The waterway formed by the Paraguay and Paraná rivers is one of the world’s longest and most biodiverse river corridors, extending more than 3,400 kilometres from its source in southern Brazil, through Paraguay, and into Argentina to reach the Río de la Plata estuary.
For Argentina, it is also a vital route through which most of the country’s foreign trade flows. The country’s section of this natural channel – also known as Hidrovía, after the company that held its dredging and signalling concession from the mid-1990s until 2021 – enables around 80% of its exports, mainly of agro-industrial origin, to reach the rest of the world.
But the waterway is currently in the midst of a contentious process to privatise its management and enable works along its route, launched by the administration of President Javier Milei. In November, it opened a call for tender for a concessionaire to undertake a 30-year contract for the waterway’s “modernisation, expansion, operation and maintenance”, in a process that will be open until the end of February, and that has so far seen interest registered by European and Chinese companies.
However, the call for tender has generated fierce opposition from several interested business entities, who claim the government is favouring a single company: Belgian dredging firm Jan De Nul, which, as a joint partner in Hidrovía, held the concession until 2021, after which management returned to state administration.
Additionally, some aspects of the call for tender, namely works to widen and deepen channels along the Paraná, have come under fire from environmental organisations, who have warned about the possible environmental impacts of such works. They say that further dredging of the river could damage the surrounding wetland ecosystem that provides many ecosystemic benefits, ranging from water purification to climate change mitigation, while worsening the unprecedented water deficits it has been experiencing for the last five years.
More works, more depth
Since the end of 2021, the management of the most intensively navigated stretch of the Paraná has been without a concessionaire. Through the current call for tender, the government is looking for an operator to provide works and technology to expand the operational capacity of waterway navigation and boost the competitiveness of the Argentine economy.
To this end, the tender documents require the winning company to “modernise” the waterway not only by increasing its depth, but also through providing radars and satellite systems to track ships, new signalling equipment, and stronger control measures to combat drug trafficking – an activity that expanded dramatically along the route in the past decade.
For years, the main entities in the agricultural export sector – ports and grain exporters – have been insisting on the need for dredging to deepen the waterway to enable the passage of larger ships, improve the logistics of the shipping lines that transport grains, and increase the flow of raw material exports.
Gustavo Idígoras, president of the Argentine Edible Oil Association and Grain Export Centre (CIARA/CEC), noted that the route “is the only highway to connect with the world, not only for exports – more than 85% of sales go through the waterway – but also for imports, 90% of which enter through the Río de la Plata.”
Idígoras describes the current state of the waterway as dated: “It is as if the world had evolved towards five- or six-way highways, while here we are left with a one-way route.” Cargo ships, he explained, have become larger, with draughts of at least 44 feet, yet the navigation channel does not exceed 34 or 36 feet at its deepest points. This “generates a lot of inefficiencies” and means Argentina loses out on some cargo business to neighbouring Brazil, he added.
In 2020, a group of Argentine private-sector entities put together a feasibility study explaining the works that would be needed to expand the operational capacity of the navigation channel. The study noted that, in the section that spanning the province of Santa Fe to the ocean, the waterway has a maximum depth ranging between 25 and 34 feet. It proposed maintaining the current 27-foot depth in the more northerly section near the confluence of the Paraguay and Paraná rivers, but increasing depths from the current 36 feet to 42 feet in the lower reaches of the Paraná, closer to the Río de la Plata and where the larger ports and greater capacity needs are located.
A disputed process
The tender involves major infrastructure works and a significant business deal. “We are talking about the largest project on the planet: more than 1,000 kilometres from Confluencia to the ocean, with an estimated turnover of between USD 10-12 billion over 30 years,” said Alfredo Sesé, technical secretary of the Transport and Infrastructure Commission at the Rosario Stock Exchange (BCR).
The conditions required in the tender documents have sparked criticism from several large operators in the sector, who see a business supposedly tailormade for former concessionaire Jan De Nul.
Two global dredging giants, Belgium’s Dredging International (DEME) and Denmark’s Rohde Nielsen, have publicly complained, filing an administrative appeal for the tender to be suspended on the grounds that it is an “illegitimately steered” call.
