Argentina Procurement News Notice - 46998

Procurement News Notice

PNN 46998
Work Detail Despite the fact that the Buenos Aires Kirchnerism played hard, obtaining a millionaire national budget, no offers were presented to dredge a direct access channel to the sea that was to be requested from the southern ports of the country Dredging the Magdalena canal, an access road from the ocean to the Argentine navigation system that would benefit the ports of southern Buenos Aires, was not of interest to the operators in the sector and this Thursday the tender promoted by the national government was abandoned. With an official budget that exceeded 40 billion pesos, the opening of the envelopes with the offers, which was initially scheduled for July 31 but was postponed until August 17, failed to attract dredging companies. The lack of offers does not surprise those who follow the process, since the conditions did not seem interesting to the dredging companies because they were not dollarized. And if there was any doubt, the strong devaluation that the government made after the Paso ended up defining the fate of the work. No suitors. This is how the failed call for tenders appeared today Specifically, the conditions set out in the tender had already generated frowns even among its promoters. For example, they complained that the Ministry of Transportation of the Nation decided to tender the work under Public Works Law 13,064, which requires payment in pesos to the successful bidder, as happened in the first failed attempt in 2014 that was left deserted because international dredgers Interested parties, who have all their costs tied to the dollar value, did not want to assume the risk of a devaluation or an inflationary process. Although the Magdalena (a long-standing idea in the shipping world) was a million-dollar work that interested the dredging companies -which are all international-, the main promoter was the Buenos Aires Kirchnerism that was betting on having a more direct access route for the southern ports. And to obtain the millionaire state financing, the project was clothed with a nationalist logic, seeking to contrast it with the current access channel, Punta Indio, whose layout is convenient for the ports up the Paraná river. National and Popular Currently, the channel used for the entry and exit of ships is Punta Indio (closer to the Uruguayan coast), which is the starting point for the dredging and beaconing concession for the main navigation system . But in 2020, in the midst of the debates over the end of the private concession of the waterway, the Buenos Aires and Buenos Aires Kirchnerism, always critical of the cereal business, began to agitate for its replacement by the construction of the Magdalena, further south, to benefit the Buenos Aires and southern ports. The access system to Argentine ports The Magdalena Canal project is the straight-line extension of the section of the Punta Indio Canal from the curve called El Codillo at Km 143.9 to the area of ??natural depths in the Rio de la Silver with an approximate length of 61.5 kms. The promoters of this new nautical access define it as a "direct exit to the sea" if "direct" is synonymous with "straight" then the Magdalena Canal meets the definition, but if "direct exit to the sea" means the exit and entrance of less distance and navigation times, so the project does not verify 90% of the ships that enter our fluvial ports. In any case, to obtain the public funds with which to dredge the canal, Senator Jorge Taiana, one of its promoters, flagged the Magdalena as a vector of national sovereignty, describing the waterway as a loss of sovereignty since it is at the request of the interests of multinational cereal companies and is managed by a private concessionaire; as if they were not the same cereal companies that are also installed in Bahía Blanca or Quequén. But that change made it more difficult for the river terminals upstream, since ships would have to travel more miles to arrive and load grain; and for this reason the ports of the Gran Rosario region opposed it. Finally, the government opted to maintain the Punta Indio -in the framework of the concession to the waterway- but finance the Magdalena with public funds, so as to leave everyone happy. And although the bidding was undertaken by the National Ministry of Transportation, a management unit was set up under the charge of Hernán Orduna, a Kirchner critic of the waterway. Critical voices “We do not see that it is economically feasible. The new channel has no repayment because it has no load. We consider that the current access channel (Punta Indio) being fully operable, it is not convenient to generate the expense of the work at the head of the State, which is estimated at US$250 million. There are other priorities. But if it is at business risk and without a state subsidy, it would be another story, although we still have the fear of how they will finance maintenance when the load does not go well”, said the president of the Chamber of Private Ports, Luis Zubizarreta, last April during the Argentine River Transport Meeting organized annually by the Regional Development Institute (IDR). At that same event, Alfredo Sesé, coordinator of the technical teams in Transportation of the Rosario Stock Exchange, pointed out that “from a technical analysis of project valuation that prioritizes benefits, it is clear that the Magdalena is not a priority. There are other priorities that, with less investment, would be more important for competitiveness, such as road access to the port terminals of Gran Rosario”. For his part, Julio Deflino, president of the Navigation Center, had considered at the same meeting that the studies they commissioned indicated the "non-advisability" of developing the canal. “We are not against infrastructure. On the contrary, we support each new infrastructure project. But what we analyze is that priorities must be established when there is a lack of resources and foreign currency. It is better to use resources for works that guarantee 36 feet in the waterway and move towards a depth of 38 feet”, he highlighted. Economic Analysis According to a study by the specialized consultancy Serman, it is a work that has no economic justification, it is not repaid with the savings generated. Even when the Hidrovia is deepened, the traffic to the south to complete the load will drop to a lot, and this potential risk may have been detected by the dredgers. “From the economic analysis of the Magdalena canal project, it is concluded that, as a public investment, it presents a negative net present value. This means that the benefits represented by transportation cost savings, due to the reduction in navigation time allowed by the Project, are not enough to pay the incremental cost required by the construction and maintenance of the new Canal," says the report of Serman. Likewise, if the results obtained by the two alternatives analyzed are compared (Magdalena Canal operating as the only option or two channels considering the Punta Indio Canal simultaneously), the increase in benefits obtained from the existence of the two channels does not reach offset the increased costs. The costs are multiplied by three and the benefits only increase a little more than 60%. Finally, regarding the balance rate for the operation of the Magdalena canal, the rate coefficient of the system should consider 1.2 US$ per equivalent net register ton, in addition to the current toll”, the report concludes.
Country Argentina , South America
Industry Construction
Entry Date 22 Aug 2023

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