The Argentine Port Authority to Operate the Paraná-Paraguay Waterway for Twelve Months

On July 1, 2021, the President of Argentina issued Decree No. 427/2021 granting the Argentine Port Authority (the “AGP,” after its acronym in Spanish) a concession to maintain the port’s signaling system and carry out dredging and redredging tasks. The concession also includes the corresponding hydrological control of the Waterway between kilometer 1,238 of the Paraná River up to the Natural Deep Water Zone in the outer La Plata River.

In line with this, the AGP’s bylaws were modified so as to incorporate to its purpose provision the possibility of assuming the concession of works and/or the administration, provision of all types of maintenance services, and the operation of the navigable waterways granted and entrusted to it.

The Waterway is of strategic importance to Argentina’s economic development. Free navigation under competitive conditions is a government policy under the Agreement on River Transport on the Paraguay-Parana Waterway and the Law for the Development of the National Merchant Marine and Regional River Integration.

Through the Decree, the Ministry of Transportation was delegated the preparation, execution and approval of the concession contract with the AGP. Pursuant to the Decree, the contract is for twelve months commencing upon termination of the concession contract with the current concessionaire, Hidrovía S.A. That contract had been extended in April for 90 days to guarantee the continuity of the economic activities that are reliant upon adequate service rendition.

The concession contract to be granted to the AGP may be extended until the successful bidder of the national and international public bidding process authorized by Decree No. 949/20 and issued on November 26, 2020 takes over the service.

The Decree’s recitals ground the measure on the upcoming expiration of the 90-day term and the need to for the Waterway to continue to be navigable until the bidding process is completed.

The recitals also state that the Decree aims to preserve the public interest involved in the proper administration of the Waterway and the direct and indirect sources of employment linked to its operation while preventing scenarios or situations that could alter or jeopardize the normal operation of the related ports. All of this to prevent negative consequences over foreign trade and enhance the development of Argentina’s regional economies.

Among other provisions, the concession contract establishes a tariff base and the tariff or toll system to which the AGP’s financing is subject, notwithstanding any subsidies, grants and/or transfers of contributions from the National Government that may temporarily be necessary for the purposes established in the contract. The rivers, canals, areas, zones, tracts and/or sections into which the Waterway will be formed or segmented will also be delimited, so that at any time they may be affected or disaffected with respect to the scope and purpose of the contract, either in full or in part, in relation to the different services provided in it.

There are still no details as to which services the AGP will subcontract during the term of the concession, but the AGP is expected to invite interested parties to participate in the respective subcontractor selection process in the near future to make the performance of the concession contract viable.