In the appeal made by DEME, the company notes: “A tender document has been approved that grants unbeatable competitive advantages to the current dredger, that could discourage and even make unviable the presentation of new bids by new operators.” The government has made limited public comment on the tender, though the National Agency for Ports and Navigation has described the concession’s specifications as “very demanding” by design. “None of those who are qualified to participate will be left out,” a spokesperson told Infobae. Jan De Nul has issued no public response to these accusations.
Certain stipulations in the call for tender have also generated interest and questions among observers. The Argentine government has said that companies “controlled, directly or indirectly, by sovereign states or state bodies” cannot apply – something that would exclude China’s Shanghai Dredging Co, which had expressed interest in participating.
The exclusion occurs against a backdrop of the Milei government’s frequently tense relations with China, a relationship that, according to specialists such as Agustina Marchetti, a PhD researcher at the University of Rosario, is a demonstration of its “oscillating” foreign policy, between “ideological principles, which deplore communism, and the pragmatism of doing business”.
She added: “Milei repeated many times that he was not going to align himself with communists, although he may later give in to pragmatism and the need to negotiate with China.”
Although this clause “indirectly affects the relationship”, it does not overshadow the need to continue trading with China and strengthen the commercial relationship, Marchetti argued. “China is a relevant actor, although the relationship is marked by this duality, or double standard, that appears throughout.”
For Idígoras, the presence of such a clause should be seen as a sovereign condition for Argentina, and not one specifically targeting certain countries, as it “leaves out the US Army, a Chinese company and surely a European company as well”. He added: “It is the same as the contracts that exist in Europe or the United States, and it is still a sovereign decision.”
Idígoras says the key concern is securing “a solid and good contract”.
The current bidding process has a high degree of precariousness and lack of foresightJuan Venesia, head of the Institute for Regional Development and director of the National University of Rosario’s infrastructure programme
Juan Venesia, head of the Institute for Regional Development and director of the infrastructure programme at the National University of Rosario, described the current bidding process as being carried out quickly and without proper planning, creating a “high degree of precariousness and lack of foresight”.
He said: “Many issues that have been requested for years do not appear, such as a control body and spaces for participation from the provinces. It was done in a handful of weeks, for something that takes a long time.” Venesia claimed that this “takes away the seriousness of the tender”.
Socio-environmental impacts
In the midst of the political tensions, environmental organisations have been warning about the effects that the dredging and increased river traffic could have. The Fundación Humedales (Wetlands Foundation) has called for environmental impact studies to be conducted, as well as an evaluation of the costs of this megaproject over the last 30 years. “It is urgent to project what the impacts would be in the framework of a new concession that will increase the dredging depth of the canal,” said Nadia Boscarol, the national coordinator of the NGO’s Blue Corridor programme.
She noted that the entire river system is going through an “unprecedented” water crisis associated with its productive uses. The drought has been described as one not seen in over a century, with flow rates of the river falling due to scarce rainfall. Land use change is said to have worsened the impacts.
According to the Argentinean Association of Environmental Lawyers, there is little information on the socio-environmental impacts of works of this magnitude. “Studies show how dredging and signalling equipment have impacted the ecosystem,” said Rafael Colombo, one of the group’s founders. “This generates a lot of uncertainty when it comes to making public policy decisions.”
For Colombo, the Paraná “is going through an unprecedented crisis” that is not being given due attention. “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, said that there is a lack of information on the impacts that the waterway has had to date. “It is difficult to discern the [waterway’s] effect on the ecosystem because there are no previous studies that allow us to compare. There are some studies, but they have been more literature reviews than anything else,” he noted.
Espínola is one of the authors of a 2021 report warning about potential impacts of the works on the waterway. The report states that impacts on biodiversity include erosion of riverbanks, alterations in water composition and increased mortality of fish eggs and larvae due to turbines and wave effects. It also highlights the waste generated by ships, as well as possible spills and other pollution generated by ports and large vessels.
For biologist Nadia Boscarol of Fundación Humedales, it is a “very complex” task 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,” she noted. “But in a time of extreme weather events, the water will tend to flow faster with a greater depth, generating more erosion. That’s the main danger.”
The Argentine government is due to make public the offers received for the tender on 12 February. Despite accusations of favouritism, legal actions launched against the tender, and moves to restructure the state agency in control of the waterway, the administration still aims to have the new concession holder confirmed by April.
