ALERT - REGULATORY
Adoption of the new regulation of the Works for Taxes Law
On September 14, 2022, Supreme Decree Nº 210-2022-EF was published in the Official Gazette «El Peruano», which adopts the new regulations of Law Nº 29230, Law that promotes Regional and Local Public Investment with Participation of the Private Sector, which regulates the works for taxes regime in Peru (the «Regulations»).
This regulation, which is already in force, is published under the new Sole Ordered Text of the Works for Taxes Law, adopted by Supreme Decree Nº 081-2022-EF, and includes very relevant modifications to facilitate the entry and participation of the private sector in this regime. In this sense, the Regulation, among others, introduces or modifies the following provisions, in relation to the previous regulation:
- New rules are established for a private company to execute the operation and maintenance of certain projects.
- Private parties may not only execute public investment projects, now they may also execute Optimization, Marginal Expansion, Rehabilitation and Replacement Investments («IOARR»). Based on this, the procedure for the execution of IOARR, emergency IOARR and operation and/or maintenance activities is regulated.
- The sources of financing for the execution of projects under the Works for Taxes regime are expanded. Accordingly, in addition to canon, excess canon and royalty resources, Works for Taxes projects may also be financed with certain resources from funds received by the Regional and Local Governments, such as the Regional Compensation Fund – FONCOR, the Municipal Compensation Fund – FONCOMUN and the Camisea Socioeconomic Development Fund – FOCAM.
- The rules for the presentation of private initiatives are modified. Specifically, private parties may now submit an initiative for the execution of a works for taxes project, based on (i) investments that are viable or adopted within the framework of the Invierte.pe system; and (ii) the updating of investment projects that are viable in Invierte.pe.
- Regarding the minimum content of the bidding conditions, the following points, among others, are included: (i) deadlines for the review, formulation of observations and correction of deliverables submitted for the adoption and/or update of the pre-investment study and/or the technical file and/or the operation and/or maintenance manual; (ii) the operation and/or maintenance manual, when applicable; (iii) the regulation of the appeal procedure; (iv) a formula for the calculation of penalties.
- New legal deadlines are established for the regulation of the selection process of the private company. By way of example, the deadline for submitting expressions of interest is extended from 5 to 7 working days, and for submitting proposals from 6 to 7 working days.
- Specific deadlines are included for the processing of projects under the IOARR modality.
- It is mandatory for the entity that owns the project to ensure the availability of land, specifying that the entity is responsible for the availability of the land, expropriations and/or interferences, obtaining licenses, authorizations, permits, easements or similar for the execution of the project. This is provided that it is not agreed that the private company is in charge of such management, in which case the corresponding procedures and payments must be covered by the latter.
- Legal conditions are established, beyond the signing of the Agreement, for the beginning of the execution of the project.
- Specific grounds are provided for the modification of the Agreement.
- Electronic certificates are regulated, as well as specific procedures for their use and transfer to a third party, in case the private company is not the executor of the project.
- The Ministry of Economy and Finance must adopt new standardized documents for the implementation of the works for taxes mechanism. Likewise, it is provided that the public entity may make adjustments to the standardized documents, except in those sections where their modification is expressly prohibited.
- In the case of Investment Agreements already subscribed, it is stated that this becomes effective «in all those aspects that do not contravene the Investment Agreements or the contracts subscribed under the Works for Taxes mechanism». On the other hand, the Regulation also provides that the processes or procedures already initiated must be adapted to the same at the stage they are in.
For further information, please contact Diana Briones (dbriones@estudiorodrigo.com), Diego Morales (dmorales@estudiorodrigo.com) and/or Sebastián Velarde (svelarde@estudiorodrigo.com).