Argentina’s Ministry of Energy and Mines (MINEM) launched the process to rescind two contracts for the development of two projects awarded in RenovAr 1.5, a source at the ministry told Inframation.
The source said that MINEM started the 60-day process to rescind the contracts because the companies did not submit all of the required documentation, but that the owners of the Viento Reta 100MW wind farm have since submitted the documents.
Upon notification of their non-compliance, Chinese firms Sinohydro, China Energy Engineering Investment Corporation (CEEIC) and China Lac Cooperation Fund submitted the required documentation for Viento Reta’s PPA contract, which they signed on 21 November 2017.
The same source said that SoEnergy, the owner of the Sarmiento 35MW solar PV plant, still needs to submit all the required documents for its PPA for Sarmiento, which it signed in May 2017.
A spokesperson for SoEnergy told Inframation on 24 July that they had not yet received notification from the government about any rescission.
A spokesperson for Sinohydro declined to comment on the information.
According to two lawyers involved in Argentine renewable project financings, sponsors at the RenovAr renewable capacity auctions had to fulfill a series of milestones that were written into the contracts.
Wholesale electricity market administrator CAMMESA reserved the right to initiate a rescission process for contracts that fell into non-compliance with either the date of financial close, the start of construction, the arrival of the relevant equipment and the date of commercial operations.
It is not clear which milestones the companies had failed to fulfill.
Companies signed two guarantees for projects won under RenovAr, one to guarantee the proposal when signing the contract, which is later exchanged for the compliance guarantee.
The source at MINEM said that once contracts are terminated, the government would execute the guarantees which are USD 250,000 per offered MW.
“There are other renewable projects which have not fulfilled their milestones, but not as bad as these two contracts. However, I believe that other contracts will be terminated,” the source at the ministry added.
One of the lawyers consulted said that to date, no fines have been applied to companies that won projects under the auctions, even though some have not reached their milestones.
Both lawyers agreed that the initiation of these rescission processes represents a good signal for the market that the rules are respected in Argentina.