Provincial projects expected to benefit from Milei’s investment regime, experts say

Argentina’s provincial governments should see benefits from President Javier Milei’s large investment incentive regime (Rigi) but experts are waiting to see how the scheme plays out in practice in areas such as gas and mining. 

Rigi is part of the president’s economic framework law passed by congress last week. However, it will not go into effect until the executive drafts the rules for its implementation, which is expected to take around a month, Nicolas Eliaschev, partner at law firm Tavarone, Rovelli, Salim & Miani, told a webinar. 

The scheme will give projects with investment of at least US$200mn tax, customs and exchange rate benefits for 30 years.

Provinces will be able to be involved as long as the taxes to be applied are only those in force previously, with no new levies at a provincial level.

When BNamericas asked if this was financially viable for provinces, which are seeing a noticeable drop in their tax income, Eliaschev said the model aims to expand the taxable base for provincial governments by bringing in larger investments. 

“In the case of projects involving natural resources such as copper, lithium and hydrocarbons, [provinces] will be gaining royalties that they are currently not charging. That’s where the big gamble is. We will be monitoring provinces in the north, such Salta and La Rioja in the case of lithium, San Juan in the case of copper, and Patagonia for hydrocarbons,” he said during the event organized by the law firm to discuss Rigi’s implications for investments. 

A San Juan province official previously told BNamericas the increase in mining royalties from 3% to 5% that is part of the economic framework law will make districts where mining is developed more competitive.

In the case of infrastructure, the Rigi regime will benefit concessions that are either awarded via tender or through a private initiative process.

“What this reform seeks is to modernize the existing concessions system, which is from a 1970 law, with more modern criteria and focusing more on finances and profitability,” Javier Constanzó, energy, infrastructure and natural resources partner at Tavarone Rovelli, Salim & Miani told the same event.

He said it will be key how Rigi’s future framework regulates the scheme’s relation with concessions as this will determine how profitable they are.