Jan De Nul and Servimagnus sign Argentina waterway concession contract

Jan De Nul and Servimagnus have signed the contract to operate Argentina’s Main Navigable Waterway, known as the Vía Navegable Troncal, for the next 25 years, clearing the final step needed to launch the concession process for one of the country’s most important foreign trade corridors.

The Argentina waterway concession covers modernization, expansion, navigation aids, dredging and maintenance dredging along the route from kilometer 1,238 of the Paraná River, at the point known as Confluencia, to kilometer 239 of the Punta Indio Channel.

The corridor is critical for Argentine exports, particularly agricultural and industrial cargoes moving through the Paraná-Paraguay waterway system. The new concession is expected to address the need for greater draft and improved navigation conditions as larger merchant vessels require deeper channels to sail with fuller loads.

The new operating company, Vía Navegable Argentina, or VNA, will take over the concession. The enforcement authority will be the National Ports and Navigation Agency, known as ANPYN, led by Iñaki Arreseygor. Under the contract, the grantor will not be responsible for events directly or indirectly related to the execution of concession works.

The signing ends a four-year period in which the waterway shifted from private management to state administration. The contract was signed after a contentious bidding process that included warnings from Argentina’s Administrative Investigations Prosecutor’s Office.

Toll structure may be reviewed

The concessionaire’s obligations will be supervised by ANPYN or by another body designated by the agency. The authority will review reports submitted by the concessionaire and conduct an annual assessment of the concession’s economic and financial balance. It may also recommend changes to the toll structure.

Tariffs can also be reviewed at the concessionaire’s request, with input from users and industry groups required to pay the toll. If no extraordinary review takes place, the rate structure will still be reassessed every 10 years.

The contract sets out several cases in which tolls could change.

If annual waterway traffic growth exceeds 3% over the previous 10 years, the parties may agree to reduce the tariff. If traffic moves in the opposite direction, the tariff could rise.

If new technology improves profitability, 50% of the resulting benefit must be passed on to users through a reduction in the prevailing toll.

The basic tariff will also be periodically adjusted through a cost formula that includes fuel, labor and consumer price indexes. Changes in that formula could either raise or lower the tariff.

Any modification to the tariff schedule must be supported by prior technical, economic, financial and legal reports assessing its impact on the concession’s economic and financial balance.

Contract transfer and additional works

One of the more sensitive points in the Argentina waterway concession concerns the possible transfer of the contract. The contract allows a full or partial transfer to a third party, but only after 20% of the original contract term has passed or 20% of the committed investment has been completed, whichever occurs first. Any transfer must be approved by the enforcement authority.

The grantor may also make unilateral changes to the project’s execution, up to a maximum of 20% of the total contract value. According to the contract annexes, such changes may include deepening works or other public-interest measures not originally included in the bidding documents.

Although the contract does not spell out a detailed deepening scheme, which was a central issue in the bidding process, the terms established in the original tender documents remain in place.

Concessionaire obligations

The concessionaire must ensure permanent navigation on the waterway, 24 hours a day, under normal operating conditions. It must also carry out any work needed to maintain the channel in safe navigable condition.

VNA will be required to submit quarterly reports on billed traffic, operating volumes and updated inventories. It must also present annual reports, audited financial statements and updated economic and financial plans. At the end of the concession, it must submit a closing balance and a description of the waterway’s condition.

The company must also provide the authorities with all information required under the integrity program and report any possible corruption-related incidents.

The concession includes several financial and insurance obligations. The operator must allocate monthly gross revenue to different funds managed by ANPYN: 2% for supervision and technical panel expenses, 1.5% for improvements and additional works, and 2.5% for safety, operation and maintenance works.

The contract also addresses debt left from the previous state-run management period. That phase left an $80 million debt with Jan De Nul, of which $35 million remains unpaid. The outstanding amount was transferred to the winning concessionaires through a mechanism described in the source text as a form of “self-payment.”

The concessionaire must also maintain annual civil liability insurance coverage of at least $10.88 million, as well as workers’ compensation and environmental insurance policies.

Environmental, labor and control issues

On environmental matters, the contract provides for an initial phase involving the required permits and authorizations. Environmental impact studies will be required in later phases of the project.

Current employees will remain in place, with their seniority and labor conditions preserved.

The contract does not assign Vía Navegable Argentina security, customs or environmental policing functions. Those responsibilities will remain with the Argentine Naval Prefecture, ARCA and the relevant environmental authorities, among others.

That point is particularly important because the previous, later-canceled tender included several obligations beyond dredging and maintenance. Those additional requirements had increased operating costs and triggered complaints from bidders.

Users call for oversight council

Several user groups welcomed the signing of the contract and called for the rapid creation of the VNT Control Council. The groups included the Rosario Board of Trade, the Argentine Oil Industry Chamber and Grain Exporters Center, the Chamber of Private Commercial Ports and the Chamber of Port and Maritime Activities.

For shippers and port operators, the Argentina waterway concession will be closely watched because of its direct impact on draft, navigation reliability, toll costs and the competitiveness of exports moving through the Paraná-Paraguay system.

Source: La Nación

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