PPPs planned to help revive Argentine infra projects

Public-private partnerships (PPPs) are being touted as solutions for infrastructure projects in Argentina that have been halted by a lack of federal funding, though financing is likely to be the biggest obstacle.

Tucumán province’s construction chamber (CTC) presented a draft PPP framework to provincial public works minister Santiago Yanotti. If Yanotti accepts it, the proposal will be sent to the legislature.

The legislature “is extremely conscious of the challenges forced on us by the current reality,” CTC head Jorge Garber told BNamericas. But he is also optimistic that the work with the provincial government will result in a final proposal that will come to fruition.

Thousands of public work projects across Argentina are estimated to have stopped due to President Javier Milei’s austerity measures, leaving provincial governments scrambling to keep construction going. 

“There are several projects, both paralyzed or that haven’t been launched yet, that can be realized through a PPP scheme. Execution, improvement and maintenance of primary roads, and some secondary roads, would be done through private investment,” Garber said.

He added that housing projects could also benefit from PPPs.

Argentina attempted to carry out a PPP program during Mauricio Macri’s presidency (2015-19) but the plan failed due to rising macroeconomic instability, which restricted access to markets.

Garber told BNamericas that CTC’s proposal tries to avoid some mistakes of the Macri plan, and takes contract monetization and low competitiveness between companies into account.

Meanwhile, Santa Fe governor Maximiliano Pullaro has requested the federal government hand over some projects to the province to restart them as PPPs.

The most recent draft of Milei’s so-called omnibus bill, which was published in an attempt to drum up legislative support, includes a provision that would transfer projects from firms targeted for privatization to provincial governments, though it doesn’t specify which framework local administrations can use.

The measures would apply to firms such as roads operator Corredores Viales, rail company Trenes Argentinos, energy company Enarsa and Buenos Aires water utility AYSA.

But Buenos Aires governor Axel Kicillof is a strong opponent of Milei’s infrastructure policy and is not expected to support AYSA’s privatization.

Milei wants to reduce public infrastructure investment to a minimum and leave works to private players. But this strategy could run into similar financing problems as Macri’s plan.

Garber said that while the CTC proposal considers this issue, improving economic conditions that facilitate access to credit at more competitive rates would still be crucial.