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REGULATORY FRAMEWORK FOR BIOFUELS

Law 27640

Approval.

The Senate and Chamber of Deputies of the Argentine Nation, meeting in Congress, etc.


REGULATORY FRAMEWORK FOR BIOFUELS

Article 1-Approve the Biofuels Regulatory Framework, which includes all the activities of the production, storage, marketing and mixing of biofuels, and will be effective until 31 December 2030, with the possibility of National executive will extend it, for the only time, for five (5) years more to count from the aforementioned due date of the same.

Implementing authority

Article 2-Establishment that the enforcement authority of this law will be the Energy Secretariat, under the Ministry of Economy.

Functions of the implementing authority

Article 3-The functions of the implementing authority shall be:

a) Regular, manage and monitor the production, marketing and sustainable use of biofuels;

(b) Adecuate to the terms of this law the rules establishing the quality specifications of biofuels, the safety of the facilities in which they are made, mixed and/or stored, and those that are linked to the registration and/or enabling of undertakings and/or products;

(c) Carry out audits and inspections in companies and facilities for the manufacture, storage and/or mixing of biofuels, in order to control their proper functioning and their adjustment to the current regulations;

(d) to apply the penalties provided for in this Law;

(e) to request, on an affidavit and at the intervals deemed necessary, the estimates of the demand for biofuels provided by the working and/or fossil fuel companies for the purposes of carrying out the allocation of the biofuel required for the compliance of the mandatory mixing percentages with gasoil and/or naphtha;

(f) To establish and modify the percentages of mandatory blending of biofuels with gasoil and/or naphtha and to ensure compliance, in accordance with the conditions laid down in this Law;

(g) Ensure the availability of the necessary inputs for the production of biofuels destined for the mandatory mix, being able to arbitrate and establish the mechanisms that it deems necessary in order for the acquisition of those carried out in accordance with normal and normal market conditions and without any distortion, establishing as a limit, where appropriate, the export price of those inputs minus the respective expenditure;

(h) determine the biofuel allocations for the supply of the mandatory mixture with gasoil and/or naphtha, and ensure compliance, in accordance with the conditions laid down in this law;

(i) to determine and publish, in the segment of relevant companies and at the intervals which it considers to correspond to the variation in the economy, the prices to which the marketing of biofuels intended for blending must be carried out; mandatory with fossil fuels established in the framework of this law;

(j) determine the rate of audit and control that will be paid annually by the agents reached by this law, as well as its methodology for payment and collection;

(k) Fiscalize the exercise of the activities referred to in this Law in order to ensure compliance with the relevant laws and regulations;

(l) make use of all means deemed necessary for the exercise of its inspection and audit functions;

(m) Dictate the additional rules necessary to interpret and clarify the present regime, as well as to exercise any other attribution that arises from the regulation of this law for the purposes of its best compliance.

Definition of biofuels

Article 4-For the purposes of this law, bioethanol and bio-fuel shall be understood to comply with the quality requirements laid down by the implementing authority and produced in plants installed in the Republic of Argentina. from national raw materials, the origin of which is agricultural, agro-industrial and/or organic waste.

Enabling companies

Article 5-Only companies which are duly authorised for such purposes by the authority may draw up, store and/or market biofuels or carry out the mixture of biofuels with fossil fuels in any proportion. If not, the activity will be considered underground.

Companies producing and/or distilling hydrocarbons may not be holding or holding a holding in companies and/or plants producing biofuels.

Modifications to installations and/or undertakings

Article 6-The extensions and/or improvements carried out in their facilities by the companies making biofuels for the mandatory mix, and/or the modifications that they could make in their business model-considering also the controlling and/or controlled undertakings-they shall not be able to derive a better positioning of the undertaking in respect of the treatment granted by the implementing authority in the framework of this law.

Quality of biofuels and their mixtures

Article 7-All biofuels and mixtures of biofuels with fossil fuels that are marketed within the national territory must comply with the quality regulations in force for each of the products in question.

