Renewable Energy Projects in Mexico Dealt Another Blow by the Lopez Obrador Administration

On April 29, 2020, Mexico’s independent system operator (“CENACE”) notified generators of its decision to indefinitely suspend all legally mandated pre-operation tests for solar and wind projects in light of the COVID-19 pandemic. Such suspension purportedly seeks to safeguard the national grid against system interruptions clean intermittent energy projects could cause during the pandemic, and essentially bars any such projects from connecting to the grid until further notice. According to industry groups AMDEE and ASOLMEX, CENACE’s actions impact a total of 44 solar and wind projects (28 that are ready for commercial operation and 16 that are under construction), which represent approximately US$6.4 billion in investments.

Less than three weeks later, on Friday, May 15, the Agreement setting forth the Policy of Reliability, Safety, Continuity, and Quality of the National Electric System (“Policy”) was published in the Official Gazette of the Federation by the Ministry of Energy (“SENER”). The Policy cites as its primary objective the establishment of guidelines allowing competent authorities to guarantee the national grid’s electricity supply based on principles of reliability, insisting that clean intermittent energy poses a threat to such security and reliability. Much like CENACE’s suspension, the Policy primarily impacts those solar and wind projects not yet in commercial operation, but it may also impact in-the-fence projects that intend to connect to the national grid.

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Brazil | Coronavirus Could Push Hundreds of Companies Close to Bankruptcy

The financial constraints caused by the coronavirus has affected the world’s economy and its outlook is still unknown and gloomy. Companies from all industries worldwide have been taking all sorts of measures to mitigate losses, preserve cash flow and, ultimately, survive. Just like other companies around the globe, the coronavirus has pushed many struggling Brazilian companies over the edge and into bankruptcy.

The International Monetary Fund predicts the Brazilian GDP will fall by 5 percent in 2020 and, have a slim 1.5-percent recovery next year. The consequences are enormous or significant Due to this huge contraction for Brazil, it is estimated that around 2,500 companies in the country may be forced to turn to the courts to avoid bankruptcy. If the numbers are confirmed, that would represent an increase of 40%compared to the record of 1,800 requests in 2016, when the country’s GDP dropped 3.5 %.

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Mexico USMCA & COVID-19 Updates

On May 5, 2020, Mexican President Andrés Manuel López Obrador (“AMLO”) announced new measures to resume automotive manufacturing, mining, and construction activities amid the COVID-19 pandemic.  Mexican Minister of Economy Graciela Márquez Colín announced on May 13 a new plan to re-open the economy in three stages.  The first stage of the plan is set to begin on May 18 in those municipalities where no new COVID-19 infection cases have been reported.  The second stage is occur between May 18-31 and is focused on preparing workers, companies, and families in general for a return to work, subject to region-specific situations.  In the second stage, Mexico will also include as essential sectors:  construction, mining and the manufacture of transportation equipment, subject to strict health protocols.  The third stage will begin on June 1, and focuses on a “traffic light”-like system for a phased re-opening – similar to the United States – that accounts for:  (1) public health measures, (2) defined work activities, (3) protecting vulnerable people, (4) open and closed public spaces, and (5) educational facilities.  The first phase (“red light”) allows essential businesses to operate but continues restrictions on non-essential businesses and social activities.  The last phase (“green light”) allows for re-opening of schools and a resumption of social and recreational activities.

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Mexico and COVID-19

Over 300 manufacturing CEOs in the United States sent a letter to the President of Mexico on April 22 asking him to align Mexico’s definition of essential businesses with that of the U.S. Department of Homeland Security’s (DHS) Cybersecurity and Infrastructure Security Agency (CISA) to minimize supply chain disruptions in North America. On April 21, the Mexican Minister of Health announced an extension of the suspension of non-essential activities until May 30, with the possibility of lifting these restrictions on May 18 for those municipalities with low or no transmission of COVID-19. The Health Ministry will define transmission metrics, along with other risk factors and vulnerabilities associated with COVID-19, in addition to processes for reducing transmission between municipalities that have differing virus propagation levels.

