Javier Milei is moving forward with the tender for the Belgrano Cargas railway system to attract private capital and end decades of state inefficiency. The plan envisages investments of hundreds of millions of dollars.
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As part of its ambitious plan for privatization and reorganization of the State, the national government will launch a tender for the Belgrano Cargas railway system at the end of March, with the objective of having the process fully completed by the beginning of December. This was reported by the national authorities to interested companies during one of the days of ArgentinaWeek, an event that took place in the middle of this month in New York City and brought together Argentine investors and officials
.
During that meeting, the libertarian administration presented the main guidelines of the project, the expected deadlines and the investment estimates that could reach the country as a result of the initiative, estimated at almost 800 million dollars. Throughout the agenda in the United States, some officials received representatives of companies potentially interested in competing for the operation of the railway network. Among them were Foreign Minister Pablo Quirno and the Minister of Economy, Luis “Toto” Caputo, who held meetings with industry executives in Buenos Aires and also as part of activities related to the international event
. Current figures for the charging system
The official presentation, made at the Argentine Consulate General, began with a diagnosis of the current situation of the railway freight system.
According to official data, the network has a load density of 0.63 million tons-kilometers per kilometer of road, a figure that contrasts with the 3.40 recorded in Brazil and which is a far cry from 24.20 in Australia.
According to the graphics shown at the exhibition, the Argentine system is unable to keep up with agricultural expansion, since the volume transported by trains has been around 25 million tons per year for more than five decades. This scheme was defined by the officials themselves as “a vicious circle” characterized by low loads and insufficient resources for maintenance, which resulted in degraded infrastructure and weak logistical capacity. Faced with this scenario, the Government's proposal presented in the United States aims to modify the current model of “vertical concession” and move to an “open access” system, in which the administration of railway infrastructure will be separated from the operation of trains
. Current model vs future model The proposed scheme contemplates three main axes: an infrastructure manager responsible for traffic control, maintenance and shift assignment; private cargo operators who will compete to provide the service by paying a toll; and railway workshop dealers who will have fifty-year contracts for the maintenance of rolling stock.
The scope of the privatization covers 7,594 operating kilometers distributed along the Belgrano, San Martín and Urquiza lines, which cross 16 provinces and connect with five international crossings: Chile, Bolivia, Paraguay, Brazil and
Uruguay.
As for rolling stock, the Government ordered that it be auctioned separately, with two batches of locomotives and another two batches of wagons for each of the three branches mentioned above. The planned contract does not provide for the payment of royalties or state subsidies. Instead, the dealer will earn income from collecting tolls from operators and from the commercial operation of buildings located next to the railway line, including silos
and logistics parks.
The plan establishes investments of 755 million dollars, distributed as follows: 420 million for the San Martín line, 260 millionfor the Belgrano line and 75 million for the Urquiza line. In addition, a funding limit of 435 million dollars was set for the entire project. The agreement also incorporates legal protection mechanisms for the dealer. These include rights to renegotiate conditions in the face of legal changes or extraordinary events, international arbitration clauses under UNCITRAL rules, and “step-in” rights for creditors, which will allow them to intervene in case of
default before the State terminates the contract.
According to the official schedule, the tender will be launched at the end of March. From then on, bidders will have 90 days to submit their proposals. Subsequently, the award and signing of the contract will take place between June and July, followed by a 90-day transition period, aimed at carrying out inventories and the transfer of personnel. The Government's objective is for new private operators to take effective control of the service in December
.
However, during Argentina Week, questions also arose from some potential bidders.
The representatives of Grupo México, one of the companies that has already publicly stated their intention to participate in the tender, reiterated to officials their criticism of the Open Access system.The estimated time frames
The company, which already operates in Mexico and in several regions of the United States, wants rolling stock, infrastructure —including workshops— and operation to be included in the same offer, so as to have an integrated system to work with. In exchange, they say they could make an investment of close to 3 billion dollars for the Belgrano and Urquiza lines, a figure much higher than the almost 800 million initially planned by the
Government.
“It's done that way everywhere, because the open access mechanism was only implemented in England and it failed. As it is now armed, we are thinking only of the agrarian market, when the network can also benefit mining and other important sectors of the economy, although for that a more comprehensive plan is necessary,” sources familiar with the Mexican position explained to this media outlet
.
Last February, representatives of the group traveled to Argentina to meet with the new Secretary of Transportation, Fernando Herrmann, in order to ratify the request that the tender format be reviewed.
For the time being, the structure designed by the Executive Branch for the process remains divided into two parts: an offer A for the concession of roads and infrastructure only, and an offer B that includes the concession of roads together with the purchase of rolling stock. In this way, the Government of Milei seeks to open up competition and attract private investments to modernize a railway system that is key to logistics and economic growth in the country
