Argentina seeks $9.5 billion private financing for water infrastructure
BUENOS AIRES (Reuters) – Argentina invited private companies on Monday to submit proposals for building and financing $9.5 billion of water infrastructure projects, as the government seeks to cut its wide fiscal deficit without slowing down public works investment.
The 38 projects “demand investments that exceed annual available resources,” the Interior Ministry said in a statement. The amount represents about one-quarter of the country’s $40 billion plan to rebuild water infrastructure, a spokesman for the Ministry’s hydraulic resources subsecretariat told Reuters.
The push to improve Argentina’s irrigation and sewage systems and build dams, canals and water treatment plants is part of President Mauricio Macri’s broader effort to improve the country’s infrastructure, which was a global model a century ago but has suffered from decades of lack of investment.
Inadequate water infrastructure contributes to frequent flooding across the country’s Pampas grains and cattle belt, reducing output in the world’s No. 3 soy and corn exporter. Producers often build illegal canals to clear their fields of standing water, endangering nearby urban areas.
Weeks before planting for the 2017-18 corn and soy crops begins, 26 percent of the country’s most productive farmland is flooded, according to a report last week by Carbap, a producers’ association. Flooding threatens a third of planted wheat area, the Buenos Aires grains exchange said last week.
Argentina passed a law permitting public-private partnerships for infrastructure projects last year, and in 2018 the government expects such investment to total 100 billion pesos ($5.79 billion), or roughly 1 percent of gross domestic product, a Treasury Ministry source told Reuters last week.
Public-private partnerships (PPPs) will likely be used extensively for irrigation projects, while a type of PPP known as ‘Build, Operate, Transfer’ contracts – in which the state ultimately assumes ownership of the project – will likely be used for water treatment plants, the spokesman said.
For construction of public works like aqueducts or dams, companies will seek financing from banks that will ultimately be paid back by the government, a way to reduce dependence on multilateral lenders like the World Bank or the Inter-American Development Bank, the spokesman said.
Companies have between Sept. 15 and Dec. 15 to indicate their interest, and a tender process for the projects will follow. The works are to be built in coming years.
($1 = 17.2600 Argentine pesos)