Argentina’s General Ports Administration (AGP) is planning to extend concessions to complete a large scale building operation at the Port of Buenos Aires.
The operation is expected to cost US$737 Million.
The state run company has signed a preliminary contract with the three international terminal operators that currently provide services across the ports five terminals to complete the works.
In exchange, the AGP will extend concessions for each company up to 20 years after current contracts lapse in five years time. This extension will provide each company with more than enough time to mortgage and complete their investments.
The preliminary contract is expected to be finalised and will be sent for approval to President Cristina Fernandez Kirchner.
The project will involve development of the berths and a complete dredging of the entire facility in a bid to handle the larger ships expected to journey down the Panama Canal after its own expansion project comes to an end in December 2015.
Each individual operator will finance their own operations at the port – Terminals 1, 2 and 3 TRP, operated by DP World is expected to invest $186 million in docks, and $109 million in cranes. This will create around 1,100 new jobs for the terminal.
APM Terminals, who operate Terminal 4 are expected to invest $137 million in docks, and $55 million in cranes, generating yet another 1,100 jobs.
Finally, Chinese based company Hutchinson Port Holdings will invest $162 million in docks and $88 million in cranes to increase the capacity of Terminal 5.
Merchant navy captain Sergio Borrelli (pictured right), who acts as trustee of the AGP authority has stated that plans to let terminals fund the buildings at “zero cost for the state, is something that is not happening in any port in the country.”
He stated the necessity of these expansions if Buenos Aires is to compete with southern Brazilian ports.
This will include deepening the port to 40-feet, something that competitors Montevideo and Brazil are also planning.
Speaking to the Buenos Aires Herald, Borrelli said “Buenos Aires, which requires permanent dredging, and the rest of the ports of the Metropolitan Area (Dock Sud, in Avellaneda, in Greater Buenos Aires) and La Plata (the capital of Buenos Aires province), must adapt to receive the ships forming an itinerary with the ports of Uruguay and Brazil.”
He then stated that the expansion would reduce the risk of Buenos Aires becoming another feeder port for its Southern Brazilian rivals: “The risk is there, but it is not inevitable. Argentina must make an effort to prevent that because it means greater logistics costs for both Argentine import and export.”
He furthered that by reaching a 40 feet draft and completing the extensions Buenos Aires will “continue to be the cheapest way to transport cargo.
“For example, if a company unloads cargo in Río Grande, in South Brazil, and later on it anyway has to move to Buenos Aires, that means an additional freight cost which had already been paid.
“Over very long distances, short distances make no difference. Freight to a port near Buenos Aires costs almost the same as to Buenos Aires itself.
“Trans-ocean ships will charge the same fee for unloading containers in Montevideo or in Buenos Aires. The transfer from Montevideo by truck or feeder ships would be very costly, while bringing the container ship with tug-boats to Buenos Aires trims costs markedly. Paranaguá, Río Grande or Santos (all in Brazil), require feeder ships to bring cargo to Buenos Aires. But any transfer increases costs. It is true, however, that there may be some cost differences due to other issues besides freight.”
Borelli also announced that the AGP had conducted a revamp of the state run E Basin, which had been sat idle for the past 30 years.
This month the E Basin received 360 wagons and 44 locomotives from China, and unloaded them directly, as part of rolling stock Argentina bought last year to renew the Sarmiento and Mitre lines. These were previously stored privately, costing millions of pesos in operational and parking costs.
In regards to the revamp Borrelli said “If you have your own garage, why would you use someone else’s?”
At this moment in time a total 1,800,000 TEU are moved through Argentina each year, with 1,200,000 TEU of that number flowing through the Port of Buenos Aires.