Paraguay – ANDE: Turnkey electric power distribution and transmission works

Paraguay – ANDE: Turnkey electric power distribution and transmission works
Paraguay regulated Law 6324/19 (“Sovereign Guarantee Law for ANDE”). As a result, Paraguay approaches the launch of the next infrastructure project for the distribution and transmission of electricity under the turnkey modality (the “Project”).

Here is what you need to know:
1. Value: USD 300 million, including financial costs.

2. Guarantee: The Project will be tendered by the National Electricity Administration (“ANDE”) and will have the sovereign guarantee of Paraguay, represented by the Ministry of Finance, for up to USD 300 million, including financial costs

3. Payment: As all other turnkey projects, the payments are instrumented in certificates of recognition of payment obligation (“CROPs”). The CROPs are autonomous, unconditional, irrevocable, and transferable obligations of Paraguay.

4. Milestones: The Project is subdivided into executable milestones. CROPs are issued upon completion of each milestone. The milestones will be specifically determined in the Bidding Terms and Conditions (“PBC”) and the delivery of equipment and materials for up to 40% of the value of the Project may also be considered as completed milestones.

5. Financing: The bidder must ensure the financing of the Project.

6. Offer: The offer will be divided in 3 sections:

  1.  Technical offer: Indicates the technical, administrative and legal capacity and solvency of the offeror.
  2.  Economic offer: Indicates the list of quantities and their prices, which determine the total value of the works.
  3.  Financial offer: Indicates the financing conditions, financial model, and financing structure.

7. Non-binding preselection: ANDE will preselect the best offer and submit it to the Ministry of Finance for consideration. This pre-selection will not be binding upon ANDE or Paraguay and the Project can only be awarded with the approval of the Ministry of Finance.

8. Variation of the offer: Once the offer has been submitted, the financial offer may only suffer variations when:

  1.  A bidder is preselected by ANDE and the Ministry of Finance requests to improvements of the financial offer and/or clarifications of its scope; or,
  2.  In view of the economy of scale and, provided the Project contemplates an awarding system by lots, a bidder is awarded more than one lot of the Project (maximum three lots).

9. Socialization: Before launching each tender, ANDE may socialize the draft PBC with potential bidders and financiers so that they can make contributions (not binding), especially to the economic or financial aspects of the project

10. National participation: The Project must have real Paraguayan participation of:

  1.  25% of the value of the Project (including subcontracting)
  2.  100% of the supply of hot-dip galvanized metal structures (gantries and supporting structures of electromechanical equipment for substations and transmission line towers).

11. Cross-default: There will be no cross-default of the work contract in relation to other current work contracts of Paraguay, i.e. The breach of a work contract (e.g. Bioceanic Corridor) does not cause the breach of the Project contract.

12. Indemnity Letter: ANDE is enabled to issue representations and warranties about the information declared in the PBC and other Project documents (indemnity letter) in relation to the financing of the Project.

13. Jurisdiction: The PBC may include clauses of extension of jurisdiction for the application of the laws of New York or London and the possibility of submitting to the courts of those cities.