President Javier Milei’s administration is initiating a tender for the Belgrano Cargas freight line, which is among the state enterprises slated for privatisation under the ‘Ley de Bases’ comprehensive reform of 2024. The forthcoming tender follows the La Libertad Avanza administration’s presentation of the key components and timelines of its strategy to business representatives and officials during the ‘Argentina Week’ roadshow held in New York last month. Milei’s administration has introduced the ‘Open Access’ model, allowing unrestricted use of train tracks prior to formal possession, alongside a strategy of vertical disintegration, which ensures that leases for train operations and infrastructure maintenance may not be consolidated under a single entity. The parameters have caused uncertainty among firms looking to compete, as they do not align with the standard international criteria relevant to the sector.
The Open Access model allows any company to utilize the tracks, even in the absence of a lease adjudicated to them – a situation not observed in freight services globally. In Europe, this is exclusively allowed for passenger transport, as opposed to cargo, with state involvement subsidizing the line. Concerning the fragmentation of Argentina’s existing railway management, Milei’s administration aims to liberalize the sector by leasing tracks separately, rolling stock independently, and workshops in a distinct manner. The sell-off further indicates that various companies can position themselves in such a way that if a particular investor group seeks to manage multiple operations, they would need to alter their company registration. The network slated for privatisation encompasses 7,594 kilometres of tracks across the Belgrano, San Martín, and Urquiza freight lines. This infrastructure traverses 16 provinces nationwide and links five international crossings to Chile, Bolivia, Paraguay, Brazil, and Uruguay.
Argentina’s government estimates an investment totaling US$755 million, which includes US$420 million allocated for the San Martín line, US$260 million for the Belgrano, and US$75 million for the Urquiza, with a financing baseline of US$435 million for the entire project. The recent presentation by the government in the United States established a timeline for initiating the tender process before the conclusion of March, allowing a period of 90 days thereafter for the submission of proposals. Upon the expiration of the deadline, a month is allocated for the assessment of the proposals, followed by an additional 30 days to finalize a contract, anticipated to occur around the middle of the year. Following this, a transition period of 90 days will ensue, culminating in the final acquisition of the adjudicated offer in December.
Thus far, the sole international entity demonstrating a strong interest in engaging in the tender is Grupo México, a private company active in both Mexico and the United States. Representatives articulated their interest by delineating their distinctions from the Argentine government’s model, emphasizing the necessity to consolidate the entire operation into a singular offer, which includes an investment of US$3 billion. Argentina’s principal exporters of agricultural products are collaborating in a consortium to pursue the same multi-million dollar business: Aceitera General Deheza, Asociación de Cooperativas Argentinas, Bunge, Louis Dreyfus Company, and Cargill.