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Privatization
SYNOPSIS
A.
STATE REFORM LAW
1.
Common Legal Framework
24.101
B.
PRIVATIZATION PROGRAM
1.
Characteristics
24.113
C.
PENDING PRIVATIZATIONS 24.114
D.
PROVINCIAL PRIVATIZATIONS 24.115
A. STATE REFORM LAW
1.
Common Legal Framework
24.101
The
State Reform Law or administrative
emergency law (No. 23,696) establishes
the application of several measures in
order to recover the efficiency of the
Argentine Public Administration. It was
sanctioned together with law 23,697, the
so called economic emergency law, and
both constitute a very important
breakthrough as regards the evolution of
public companies’ activities. The
reform law faces the situation of the
State as a company and it points out the
steps that the State should follow in
the future in relation to economic
matters, taking into account the
subsidiarity principle.
24.102
The privatization rules have established
a common legal regime in which several
subjects have been considered, and this
has been complemented by the rules of
the regulatory frameworks related to
industrial activities and public
services that, in many cases, will exert
a remarkable influence on the
privatization and the antimonopoly law.
24.103
1) Statement that the company is subject
to privatization. The law introduces as
a requirement prior to privatization, a
statement by means of a decree-law
issued by the Executive Power (the body
competent to transfer the company) and
an authorization by the Legislative
Power if the transfer involves the
transfer of control of the company.
24.104
2) Preparatory and complementary
measures. The law invests the Executive
Power with important powers so that the
reform and privatization program is
carried out as soon as possible. Among
such powers a) The deregulation and
demonopolization prior to or at the time
of the privatization, since the
Executive Power is entitled to eliminate
all monopolies and other privileges of
public companies if such prerogatives
are an obstacle to the objectives of the
privatization or impair the
demonopolization or deregulation of the
relevant service. b) The transformation
of the legal form of the company or the
creation of a new company.
24.105
3)
Bicameral Commission. The Legislative
Power is entitled to control the
privatization process by means of the
Bicameral Commission. Besides this
Commission, the Sindicatura General de
Empresas Públicas (SIGEP) is appointed
with control powers and it may express
objections and suggestions that it may
deem necessary.
24.106
4)
Valuation of the Company. The need of
valuating the company is one of the most
important steps in the privatization
process.
24.107
5) Selection Methods. The law
establishes a buyer’s section methods
to which the Administration may resort
to, and among such methods we can
mention public bidding, public tender,
sale in the Stock Exchange and direct
contracting.
24.108
6)
Modalities. Sections 17 and 15 set the
modalities and alternatives of the
process. Among the modalities the law
states the sale, concession or lease
with option to buy, and with regard to
alternatives: credit capitalization as a
form of payment, reversion and merger.
24.109
7)
Employee Participating Program. The Law
considers the transfer of public
companies in favor of its employees by
means of the creation of an Employee
Participating Program in which all the
employees of the company to be
privatized are authorized to acquire the
capital stock of the companies,
corporations, or production plants, or a
percentage of same.
24.110
The
Legislative Power had an important
participation in the enactment of
regulatory frameworks that will be in
force in the future for all economic
agents (privatized, public or private):
-
Law
24,065, which regulates the electric
sector, set the principal guidelines
for restructuring and privatization
of this sector. It treated
generation separately (considered an
activity of general interest) from
distribution and transport
(qualified as public services).
Generation is organized
competitively, those who render
public services are obliged to allow
the free interconnection and access
to the available capacity of the
networks. The law created the ENRE
as federal regulatory agent and its
main objective is to secure the
compliance with the provisions in
force for the sector.
-
Law
24,093 established the regulatory
framework for ports, based on a
system of authorization and
classification of ports in charge of
the State.
-
Law
24,076 sets the regulatory framework
for gas considering distribution and
transport a public service.
24.111
Other framework were enacted and
approved by decree-laws, as follows:
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Decree-law
731/89, complemented by decree-law
1185/90 and amendments, decree-law
1420/92 complemented by decree-law
1674/93: telecommunications
regulatory framework.
-
Decree-law
999/92 sets the regulatory framework
for the public service of water
supply and sewage system in the area
of the Federal Capital and districts
of the Greater Buenos Aires, defined
as the Regulated Area (chapter I).
Such decree-law sets the
concessionaires’ right and duties
and the regime to which service
concessions are subject (chapter
II); regulates the functions of the
Tripartite Agency of the Sector
(chapter III); sets the rights and
protections in favor of the user
(chapter V) and the required quality
of the service (chapter VI).
24.112
Once the privatization program was in
force, the Legislative Power enacted the
law No. 24,240 "consumer’s
defense law", which contains
express provisions in relation to the
defense of the user against abuses of
privatized companies that render
domiciliary public services.
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B. PRIVATIZATION PROGRAM
1.
Characteristics
24.113
The most outstanding characteristics of
the privatization program applied in
Argentina were the following:
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The
privatization program included not
only loss-making public companies
but also those companies with
operative benefits.
-
As
a consequence of the call for
qualified consortia for the transfer
of majority holdings, foreign
investors have taken part in the
process and received the same
treatment as national investors.
-
Privatizations
in general have been made without
previous cleaning-up, and the
companies were transferred pursuant
to the "as is " rule.
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The
enactment in time of the regulatory
frameworks related to the sectors of
essential services has been very
important for the success of
privatization operations.
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Payment
with foreign and domestic debt
securities of the acquired shares
acquired was admitted.
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C.
PENDING PRIVATIZATIONS
24.114
The
privatization process is not finished
yet. Among the companies that could be
transferred to the private sector we
could mention the Banco Nación de la
República Argentina, telecommunication
frequencies, some nuclear and
hydroelectric plants and the national
airports, at present ongoing a
privatization process.
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D. PROVINCIAL PRIVATIZATIONS
24.115
The privatization process described
above has been developed mainly at a
national level. Centralization policies
of past decades caused that many public
services were subject to the federal
jurisdiction, and consequently the
privatization of these public assets was
made by the Federal Government. However,
some services such as electricity
distribution, water supply and the
banking activity were subject to
provincial jurisdiction. In addition,
the Federal Government in certain cases
proceeded to the provincialization of
certain activities before they were
transferred to the private sector.
Therefore, each province enacted laws
adhering to the State Reform law and
proceeded to privatize some of its
public assets. However, the
transformation process at provincial
level has been slow and in some cases it
has become an ongoing process and in
others very resisted by the local
legislators.
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