Mandatory mixing of biofuels with fossil fuels

Article 8-Establishment that any liquid fuel classified as diesel or diesel oil-as the current fuel quality regulation or the one that replaces it in the future-that is marketed within the national territory must contain a Mandatory biodiesel percentage of 5% (5%), in volume, measured on the total quantity of the final product.

The implementing authority may raise the above required percentage where it considers it appropriate in the light of the supply of demand, the balance of trade, the promotion of investments in regional economies and/or environmental or environmental reasons. (iii) to reduce the price of the fossil fuel at the pump to a nominal percentage of 3% (3%), in volume, when the increase in the prices of basic inputs for the production of biodiesel could distort the price of fossil fuel by altering the proportional composition of the latter on the latter, or in situations of a shortage of biodiesel by the processing companies authorised by the implementing authority for the supply of the market.

Article 9-Establishment that any liquid fuel classified as naphtha-according to the current fuel quality regulations or the one that replaces it in the future-that is marketed within the national territory must contain a percentage Twelve per cent (12 per cent) bioethanol mandatory in volume, measured over the total amount of the final product.

Supply of biofuels for the mandatory mix and other destinations

Article 10.-The undertakings responsible for carrying out the mandatory mixtures of biofuels with fossil fuels must, without exception, acquire the totality of those exclusively of the working companies authorised for such use. effects by the implementing authority, in accordance with the parameters of price and distribution of quantities set out in this Law.

The biofuel processing companies which decide to supply such mixtures shall ensure the provision of the products in question, and the implementing authority may revoke the supply authorisation. in the preceding paragraph to undertakings which fail to comply with the said supply undertaking.

Article 11.-The supply of the quantities of biodiesel monthly for the compliance of the mandatory mixture with diesel oil and/or diesel oil will be carried out by the companies making such biofuel that-either directly or indirect through their controlled and/or controlled companies-do not develop activities related to the export of biodiesel and/or their main inputs, and the implementing authority should allocate these quantities among those, on a pro rata basis. and by performing the calculations according to the monthly equivalent of the processing capacity The annual report of each company, with a ceiling of fifty thousand (50,000) tonnes a year in the case of companies with a higher scale.

In cases where the distribution described above is not sufficient to satisfy the monthly demand for biodiesel for the compliance of the mandatory mixing percentage with diesel and/or diesel oil, the missing quantities will be supplied in equal parts by the producers of biodiesel that are included in the preceding paragraph and which have the possibility of providing them, establishing as a maximum limit the production capacity of each company.

For the purposes of the supply described above, undertakings which comply with the premises laid down in this Article, which have been authorised by the implementing authority in the framework of law 26.093, shall be considered to comply with the provisions laid down in this Article. supply of biodiesel destined for the mandatory mixture at the time of the penalty of this law and the production capacity recognized to that date for the same-contemplating a tolerance of 10% (10%)-, not being able New companies will be incorporated in the market until the installed capacity of those companies is exhausted.

The possible reduction of the percentage of the mandatory mix referred to in Article 8 of this Law shall be borne by all the biodiesel companies supplying the said market in a proportional manner and in accordance with the same conditions. parameters on which the biodiesel allocations are carried out for each of them.

Article 12.-The supply of the monthly bioethanol volumes for the compliance of the mandatory mixture with naphtha will be carried out by the companies working for said biofuel, under the following parameters:

(a) Bioethanol made from sugar cane:

The volumes of bioethanol equivalent to a nominal percentage of six per cent (6%) of the mandatory mixture shall be allocated by the implementing authority to the sugar cane-based bioethanol processing companies, pro rata and carrying out the calculations according to the monthly equivalent of the annual bioethanol quotas in force at the date of expiry of the scheme established by Law 26,093 and 26.334, establishing the maximum limit for the production capacity of each undertaking.

In the event of a general and proven shortage, the implementing authority may temporarily reduce the percentage of bioethanol based on sugar cane and may raise it when it considers it appropriate in accordance with the supply of demand, trade balance, environmental or technical reasons or promotion of investments in regional economies.

In the same way, the mixing companies will be able to freely buy bioethanol based on sugar cane and exceed the percentage of the cut established in this article, depending on the technical particularities of their respective plants and processes, the optimization of costs that are reflected in the final price, the cost of the substitutes and the savings of foreign currency, up to the limit that they impose the technical norms in force on the quality and physicochemical composition of the final product.

