Posted on January 20, 2025
Most of Argentina’s foreign trade passes through the Trunk Navigable Route (VNT) formed by the Paraguay/Paraná rivers , which, with a length of more than 3,400 kilometers from its source in Brazil to the Río de la Plata, is one of the longest and most biodiverse river corridors in the world. In its Argentine section, this natural channel – also known as a waterway, after the commercial name of the company that from the mid-1990s to 2021 had the concession for dredging and buoyage – allows around 80 % of the country’s exports to the world , especially of agro-industrial origin.
But the waterway is currently in the midst of a controversial process to privatise its management and allow for construction work along its route, launched by the government of President Javier Milei. In November, a new call was opened for a concessionaire to take on a 30-year contract for the “modernisation, expansion, operation and maintenance” of the waterway, in a process that will be open until the end of February, and in which European and Chinese companies have so far shown interest.
The scale of the waterway’s management has been generating fierce disputes between the main interested firms and the government itself, which some operators accuse of having drawn up a tender tailored to a single company, the Belgian dredging firm Jan De Nul. As a joint partner in the waterway, this company held the concession until 2021, after which management returned to state administration.
With this decision, Milei’s administration seeks to expand the depth of the Paraná , which would help complete the loading of large ships, which often have to finish loading their holds in other ports, increasing the logistics cost.
Various environmental organisations have warned about the potential environmental impacts of these works, as dredging the river further could cause damage to a wetland ecosystem that provides countless ecosystem benefits ranging from water purification to climate change mitigation, and which has been experiencing an unprecedented situation of water deficit for five years .
More works, more depth
Since the end of 2021, the management of the most heavily navigated stretch of the river has been left without a concessionaire. With the call for tenders, the government is seeking that the new operator provide works and technology to expand the operational capacity of navigation and add competitiveness to the Argentine economy.
To this end, the tender demands that the winning company be able to “modernize” the waterway not only by guaranteeing greater draft depth, but also by providing radars and satellite systems for tracking ships, new signage and better control measures to combat drug trafficking , an activity that has spread along the route in the last decade.
For years, the main companies in the agro-export sector (ports and grain companies) have been insisting on the need to deepen dredging in order to improve the logistics equation of the shipping companies that transport grains and increase the export of raw materials
Gustavo Idígoras, president of the Argentine Chamber of the Oil Industry and Chamber of Cereal Exporters (CIARA/CEC), celebrated that “finally” Argentina has opened a call for private management: “it is the only highway to connect with the world, not only for exports ―more than 85% of sales leave through the main navigable waterway― but also for imports, 90% of which enter through the River Plate.”
For Idígoras, the current format of the waterway was stuck in the 1990s: “It is as if the world had evolved towards five- or six-lane highways, while here we are left with a one-way and one-way route,” said the expert, who added that cargo ships have become larger and have at least 44 feet of draft, while the navigation channel does not exceed 34 or 36 feet at most. “We are stuck and that generates many inefficiencies and gives cargo away to Brazil.”
The voice of the private sector is usually synthesized in the proposals of the Rosario Stock Exchange, a reference in feasibility studies that in 2020 presented a project that explains the works necessary to expand the operational capacity of the navigation channel. This study details that the VNT, in the section that goes from the province of Santa Fe to the ocean, has maximum drafts of between 25 and 34 feet. The private sector proposes maintaining the current depth of 27 feet in the northernmost section, near the confluence of the Paraguay and Paraná rivers, but increasing the depth from the current 36 feet to 42 feet in the lower section of the Paraná, closer to the Río de la Plata and where the largest ports and the greatest capacity needs are located.
Tendering under discussion
The open tender for the management of navigation in the Paraná trunk channel involves large infrastructure works and a fabulous business: “We are talking about the largest work on the planet, more than 1,000 kilometers from Confluencia [where the Paraguay joins the Paraná] to the ocean, with an estimated turnover of between 10 and 12 billion dollars in 30 years. It is something very big and important,” said Alfredo Sesé, an expert in transport and infrastructure at the Rosario Stock Exchange (BCR).
The conditions set out in the tender documents have sparked criticism from some of the sector’s major operators, who see a business tailored to a single bidder, Jan de Nul.
Two global dredging giants, Belgium’s Dredging International (DEME) and Denmark’s Rohde Nielsen, have publicly complained, filing an administrative appeal to have the tender suspended on the grounds that it is a “directed” call for tenders.
