The toll increase for the Hidrovía set by AGP for river maintenance is a setback for the government with the agro-export sector and the countryside amidst a reviewing relationship. Despite Javier Milei’s discontent, a state society will bear the cost.
Tension Dimensions
Firstly, operationally, the increased tariff for ships loading 80% of national agro-exports is an economic issue. AGP, temporarily managing the business by outsourcing maintenance, proposes a 40-60% dollar toll increase due to financial imbalances in the concession. The Subsecretary of Ports and Navigable Waterways under the Ministry of Economy approved it.
The tariff adjustment stems from a $80 million debt to the dredging company Jan de Nul. Sources indicate the debt arose last year, potentially from August/September to December 2023, raising political suspicions hard to prove. They acknowledge delays by the current management, struggling to catch up. Until a year ago, most private users praised AGP’s good work, even mentioning a surplus.
Hidrovía Debts
The public hearing will likely create noise, with unknown lobby power to change course. The toll’s alarmed port and export sectors, with some business interests finding a 64% increase abusive, raising it from $3.06 to $5 per net registered ton. However, a 40% increase, adjusting for dollar inflation since the last tariff adjustment a decade ago, seems reasonable, making the toll $4.3. The difference might seem small, but it adds up in volumes up to 45,000 tons.
Politically, Milei promised the countryside a handshake with reduced withholdings that haven’t materialized. Also absent are exchange improvements to encourage producers to settle, and there’s little interest in the activity. As if this weren’t enough, the government exacerbates the issue, risking breaking trust.
The upcoming Hidrovía bidding could demonstrate the commitment to liberal principles that the sector expects, opening fierce competition among dredgers and buoy markers for at least 15 years. Jan de Nul, confident in its 25-year expertise in Paraná waters, plans to compete, along with several international companies.
Broken Promises
Recently, a group of businessmen asked the Chief of Staff, Guillermo Francos, about the bidding. His optimistic but unlikely response indicated the terms should be ready by year-end, overlooking the weight of broken promises in this business.
For the agro-export sector, unfulfilled promises strain government credibility, especially the President’s. Exporters reminded that the toll increase contradicts the government’s tax reduction stance.
The toll hike harms competitiveness, affecting exporters and producers. Long-term, a new bidding is expected to provide better services at lower costs, tying the issue to the unresolved bidding process. The intention to raise the toll without solving the process is linked to the disorder of Fernández’s management and the missed opportunity during Macri’s private sector-focused administration.
Ultimately, this adjustment doesn’t impact the ruling class but the establishment. The logistics cost discussion is a major issue, with the agro-export sector relying on an outdated study suggesting toll reductions for better competitiveness.
However, some argue this is impossible now, as AGP’s increase makes it unlikely to reduce the toll in future terms, possibly raising it above the current level.
Establishment Concerns
The agro-export establishment fears a ‘temporary’ toll increase becoming permanent, affecting future deepening costs. Two weeks ago, they expressed concerns in a letter to Arreseygor and AGP’s Benvenuto about the toll hike.
They stressed the need for competitive bidding conditions, avoiding ties to current dredging service providers without price validation, indirectly criticizing Jan De Nul’s disassociation from the toll increase.
The letter was signed by powerful economic groups like the Oilseed Industry Chamber (Ciara), the Grain Exporters Center, the Rosario Stock Exchange (BCR), the Chamber of Private Commercial Ports, the Maritime and Port Activities Chamber, and the Steel Chamber (led by Tenaris, Ternium from Techint Group, and Arcelor Mittal Acindar). This powerful economic group closely watches the government’s actions, feeling the cost burden for the first time.