The quotas for compulsory acquisitions of bioethanol produced on the basis of sugar cane corresponding to the production companies with quotas granted under the laws 26.093 and 26.334 shall be allocated by the implementing authority. maintaining the annual volumes set out in the single Annex to resolution 692/2019 (SGE), without prejudice to any extensions that may be requested, which shall be subject to the general conditions established;

(b) Bioethanol made from maize:

The volumes of bioethanol equivalent to a nominal rate of six per cent (6%) of the mandatory mixture shall be allocated by the implementing authority to the maize-based bioethanol-producing companies, pro rata and by making the calculations on the basis of the monthly equivalent of the annual bioethanol quotas in force at the date of expiry of the scheme established by laws 26.093 and 26.334, establishing the maximum limit for the production capacity of each undertaking.

The implementing authority may raise the said nominal percentage where it considers it appropriate in the light of the supply of demand, the balance of trade, the promotion of investments in regional economies, and/or environmental or (ii) technical, or reduce it to a nominal rate of 3% (3%), in volume, when the increase in the prices of basic inputs for the production of maize-based bioethanol could distort the price of fossil fuel in the dispenser by altering the proportional composition of the latter and/or before situations of scarcity of maize-based bioethanol by the processing companies authorised by the implementing authority for the supply of the market.

Two-thirds (2/ 3) of the possible reduction in the percentage of compulsory mixing referred to in Article 12 of this Law shall be borne by the maize-based bioethanol making companies which-either directly or indirectly through their controlled and/or controlled companies-develop activities related to the export of the main inputs for their production, and one third (1/ 3) for the other companies making corn bioethanol that are found Market supply-enabled services. In both cases, this reduction must be carried out on a pro rata basis and according to the same criterion applied for the allocation of the bioethanol volumes to the maize-based processing companies.

Price determination

Article 13.-The acquisition of the quantities of biodiesel for the fulfilment of the mandatory mixture with diesel oil and/or diesel oil, and of the bioethanol volumes covered by points (a) and (b) of Article 12 of this Law, shall be carried out by undertakings in charge of mixtures at the prices established by the implementing authority in accordance with the calculation methodologies laid down for each of the products concerned.

The companies responsible for carrying out these mandatory mixtures will be free to purchase biofuels in order to obtain mixtures higher than the mandatory percentage in force, in such a case the price and the supply of the (a) products with the companies making them, as well as in cases where the placing on the market of biofuels which does not target the mandatory mix with fossil fuels is carried out.

Article 14.-The methodologies for calculating the prices of biofuels for the supply of mandatory fossil fuel mixtures to be established by the implementing authority shall ensure a return determined by the Also, considering the costs of its production, transport and the price for product put in its production plant.

Special Committee on Biofuels

Article 15.-Create the Special Commission on Biofuels, which will aim to study and analyze the possibilities of the sector, the consultation with all the stakeholders involved, as well as the formulation of proposals and projects for the industry. This committee will be chaired by the implementing authority and will participate in the ministries of Economy, Science and Technology, Productive Development, Environment, Agriculture, Energy Secretariat, which will be assisted by a Council of Ministers. Biofuel producing provinces, who will have the function of developing the Strategic Plan for the Development of Biofuels in Argentina, in order to promote in a comprehensive and systemic way the development of biofuels in the country, incorporating economic, territorial, environmental and social aspects.

Substitution of imports

Article 16.-In addition to the mandatory court to be found in force, and where market conditions permit, the implementing authority shall arbitrate the means necessary to replace the importation of fossil fuels with biofuels, in order to prevent the outflow of foreign currency, promote investments for the industrialization of national raw materials and encourage the generation of jobs.

The biofuel processing companies which decide to supply such mixtures shall ensure the provision of the products in question, and the implementing authority may revoke the supply authorisation. in the preceding paragraph to undertakings which fail to comply with the said supply undertaking.

