China, Europe or nationalization for Argentina’s Hidrovía?

3rd September 2020

By Matías Longoni

China, Europe or nationalization for Argentina’s Hidrovía?

Fears around the future of Argentina’s main agro-exporting outlet began to haunt the country’s private sector after President Alberto Fernández and seven governors met last week in Puerto San Martín, north of the city of Rosario, to sign the “Federal Agreement for the Paraguay-Paraná Waterway”.

The Paraná River is the conduit for 75 percent of the grains and grain-derivate products exported by Argentina. And for a few businessmen, a remake of the State’s attempts to nationalize Vicentin could be in the cards, although at a much larger scale now, as many players in the country’s cereal market own ports in the Paraná waterway, often referred to in Spanish as Hidrovía.

</p> <h2><strong>Northern backing</strong></h2> <p>Others, however, also have some hopes. Since the concession contract that handed the Hidrovía dredging rights to the private sector in the 1990s, the works at the Hidrovía have been the most important infrastructural deed for Argentina’s agro-industrial development. But the effort has been focused in the first tranche of the waterway, between Buenos Aires and the region of Timbúes, around 400 kilometers upstream from the waterway’s estuary.</p> <p>No progress was made beyond that initial stretch, and the promises made to the Northern provinces in the original Hidrovía project, which included a plan to deepen the draft of the river up north, were never met.</p> <p>Speaking during the presentation of the <a href="">agreement</a>, Fernández tried to strike a tone of provincial vindication. “Argentina claims to be a Federal country, but it is profoundly centered in Buenos Aires, and I want it to start functioning in a truly Federal way,” he said.</p> <p>It is hard to anticipate how this new venture will end. But one big difference between this and the Vicentin misadventure is that the Federal Agreement for the Paraguay-Paraná Waterway is being clearly backed by the provinces. The presence of governors from Buenos Aires, Chaco, Corrientes, Entre Ríos, Formosa, Misiones and Santa Fe was evidence of this. The decision didn’t seem to be born from the same improvisation and political divisiveness that led to the Vicentin nationalization attempt.</p> <h2><strong>Who controls what?</strong></h2> <p>But the scope of the agreement signed by president and governors remains unclear. The provinces already had some administrative responsibilities in the waterway. The central administration regulates navigation of the river and enforces security through the Coast Guards – a force controlled by the Nation. The provinces, meanwhile, have jurisdiction over matters of production, natural resources, and other environmental issues such as fire control.</p> <p>The only assets owned by the private sector are the more than 30 port terminals, some of them privatized in the 1990s during the auction of the Argentine Grain Board, and others built in its aftermath due to the boom of soybean production and the growth of yields.</p> <p>In addition, a concession contract for the <a href="">dredging work</a> to maintain the Hidrovía’s navigability at 36 feet deep leased that work to the private sector, between the estuary in Buenos Aires’ Río De La Plata and the ports around Greater Rosario in the Paraná.</p> <p>These dredged 400 kilometers are what allow large grain vessels used for trans-oceanic shipping to have direct access to the local ports near Argentina’s more productive agricultural regions. It’s a luxury that only exists in Argentina, and for which ships pay the cost of admission in US dollars. Or in soybeans, which act as basically the same thing.</p> <h2><strong>The decisive dredging contract</strong></h2> <p>Given that the agreement signed by Fernández does not affect the dredging concessions or the private port terminals, no one yet understands the scope of what the provinces and nation will start to jointly administrate, as the remaining aspects of the Hidrovía were already under public control.</p> <p>But the signing of this agreement happened only months before the end of the concession contract for dredging rights in the lucrative southern tranche of the waterway, in April 2021. Up to that date, those rights belong to the Belgian company Jan De Nul and its local partner Emepa.</p> <p>The last time the contract for dredging rights expired was during the Kirchnerite decade, when Néstor and Cristina Kirchner decided to renew it. But will the Emepa-Jan De Nul partnership keep control this time around? Or will a new national company pick up the dredging rights from 2021 onward? Will perhaps new concession contracts be created to dredge less lucrative tranches of the waterway north of Rosario?</p> <p>Jan De Nul has already made public its interest to stay in charge of the more lucrative southern section, from Rosario to the south. But <strong>there are also <a href="">Chinese capitalists interested in the project</a>, promising governors that a much more advantageous deal for them is possible</strong>.</p> <h2><strong>The new decision makers</strong></h2> <p>For now, the agreement signed by Fernández only establishes that a state company known as Hidrovía Federal Administration will be created, with 51% controlled by the central government and the remaining 49% in the hands of the seven provinces. Its functions and roles remain unclear.</p> <p>A federal council of advisors with private-sector participation will also be created, stationed in the city of Rosario, Santa Fe province (Governor Omar Perotti was the only provincial leader who spoke in the presentation, following his role in the Vicentin conflict).</p> <p>Transport Minister Mario Meoni, the main political force behind this initiative, has said the details will be analyzed in the newly creating advisory council during the coming weeks, with the presence of the private sector actors linked to the Hidrovía. <strong>Off the record, the representatives of agricultural exporters have already anticipated they will reject any attempts to nationalize dredging works</strong>.</p> <p>“The first goal of the agreement is to bring provinces into the discussion, understanding that the Paraná River and all its affluents are a national issue in which everyone is involved. We see the waterway as an essential development tool for the north of Argentina and we want to improve its volume load and the added value of its cargo,” Meoni said.</p> <p>&#8212;</p> <p><em>(Spanish version originally published in <a href="">Bichos de Campo</a>)</em></p> <p>

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Matías Longoni

Matías Longoni is one of the most recognized farming specialists in Argentine journalism. He worked for two decades in Clarín and now leads his own project, Bichos de Campo.