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The decision by the Argentine government to award the concession of the key Parana-Paraguay waterway to the country’s general port administration agency, AGP, could result in higher production costs and lower competitiveness, industry bodies have warned.
Under the new concession scheme, AGP will have the capacity to call for a specific tenders to select a foreign firm to take charge of dredging and signaling along the key waterways, but is able to raise funding by collecting tolls from bulk carriers.
“Today the collection of tolls is done practically without litigation. AGP is currently taking 60 days to pay its suppliers. A lack of financing due to management failure in the collection of tolls could interrupt the dredging,” Guillermo Wade, president of the Chamber of Port and Maritime Activity, told Agricensus.
Such is the current challenge facing the river network, given low water levels, that any interruption in dredging would bring a build up in sediment “immediately causing a loss of depth,” Wade said.
Lower water levels will mean less volume can be loaded by bulk carriers, generating extra costs and potentially bringing additional costs if loads need to be topped off in Atlantic or Brazilian ports.
Wade said that the ideal scenario would be to maintain the status quo with contract extensions granted for the current concession holders, while the government focuses on completing the specifications and calls an open and transparent tender as soon as possible.
“Today, Argentina needs a new concession to go to the 21st century waterway, with state controls and a transparent bidding process, which preserves the current scheme with the financed infrastructure work, without requiring expenditures from the state,” the country’s soybean chamber Acsoja said in a statement.
Meanwhile, Luis Zubizarreta, head of Acsoja, and also president of the country’s private ports chamber, said that the fact that the AGP will be in charge of collecting the tolls will make the overall system more expensive.
“We believe that this will necessarily make the system more expensive because it will generate a risk for whoever wins the tender. Instead of charging directly from the user, as it has been up until now, they will need to take the Argentine risk,” local newspaper La Nacion quoted Zubizarreta as saying.
The executive said that this situation will mean that some potential bidders will not take part in the tender, while some others will potentially decide to put a risk premium on the fee they charge.
The national government is currently working on the technical and economic details of a new concession, which would have a length of 15 years, according to previous reports.
Earlier this week, the government issued decree 427, which confirmed that AGP will take control of the waterway concession for a 12-month period until a long-term international concession could be awarded sometime next year.
The decree also stipulates that AGP will be in charge of collecting the toll paid by bulk carriers using the waterway and use those resources to pay for private dredging works.
In the current concession, which is still operated by the Belgian company Jan de Nul and Argentine firm Emepa, the toll is collected by the concessionaire.
The waterway encompasses 86 ports and conveys nearly 80% of all of Argentina’s agricultural exports, connecting ports in the Parana River with the Rio de la Plata river and on to the Atlantic Ocean.