Waterway wars

Competition hots up over Paraguay – Paraná Rivers Inland Waterway.

The Paraguay and Paraná Rivers form a 3,302-kilometre waterway system connecting Argentina, Brazil, Bolivia, Paraguay and Uruguay. According to official figures, the waterway moves 75% of Argentina’s foreign trade, mainly soy and grains and is considered a critical route.

A USD 3.8 billion tender process to deepen the draft and carry out maintenance on a 1,238-kilometre stretch in Argentina is coming up in 2021.

There is a clear need and economic rationale for improving this section of the waterway, a director of economic studies at the Rosario Stock exchange said, “There is no other place in the world where within 70 kilometres there are 29 port terminals. A greater width and depth could reduce navigation times by 30% and lower the cost per tonne of freight.”

“There is no other place in the world where within 70 kilometres there are 29 port terminals.”

Director of economic studies, Rosario Stock Exchange

The current 25 year concession, held by a consortium of Belgium’s Jan De Nul, Dredging International and Grupo Emepa, is due to end in May 2021. Five companies have expressed interest in bidding: Dredging International, Jan De Nul, Boskalis, Van Oord and Shangai Dredging Company.

Shanghai Dredging is a subsidiary of China Communications Construction Company (CCCC), which is currently involved in more than 50 large infrastructure projects across Latin America. An executive of a global dredging company believes the Chinese participations goes in line with their geopolitical interests, “When a Chinese company participates, it does not follow a business rationale but a geopolitical one… However for this tender the competition is very strong and there are many interests involved.”

“When a Chinese company participates, it does not follow a business rationale but a geopolitical one…”

Executive, of a global dredging company, Argentina.

Jan De Nul and Dredging International are bidding without their current partner Grupo Emepa whose president, Gabriel Romero, was allegedly involved in paying bribes in 2010 to extend the concession. The concession extension was ultimately awarded following a decree from Cristina Kirchner.

Executives from Jan De Nul have denied any knowledge of their partners activities. The company has been involved in other scandals though, including the De Nul brothers being sentenced for bribery in Belgium and another scandal in Ukraine following which the company lost the Yuzhny Harbour concession.

Upgrading the waterway has clear economic benefits for Argentina but the former head of the Argentine Port Council warns there are social and environmental concerns, “There needs to be an environmental impact study and a debate about who gets to keep the income from the waterway. It should be used as a mechanism for social integration and economic development of the provinces it crosses.”

An executive of a global dredging company adds, “The entire logistics port community is expectant and while the government does not want to make drastic changes, it will have to listen to all stakeholders. They are working on a proposal to create a Federal Council of Hidrovia, we have yet to see a draft!”

Can Argentina run a clean tender process? Will strategic Chinese influence in Latin America continue to grow? Will European firms be able to compete? We are watching closely.

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