Newsletter Energía - Marzo 2019

On December 26th, 2018, in the case styled “Estelar Resources Limited S.A. v National Executive Branch on injunction,” the Comodoro Rivadavia Federal Chamber of Appeals (the “Chamber”) decided to partially confirm the first instance ruling, whereby Section 755 of Law No 22,415 (the “Customs Code”), Presidential Decree No. 793/2018 (the “Decree”), and Presidential Decree No. 865/2018 (the “Amendment”) were declared unconstitutional for the period from September 4th, 2018, to December 12th, 2018.
The Decree, as amended by the Amendment, set the export tax rate at twelve percent (12%) with a cap per each dollar of taxable value (FOB official price) of AR$4 or AR$3, depending on the products. The Decree is based mainly on (i) the delegation set forth in paragraph 1 of Section 755 of the Customs Code on the National Executive Branch to impose or exempt exports from export taxes or amend the existing export tax rate, (ii) Law 26,939 enacted by Congress on May 21st, 2014, which approved the Argentine Digest of Laws and declared several laws, including the Customs Code, effective and (iii) the need to attend to the new macroeconomic context, including exchange rate variations and fiscal consolidation.
The ruling by the Chamber is based on the Federal Supreme Court precedent styled “Camaronera Patagónica” which concluded that the so called export duties are taxes. Pursuant to the Argentine Constitution, the Executive Branch has no power to create or impose new taxes or amend essential elements of existing ones. In the case of export duties, the Executive Branch may act by delegation of Congress, but such delegation must come together with guidelines and precise limits “by way of a clear legislative policy.”
Law No. 27,467 (the “Budget Law”) confirmed the Decree and the Amendment. But such confirmation cannot be retroactive. Therefore, the Chamber found that the Decree, the Amendment and Section 755 of the Customs Code could not have become effective until the Budget Law became effective, i.e. 8 days after its publication.

On March 7, 2019, the Energy Secretariat (the “ES”) issued Resolution No. 81/2019 (the “Resolution”) to launch the call for bids to participate in Public Private Partnership Contracts (“PPP Contracts”). PPP Contracts are contracts entered into between governmental entities and private or public entities acting as contractors for a large array of purposes, including the design, construction, extension, enhancement, supply, exploitation and/or operation and financing of the development of infrastructure, housing, services or other activities, productive investments, applied investigation, technological innovation and associated services.
The purpose of this PPP Contract is: (i) the construction of a 500kV Extra High Power Line between the Rio Diamante and the new Charlone Transformer Stations; (ii) the construction of a new Transformer Station; (iii) the fulfilment of additional works at 132 Kv; and (iv) the subsequent provision of operation and maintenance services.
According to the Resolution, the Bidding Terms and Conditions, including annexes and the PPP Contract model, may be consulted and/or downloaded from (i) the E.S. website; and/or (ii) the Public Private
Partnership Under Secretariat’s website.
Offers must be presented by May 27 at 3 p.m. in Hipólito Yrigoyen 250, 5th floor, Buenos Aires.

On February 19, 2019, the Federal Supreme Court of Justice (the “Supreme Court”) assumed original jurisdiction and ordered the Province of Neuquen to cease pursuing payment of amounts allegedly owed by Chevron Argentina SRL for gross turnover tax until the court enters judgment on the merits.
The Province was claiming $30 million for alleged underpayments and fines on the basis of an amendment to the Neuquén gross turnover tax law.
Chevron filed a declaratory relief action seeking a declaration of unconstitutionality of article 7 of provincial laws No. 2795, 2837 and 2897, which impose a special tax rate of 3,5%, for companies with aggregate annual revenues in excess of $100 million regardless of their activity. Oil and gas activity in general is taxed at a lower rate.
Chevron claims that at the time the concession was granted, the tax rate was 2%. Later on it was increased generally to 3%, but from July 2012 to
January 1st, 2016, a further increase was introduced to create a new rate category of 3.5% based on revenues and regardless of activity. According to Chevron, such subsequent increase, which encompasses only certain taxpayers, is discriminatory and therefore a violation of the fiscal stability principle set forth in the Federal Hydrocarbons Law.
The Court granted the injunction with the only dissident vote of Justice Rossati, who considered that necessary requirements to grant the injunction had not been met.

On February 26th, 2019, in the case styled “López, María Teresa v Province of Santa Cruz et al on Environmental Injunction,” the Federal Supreme Court of Argentina (the “FSCA”) decided to request preliminary measures before entering judgment on its jurisdiction, on the allegation of impossibility of water supplies to the people of Caleta Olivia due to environmental damage and water contamination.
The action is against the Provinces of Chubut and Santa Cruz, the Federal Government and three oil and gas companies. It seeks to ensure effective access to drinking water in sufficient quantity and quality for the entire population of Caleta Olivia. Claimant ́s petitions include (i) the adoption of relevant infrastructure measures; (ii) an order seeking suspension of exploitation of any oil wells located in the provinces of Santa Cruz and Chubut lacking a “no water contamination” certificate ; (iii) the proper treatment of sewage effluents, together with the repair and reconditioning of the entire Caleta Olivia sewage network; (iv) the relocation of open-air dumpsters around the city; (v) the rehabilitation of inactive or abandoned oil wells; (vi) the construction of the Buenos Aires Lake Aqueduct; and (vii) access to information regarding the costs of the works and the destination and management of the funds allocated to these measures.
Considering these circumstances, the FSCA required a series of measures, based on the Claimant ́s requisition, directed to the National, Provincial and Municipal administrations and government agencies.
Following the same approach of the “Caimancito” case discussed in our Newsletter last year, this preliminary ruling does not resolve the jurisdictional issue, but the Attorney General opined that, to the extent the claim refers to interjurisdictional issues between the provinces of Chubut and Santa Cruz, the FSCA does have original jurisdiction to hear the case.

On March 7, 2019, the Secretary of Energy (the “Secretary”) issued Resolution No 82/2019 (the “Resolution”), to call for declarations of interest for the construction of a new gas pipeline or a significant extension of existing transportation capacity, for the evacuation of natural gas from the Neuquina Basin to the main consumption centers of the Buenos Aires Metropolitan Area and the northeastern region, potentially substituting significant quantities of imported liquid natural gas.
Presentations must be filed by April 8th, 2019, at the Front Desk of the Secretary, located in Balcarce
186, 1st floor, City of Buenos Aires.
The resolution also authorizes the Undersecretary of Hydrocarbons and Fuels to take necessary actions and answer the inquiries arising during the period mentioned above.
Both the Undersecretary and ENARGAS will send their evaluations, for the Secretary ́s consideration, of the proposals received and determine the conditions for the selection process.