In the appeal filed by DEME, the company states: “a set of conditions has been approved that grants unbeatable competitive advantages to the current dredger, which could discourage and even make unviable the presentation of new offers by new operators.”
Certain stipulations of the tender have also raised interest and questions.
The Argentine government has said that “legal entities controlled, directly or indirectly, by sovereign states or state agencies” cannot apply, something that would exclude China’s Shanghai Dredging Co, which had expressed interest in taking part in the process.
The exclusion occurs within the framework of the frequently tense relations between Milei’s government and China, a relationship that, according to specialists such as Agustina Marchetti, a doctoral researcher at the University of Rosario, is an example of its “oscillating” foreign policy, between the “ideological principles of the government, which deplores communism, and pragmatism in doing business.”
“Milei repeated many times that he would not align himself with communists, even if he later gave in to pragmatism and the need to negotiate with China,” Marchetti added.
For Idígoras, the presence of this type of clause must be taken as a sovereign condition of Argentina: “the prohibition of participation by companies with state shareholders excludes the United States army, some Chinese companies and surely some European companies as well. It is the same as the contracts that exist in Europe or the United States and it is still a sovereign decision.” For the expert, the most important thing is to obtain “a solid and good contract.”
Juan Venesia, head of the Regional Development Institute and director of the infrastructure program at the National University of Rosario, described the current bidding process as being carried out quickly and without adequate planning, which generates a “high degree of precariousness and lack of foresight.”
“Many issues that have been requested for years are missing, such as a control body and spaces for participation by the provinces. It was done in a handful of weeks for something that takes a long time,” he said, stating that this “takes the seriousness out of the tender.”
Socio-environmental impacts
Amidst political tensions, another complaint is that of environmental organizations, which warn of the effects that both dredging and river traffic may have. The Humedales Foundation has requested environmental impact studies, as well as an evaluation of the costs that this mega-project has had over the last 30 years.
“It is urgent to project what the impacts would be in the context of a new concession that will increase the dredging depth of the canal,” explained Nadia Boscarol, from the NGO, who recalled that the entire river system is undergoing an “unprecedented” water crisis associated with its productive uses. The drought has been described as unprecedented in more than a century , with river flows declining due to the lack of rain, and experts say that land use has worsened its effects.
According to the Argentine Association of Environmental Lawyers , there is little information on the socio-environmental impacts of works of this magnitude. “There are studies that show how dredging and signaling equipment have impacted the ecosystem, as well as the movement of ships,” said Rafael Colombo, one of the founders of the group. “This creates a lot of uncertainty when it comes to making public policy decisions.”
Cows in a wetland area of the Paraná Delta. Experts say the Paraná River is undergoing an “unprecedented crisis” and that dredging the river could affect the surrounding wetland ecosystem (Image: Fundación Humedales).
For Colombo, the Paraná “is going through an unprecedented crisis” to which due attention is not being paid. “It seems that the only solution they can think of to guarantee navigability 365 days a year is to continue dredging,” he added.
Luis Espínola, an expert in freshwater fish ecology at the National Institute of Limnology (Inali), said that there is a lack of information on the impacts that the waterway has had so far. “It is difficult to discern the effect on the ecosystem because there are no previous studies that allow us to compare. There are some studies, but they have been more bibliographic reviews than anything else,” said the scientist.
Espínola is one of the authors of a report published in 2021 that warns about potential impacts of the works on the VNT. It mentions impacts on biodiversity that include erosion of the river banks, alterations in the composition of the water and increased mortality of fish eggs and larvae due to the turbines and the effect of the waves. Added to this are the waste generated by ships, as well as possible spills and other types of pollution generated by ports and large ships.
For biologist Nadia Boscarol, from the Humedales Foundation, it is “very complex” to determine the impacts of the works. “The river is very dynamic, and it is difficult to discern which changes are natural and which are the effect of dredging. But in a time of extreme weather phenomena, the water will tend to flow faster and at greater depth, generating more erosion. That is the main danger,” she added.
The Argentine government is expected to make public the bids received for the tender on February 12. Despite accusations of favoritism, legal action against the tender and moves to restructure the state agency that controls the waterway, the national administration still aims to have the new concessionaire confirmed by April.
