The Executive Power has issued the Decree N° 5226, dated May 6, 2021 (the ” Decree”) by which it regulates the Law N° 6324/19, that grants a guarantee of the Paraguayan Government for works of distribution and transmission lines of electrical energy through Public Tender called by the National Administration of Electricity (“ANDE”), under the modality of Public Tender with financing by the Bidder, commonly known as ” Turnkey.”
That is to say that the Bids filed under this modality are distinguished from those that are filed in traditional processes, since they contain, in addition to the technical and economic Bid, an offer of financing, which due to their characteristics and nature is subject to the conditions of the national and international financial market. The financial Bid shall contain the conditions of the financing offered (type and level of the interest rate, term of amortization, grace period, etc.), as it is stipulated in the respective Bid Documents. Also, the Bidder will have to introduce the financial model and the structuring of the financing with the detail of their costs.
With this new regulation, it is also include in addition a previous stage of pre-selection of the Bid that is economically and financially more convenient in the processes of Public Tender of works and services, specifically included in the mentioned Law N° 6324/19 and that they will have ANDE as a convoking institution. In general terms, the most relevant aspects of the Decree are:
- The Ministry of Economics must authorize the call for Public Tender and shall approve the conditions of financing and the criteria of awarding proposed by ANDE in the Tender Documents, and in each case, it shall be authorized to modify these conditions and the criteria originally proposed.
- The Tender Documents shall have to necessarily consider, among other points, the basic conditions of the financing and the criteria of awarding it; the way in which the payments arising from the contract shall be carried out; the condition that the Bidder has assured the financing previous to the order of commencement, as well as the concrete determination of what shall have to be understood by “Landmark” and “Commercial Qualification” of the works.
- The interested parties may suggest adjustments, improvements or additions to the economical /financial aspects of the drafts of the Tender Documents in an instance previous to the publication of the call.
- Considering the advantages that the scale economy offers, in the calls with system of awarding per Lots, it is anticipated the opportunity to introduce improvements to the financial Bid in case of awarding in more than one Lot simultaneously (until a maximum of three Lots).
- It is included a stage of provisory and nonbinding preselection of the most advantageous economic and financial Bid for the Contracting Party, and that comply with the legal, administrative and technical conditions required by the Tender Documents. The preselection shall be notified to the selected Bidder.
- The economic and financial Bids, along with the preliminary report by the Evaluation Committee by which a Bid has been preselected shall be taken into consideration by the Ministry of Economics and Treasury, which shall have a deadline of 30 calendar days following the reception of the Bid to inform to this respect by means of a Technical Report. The report of this institution shall have a binding character.
- Within the deadline for the issuance of the Technical Report, the Ministry of Economics and Treasury shall be able to ask the preselected Bidder to include some improvements in its Bid of financing and/or direct clarifications of their scope, whenever the modifications maintain or reduce the value over the criteria that determined their selection.
- By their own initiative and within the deadline of 30 days following the reception of the notice of preselection, the selected Bidder shall be qualified to file proposals of improvements to their financial Bid.
- The Ministry of Economics and Treasury, in representation of the Paraguayan Government and in character of guarantor, shall subscribe with ANDE, the contract awarded as much as all the certificates of recognition of the payment obligations that are generated by the compliance of landmarks of the contract.
- Under the conditions established in the respective Bid Documents of the call for Public Tender, it shall also be considered as landmark, the reception and complete certification of the main equipment and the materials in existence in the warehouse, and it shall be issued the of recognition of the payment obligation in this concept up to a maximum amount equivalent to 40% of the value of each corresponding contract.
- The Certificates of recognition of payment shall constitute an indirect national debt of the Central Administration, and they shall have a character of transferable, unconditional, irrevocable and independent, which implies that in case of completion of the contract, the certificates issued shall not be affected.
In conclusion, the character of the regulation is within our expectations, and it makes operative the Law N° 6324/19 of Turnkey for transmission line works to be call for Public Tender by ADNE under the parameters established therein.
It is expected now that ANDE will publish the calls for Public Tender for the much needed works of electrical transmission (with financing by the private sector) in a country that produces abundant hydroelectric energy through the Hydropower stations of Yacyretá and Itaipú, but that nevertheless lack an infrastructure of agile, efficient and modern transmission in several sectors of the interconnected network whether it is in low, medium or high voltage.
This process has drawn the interest of important local and international players from the area of design, construction and supply for this type of projects as well as of international financial players that feel comfortable accompanying these investments with deferred payment, in Paraguay.
For more information please contact
Dahiana Acosta dahiana.acosta@berke.com.py
and/or
Martin Carlevaro martin.carlevaro@berke.com.py