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NOVEL CORONAVIRUS | COVID-19: Employment Maintenance Emergency Plan Enacted in Brazil

Since the declaration of the state of public calamity on March 20, the Brazilian Government has taken several measures to contain the fast spread of the novel coronavirus and to ease the negative impacts of the novel coronavirus outbreak on the domestic economy.

The most anticipated measure is the stimulus aid package, which has yet to be approved by the Congress. However, other several critical measures have been taken by the Brazilian Government, including the authorization to modify employment agreements during the state of public calamity.

On April 1st, President Jair Bolsonaro enacted the Presidential Provisional Measure no. 936/2020, which provides the Employment Maintenance Emergency Plan. In an effort to preserve jobs, workers’ income and the country’s economic activity, the Emergency Plan allows for temporary suspension of the employment contracts or reduction of working hours and workers’ salaries during the state of public calamity.

A client alert with a summary of the main provisions of the Presidential Provisional Measure no. 936/2020 is included here.

COVID-19 Measures in Central America and the Caribbean

As the coronavirus disease 2010 (COVID-19) global pandemic continues to evolve, our Latin America team has been monitoring developments in the region and tracking measures implemented by governmental entities that may affect business operations.

Our Santo Domingo office recently published a newsletter, which can be found here, covering relevant official pronouncements, decrees, and resolutions.  Our Caribbean and Central America Desk also recently published an alert, which can be found here, addressing developments and government measures in the Spanish Caribbean.

If you would like to obtain additional information on the impact of COVID-19 on business and commercial operations in this region, please contact our Santo Domingo office or the Caribbean and Central America Desk.

Public-Private Partnerships in Dominican Republic

As the Dominican Republic established itself as Latin America’s fastest-growing economy in recent times, it became paramount to design, draft, reach a consensus and pass a public-private partnership law. In that sense, the latest legal framework proposal for the governance of public-private partnerships—which was passed into law by the Dominican Republic’s executive branch on February 20th, 2020,(hereinafter, the “Law”), is a landmark legislative achievement whose objective is to rule the provision, management and operation of public goods, infrastructure and services by means of a public-private partnership mechanism. This article gives the reader a brief overview of the following topics: (i) the definition and scope of the “public-private partnership” concept; (ii) types of public-private partnerships and procedures for its implementation; and, (iii) other relevant information, including recent developments regarding the Government’s interest to develop public-private partnerships to combat the COVID-19 pandemic. Available here.

Mexico’s Health Emergency Decree

On March 30 Mexico declared a health emergency and issued a decree with strict measures to contain the fast-spreading of coronavirus “COVID-19,” on non-essential activities in the public and private sectors that would be in force until April 30.  In order to prevent the health system from being overwhelmed with the increasing number of cases, the government of Mexico announced the following measures in Spanish and English. The Mexican Health Ministry divided into five groups those essential activities: health, security, economy, social programs, and critical infrastructure.

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US Policy Prognosis: The Legislative Response to COVID-19

Our Public Policy Team is operating at the epicenter of the evolving coronavirus disease 2019 (COVID-19) global pandemic, providing clients with timely updates, guidance and resources to weather the complex uncertainties, overcome challenges, mitigate risks, enhance resilience, maintain business continuity or normalize business operations as quickly as possible. We have just issued the following publications to highlight the US legislative efforts in response to COVID-19 and to highlight some international trade-specific issues and what may come next.

USA Flag Read our US Policy Prognosis: The Legislative Response to COVID-19 in English
Spain Flag Read our US Policy Prognosis: The Legislative Response to COVID-19 in Spanish

Coronavirus|COVID-19: Implications to Commercial and Financial Contracts Under the Brazilian Legal Framework

The coronavirus pandemic (also known as “COVID-19”) outbreak has challenged humanity to control the spread of the virus and save human lives. While the world is incredulous at the rising death toll, and more than a third of the global population is experiencing social distancing and self-isolation measures for the first time in history, country leaders have been negotiating stimulus aid packages to ease the economic impact of the coronavirus outbreak. At the same time, companies from all industries affected by the coronavirus pandemic have been seeking means to mitigate losses and legal grounds to validate the non-compliance with commercial and financial contracts.

In Brazil, the situation is undistinguishable from the rest of the world. Multinational and local companies that carry out commercial activities in Brazil have been strongly affected, due to the coronavirus pandemic.

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