The Argentinean Senate has approved a law to regulate public-private partnerships in the country, which should come into force in mid-December.

The widely anticipated measure is expected to help boost investment into Argentina, particularly in energy and infrastructure projects. It marks a shift from the previous regime, which managed private participation in public projects through a concession scheme.

“The idea is that with this new law there will be a lot of public-private collaboration on large projects. This legislation introduces very important aspects to the relationship between private investors and the government. In the infrastructure sector, the process is in deep [collaboration] between both sectors. There was no specific legislation [governing that relationship] until now,” Guillermo Ferraro, who heads the government and infrastructure department of KPMG Argentina, tells GTR.

He adds that the priority sector for the Argentinean government is energy infrastructure, including generation, power plants and transmission. Indeed, even the capital Buenos Aires is still plagued by frequent electricity outages due to the country’s outdated power system.

Another sector where the government will look for private collaboration is transportation infrastructure. “Next year, our grain production is expected to grow by 20%. We currently produce 100 million tonnes a year, and in the budget predictions for next year, people think we will produce 20 million tonnes more: that’s 20 million tonnes more to transport. We need better roads, railways and new port infrastructure,” Ferraro adds.

This legislation introduces very important aspects to the relationship between private investors and the government. Guillermo Ferraro, KPMG

However, he warns that international investors are likely to stick to their wait-and-see attitude even with the passing of the law, as they want to see how domestic private companies fare on these projects first. Additionally, investment banks are waiting for Argentina’s extremely high interest rates (25.75% at the time of writing) to drop, and financing demand to rise, before they enter the country.

“At the moment, projects are mostly financed by multilaterals, because there is no investment bank. Our country only began functioning on a normal scenario this year. We hope that the normal financial structure will also start in our market. Next year, the speed of the process will increase. We hope that typical investment banks and infrastructure funds will come in,” he explains.

Now that the Senate has approved the law, President Mauricio Macri has until November 30 to oppose it – but this is one of his administration’s initiatives, so he most likely won’t – after which the law has to be published in the official gazette. It will come into force eight days after publication.

“As of the date the law comes into force, all national procurement projects specifically stating within their terms and conditions that public-private partnerships constitute an allowable contract alternative for the specific project, shall also comprise a public invitation to tender for a PPP agreement,” Carlos Alfaro, partner at Buenos Aires-based law firm Alfaro Abogados, explains to GTR.