta Klein, manufacturing, agro-industries and services director at the IFC, says: “The mobilisation of long-term financing from international banks is proof not only of Axion’s strong profile in the market, but also of the potential to generate new private investments in Argentina.”

Campana is Argentina’s third-largest oil refinery, representing 15% of the country’s refining capacity.

Meanwhile, President Mauricio Macri has launched a bidding process for 1GW of renewable energy projects requiring investments of US$1.5bn to US$2bn. The tender was announced within the framework of a new law requiring Argentina to generate 8% of its energy needs via clean technologies by 2017, and 20% by 2025.

As part of the new law, the government will grant fiscal benefits (including an anticipated VAT return, an accelerated amortisation for income tax and exemptions in import duties) and a priority in payment to renewable energy sellers.

The 1GW of this first auction will be split between 600MW of wind power, 300MW of solar power, 65MW of biomass power, 20MW of small hydroelectric projects and 15MW of biogas power, with all projects aiming to be completed within 24 months.

According to Argentinean law firm Alfaro Abogados, this first round of projects alone could save the country around US$300mn in fuel importation for electricity generation. Contracts are expected to be announced in September.

Argentina’s government expects renewable energy projects to bring investments for US$5bn by 2017, and a total of US$20bn by the end of 2025.