FIRM BRIEFINGS OTHER JURISDICTIONS Introduction
Regulatory changes are sweeping Latin America. Bolivia has experi- enced a series of nationalisations, particularly in the energy sector. President Evo Morales has sought to renationalise many companies that were privatised between 1995 and 2006, before he came to power, particularly in the areas of energy, oil, telecoms and water. In 2012, Law 1508 regulating PPPs (public-private partnerships) in Colombia took effect. The law said that only projects larger than $1.6 million will be eligible for a PPP scheme and that concessions can last no more than 30 years, even with extensions. The new frame- work is expected to grease the wheels for foreign direct investment in infrastructure projects. Over in Costa Rica, consumers and indus- trialists are upset by the high prices of energy and Congress is con- templating a new market model for the country. In the Dominican Republic, the government has taken several
steps to streamline and overhaul the energy sector, including submit- ting plans for a new Ministry of Energy and Mining, focusing on greater use of renewable energy and proposing plans to build two new power plants. In July 2011, the country enacted the Develop- ment of the Mortgage Market and of Trusts Act, which authorised the use of the trusts in the country and is expected to help lending syndicates. Many have complained that El Salvador is taking too long to make
reforms in its legal system to attract investment. The country has a very complicated legal structure for investors, so that transactions can take up to three years to begin. Just like El Salvador, Nicaragua’s legal environment is among the weakest in Latin America, which increases transaction costs. The legal system lacks guarantees that would facil- itate investment and the country still depends a lot on asset backed guarantees such as pledge of stock certificates or mortgage liens over real property. Honduras has been subject to great financial pressure because of
the political crisis of 2009 and the effects of the global economic crash. The upshot is a series of changes to the tax laws, in order to adjust public finances. Over the last year, Panama has continued to focus on growth in
the energy and infrastructure sectors. Within infrastructure, the focus continues to be on expansion of the Panama Canal. There have been other public infrastructure projects, including the building of schools and roads. Infrastructure projects do not use public-private partner- ships (PPP) as in other jurisdictions, but are instead run by the gov- ernment often on a turnkey structure. The exception to this is the canal itself, which is regulated. Over the last year the Peruvian government made obtaining a con-
struction permit easier by eliminating requirements for several pre- construction approvals. The country has also introduced a new law regulating the approval of related-party transactions and making it easier to sue directors when such deals are prejudicial. Peru now taxes capital gains on the sale of assets located in the country, even in the case of indirect sales. Venezuela’s economy is at a very low point and its inflation rate is
one of the highest in the world, expected to soar to 40% this year. In April, Vice President Nicolás Maduro succeeded the late Hugo Chavez. Although the elections are over and a new government is in place, tension remains high.
BOLIVIA Bufete Aguirre
2012 Firm Overview Most active disciplines
Disputes: Financial and corporate, Public, Tax Financial and corporate: Banking, Equipment/asset finance, M&A, Private equity, Project finance Public: Competition, Employment, Environment, Land, Regulatory Tax: Corporate tax, Indirect tax
Key partners Fernando Aguirre B, Ignacio Aguirre U
Bufete Aguirre has spent the last year handling regulatory work and advising its existing energy clients, mainly on tax and labour issues. The firm lost several accounts due to nationalization in the energy sec- tor in 2012, including: Electricidad de La Paz; Empresa Luz & Fuerza de Oruro; Compañía Administradora de Empresas Bolivia and Em- presa de Servicios Edeser. The firm expects that the bulk of nationali- sation has past, particularly in the energy sector. One partner explained, “I think this trend will not continue, but you can’t really say, we were surprised by the nationalisation of the electric companies.” The firm was able to advise foreign investors on the sale of their stakes in energy- related assets in a confidential deal which closed at the end of 2012.
Becerra de la Roca Donoso
2012 Firm Overview Most active disciplines
Disputes: Financial and corporate, Public Financial and corporate: Banking, M&A, Project finance Public: Construction, Employment, Land, Regulatory Tax: Corporate tax
Key energy sectors Oil and gas, Traditional power
Key partners Mauricio Bercerra de la Roca Donoso
Becerra de la Roca Donoso is a young firm with a focus on regulatory work and many state-owned clients. The managing partner spun off from Guevara & Gutierrez two years ago. Since then, the firm has been growing steadily, with offices in Santa Cruz and La Paz and plans to hire several new associates. Apart from regulatory work, the firm han- dled the financing for Ingenio Azucarero Guabirá in a deal for the ex- pansion of the company. The financing ($5 million) came from a tightly held investment fund, Agroperativo, typical in a jurisdiction, which does not have an abundance of international banks. Less typi- cally, the deal included the option for further equity investment in the company for the financers. Mauricio Bercerra de la Roca Donoso noted, “We do not have a lot of multimillion foreign investors or large international project finance or M&A deals. Nevertheless, there are a lot of small to medium investments and local players that are grow- ing.” The firm has continued to work for clients that have been nation-
alised, and subsidiaries of government companies including YPFB Re- finación. As a result, they have begun handling larger transactions for those clients.
ENERGY & INFRASTRUCTURE | LATIN AMERICA 2013 81
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