Article 17.-For the purpose of developing the substitution of fuel imports, the implementing authority shall:

(a) allocate the volumes of biofuels intended for the substitution of imports on the basis of the segments and criteria for participation and supply of this law and the availability of installed industrial capacity;

(b) establish marketing requirements and conditions for these volumes of biofuels, total or partial, segmented by products, raw materials or productive regions;

(c) It may promote annual, biannual or annual supply agreements with the aim of optimising production and product availability operations;

(d) Taking into account the consumer sector, it may establish different mixing percentages and/or particular treatments by geographical region and/or for periods or months of the year of consumption and/or particular treatments.

Infringements and penalties

Article 18.-Failure to comply with this law and with the provisions and resolutions which the implementing authority has issued for the purposes of regulating the present arrangements shall give rise to the application of some or all of the penalties which are detailed below:

(a) Transitional disablement to carry out such activity;

(b) Final disablement to carry out such activity;

(c) the fines which may be imposed.

Article 19.-It shall be laid down that the fines with which the implementing authority may sanction undertakings carrying out the activities covered by this law shall be:

(a) very serious high levels, with fines equivalent to the selling price to the public of up to four million five hundred thousand (4,500,000) litres of super naphtha;

(b) serious high levels, with fines equivalent to the selling price to the public of up to 1 million six hundred thousand (1,600,000) litres of super naphtha;

(c) minor faults, punishable by the enforcement authority with fines equivalent to the selling price to the public of up to fifty thousand (150,000) litres of super naphtha;

(d) Recurrence of infringements by the same operator shall result in the application of successive penalties of greater gravity until their duplication with respect to the previous one; in the case of reoffending:

1. In a minor fault, the penalties provided for serious misconduct may be applied.

2. In a serious fault, the penalties provided for in the case of very serious misconduct may be applied.

Article 20.-For the purposes of the administrative action of the implementing authority, the National Law on Administrative Procedures and its regulatory standards shall be governed.

The administrative route will be exhausted, the judicial seat will proceed directly before the federal appeals chamber with jurisdiction in administrative and administrative matters with jurisdiction in the place of the event. The remedies against the application of the penalties provided for in this Law shall have a positive effect.

Article 21.-It shall be established that, from the entry into force of this law, all the provisions laid down in laws 23.287, 26.093 and 26.334 shall be without effect, and all regulatory regulations thereof.

Article 22.-Bioethanol and bioethanol shall not be taxed by the Tax on Liquid Fuels (ICL) and by the Carbon Dioxide Tax (ICO2), as set out in Title III, Chapters I and II, respectively, of Law 23,966, reaching the aforementioned treatment to all its stages of production, distribution and marketing. In the case of the mixture of these biofuels with fossil fuels, the charge will be borne only by the fossil fuel component that integrates the mixture. The tax treatment provided for in this Article shall be governed by the date of the end of the scheme and shall be the same as and as soon as the main raw materials used in the respective production processes are of national origin.

Article 23.-The implementing authority shall establish the requirements and conditions for the self-consumption, distribution and marketing of biodiesel, bioethanol in pure state -B100 and E100-, crude biogas, biogas, biomethane, biojet or other biofuels pure or mixed in different percentages with authorised fossil fuels, as well as their different mixtures.

Article 24. This law shall enter into force on the day following its publication in the Official Gazette.

Article 25.-Commune to the national executive branch.


CLAUDIA LEDESMA ABDALLAH DE ZAMORA-SERGIO MASSA-Marcelo Jorge Fuentes-Eduardo Cergnul

City of Buenos Aires, 03/08/2021

Under the terms of Article 80 of the National Constitution, I certify that Law No. 27,640 (IF-2021-64137662-APN-DSGA#SLYT) sanctioned by the HONORABLE CONGRESS OF THE NATION on July 15, 2021, has been enacted in fact on Day 2 of August 2021.

For your publication to the National Directorate of the Official Register, give a copy to the HONORABLE CONGRESS OF THE NATION and, for your knowledge and other effects, refer to the MINISTRY OF ECONOMY. Compliment, file.

Vilma Lidia Ibarra

NOTE: The Annex/s that integrates this (a) Law are published in the web edition of the BORA -www.boletinofficial.gob.ar-