Argentina presents trust fund for scandal-hit PPP highways
Argentina's transport minister Guillermo Dietrich unveiled a trust fund to secure the financing for six PPP highway contracts worth US$8bn amidst the uncertainty caused by the "notebooks" corruption scandal and the involvement of some contractors in the probe.
According to Dietrich, this trust fund will act as an intermediary between the financial sector and the construction firms to secure the financing needed to start works on the road corridors.
In this regard, the new mechanism is expected to finance the works during the first year of construction, around US$1.2bn. For this goal, Banco Nación will inject between US$200mn and US$300mn into the trust fund, while other entities are expected to join later, the transport ministry said in a press release.
Outside of the PPP program, Banco Nación will also give 30bn pesos (US$970mn) to facilitate payment certificate operations for public works, while this instrument will also undergo modifications to facilitate loan access for contractors.
At the same time, Dietrich said that public contract regulations will be modified to guarantee greater transparency.
Contractors will have to adhere to new integrity requirements to participate in the trust fund. These requirements will be developed by the country's anti-corruption authority, the government's internal control body Sigen, market regulator CNV, competition defense commission CNDC and financial information unit UIF.
CORPORATE SHOCK
Also on Monday, credit agency Standard and Poor's released a report noting that though it's still too early to assess the impact of the "Notebooks" scandal on Argentina's economy or the companies involved, "potential fines that may arise from collusions could be substantial" in the case of contractors.
The agency compared the potential consequences for firms that participated in the bribes scheme to those that hit the companies involved in the Lava Jato scandal in Brazil.
Consequences include difficulties to access financing due to reputational damage and possible bans from public works contracts. Dietrich said that the trust fund wouldn't "save any company, but create a mechanism to continue the works."
Standard and Poor's also estimated that the start of the PPP highways could be delayed, but Dietrich insisted that works will start late October/early November.
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