Intercity and Buenos Aires Access Roads
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Report No. 14469-AR Argentina TransportPrivatization and Regulation: The Next Wave of Challenges Public Disclosure Authorized June 6, 1996 Infrastructure Division C-ountrvDepartment I Latin America and the Caribbean Regional Office Public Disclosure Authorized Public Disclosure Authorized Documentof the World Bank Public Disclosure Authorized FISCAL YEAR January I to December 31 WEIGHTS AND MEASURES The Metric System is used throughout this report CURRENCY EQUIVALENTS Currency Unit - Argentine Peso (A$) US$ = A$1 ACRONYMS AGP = Administration General de Puertos ATAM = Autoridad de Transporte del Area Metropolitana BA = Buenos Aires BOT = Build Operate and Transfer CVF = Consejo Vial Federal DNCPVN = Direcci6n Nacional de Construcciones Portuarias y Vias Navegables DNV = Departamento Nacional de Vialidad DPV = Direcci6n Provincial de Vialidad FA = Ferrocarriles Argentinos FEMESA = Ferrocarriles Metropolitanos S. A. FONAVI = Fondo Nacional de Vivienda FONDOVIAL Fondo Nacional de Vialidad FP = Ferroexpreso Pampeno GOA = Government of Argentina JNG = Junta Nacional de Granos NRT Net Registered Tons OECD = Organization for Economic Cooperation and Development SAP = Sociedad de Administraci6n Portuaria SAR = Staff Appraisal Report SBASE = Subterraneos de Buenos Aires S. E. SUBTE = The Metropolitan Suburban Rail Services of Buenos Aires PREFACE This report has been prepared by a team led by Antonio Estache (LA1IN) based on the findings of two missions that visited Argentina in January 9-17, 1995 and January 29-February 11, 1995. The first mission included Jose Carbajo (TWUTD), Jose G6mez- Ibanez (Harvard University) and John Meyers (Harvard University). The second included Antonio Estache (LAIN), Marianne Fay (Young Professional), Walter Garcia-Fontes (Univesitat Pompeu Fabra, Barcelona), Frannie Humplick (PRDEI), and Thomas-Olivier Nasser (MIT and Institut d'Economie Industrielle, Toulouse). The report benefited from background papers by Javier Cardozo (Consultant), Xavier Freixas (Universitat Pompeu Fabra, Barcelona), Felix Helou (Consultant), Martin Rodriguez-Pardina (Consultant), and Jeff Ruster (PSD). The mission would also like to thank key members of Argentina's transport sector, Mr. Corcuera Ibanez, Mr. Conejero and Mr. Kohon for their help in the preparation of this report. The Peer Reviewers for this report were Messrs. Z. Shalizi (TWUTD), and I. Kessides (PSD). Background Papers Supporting the Report Carbajo, J., J. G6mez-Ibanez and J. Meyers (1995), "An Assessment of Argentina Transport Reform", mimeo, The World Bank, LA1IN Cardozo, J., (1994), "Estado de Situaci6n del Transporte en el Area Metropolitana de Buenos Aires", mimeo, The World Bank, LAIIN Fay, M. (1994), "Infrastructure and Growth in Argentina", mimeo, the World Bank, LAIIN Fay, M. and A. Estache (1995), "Regional Growth in Argentina: Determinants and Policy Options", mimeo, The World Bank, LAlIN Freixas, X and W. Garcia-Fontes (1995), "Infrastructure Financing for Argentina's Provinces: Issues and Options", mimeo, The World Bank, LAIIN Humplick, F. (1995), "Infrastructure Performance in the Provinces of Argentina", mimeo, The World Bank, LAI IN Hlumplick,F. and T. 0. Nasser (1995), "Risk in Provincial Infrastructure Provision: An Investor's Perspective", mimeo, The World Bank, LA1IN Rodriguez-Pardina, M. and F. Helou (1995), "Comparaci6n de Marcos Regulatorios en Argentina", mimeo, The World Bank, LAIIN Ruster, J., (1995), "Infrastructure Financing: Options for Brazil's States and Argentina's Provinces", mimeo, The World Bank, LAIIN In addition the paper has benefited from two documents prepared in parallel by our colleagues of the Government of Argentina. Kohon, Jorge: "Argentina Railways Case Study" in Kopicki, Ronald & Louis S. Thompson (eds.), Draft report on "Institutional Change and Private Sector Development in Railways". World Bank (forthcoming) "Diagn6stico del Sector Transportes" Draft report produced for the Government (December 1994) (mimeo) ARGENTINA TRANSPORT PRIVATIZATION AND REGULATION: THE NEXT WAVE OF CHALLENGES Table of Contents' Page No. Executive Summary ....................................................... i Chapter 1: Introduction and Policy Summary ..................................... 1 Reform Needs in the Provinces .......................... .............................. 2 Learning from the National Privatization Experience........................................ 3 Railways and Subways........................................................ 4 Highways ........................................................ 5 Ports and Waterways........................................................ 5 Some Key Issues with Implications for the Provinces ................... ..................6 The Role of Subsidies........................................................ 6 Fine-tuning Regulation ......................... .............................. 7 The Need for an Integrated Transport Policy Approach .................... 10 Chapter 2: Intercity and Metropolitan Railways ...................................................... 12 The Background Before the Reform....................................................... 12 The Strategy of Railway Reform ..................................... .................. 13 How was the Freight Network Unbundled and Privatized?................ 14 How was the Metropolitan Commuter Network Unbundled? ............ 16 How were the Intercity Passenger Services Addressed? .......... ..........18 The First Effects of Rail Privatization....................................................... 19 Impact on Freight Services ................................................. ...... 19 Impact on Metropolitan Railways ..................................................... 21 Impact on Intercity Passenger Services............................................. 23 Overall Impacts of Rail Privatization................................................. 24 Lessons and Challenges Ahead....................................................... 25 Lessons learned....................................................... 25 Challenges Ahead....................................................... 26 Chapter 3: Intercity and Buenos Aires Access Roads .............................................. 30 The Background Before the Reform....................................................... 30 The Reform Strategy for Roads ....................................................... 31 First Wave of Concessions: Intercity Roads .................... ..................32 lThis report was producedunder the supervisionof Mr. GobindNankani, Director, Mr. Asif Faiz, DivisionChief, Infrastructureand UrbanDevelopment, and Mr. DannyLeipziger, Lead Economist, CountryDepartment I, Latin Americaand the CaribbeanRegional Office. The Peer Reviewersfor this report were Messrs. Z. Shalizi (TWUTD),and I. Kessides(PSD). Second Wave of Concessions: Access Roads to Buenos Aires ..........34 The Impacts of the Road Concession Program ............................................. 35 Lessons and Challenges................................................ 38 Lessons Learned ................................................ 38 Challenges ahead? ................................................ 38 Chapter 4: Ports and Waterways ...................................................... 41 The Situation Before the Reform ...................................................... 41 The Strategy of Reform in the Port Sector ................................................... 42 Deregulation ...................................................... 43 Decentralization ...................................................... 43 Privatization ...................................................... 43 The Strategy of Reform in Waterways ...................................................... 45 The Impacts of the Regulatory Reform of the Ports Sector .......... ............................................ 46 Lessons learned....................................................... 47 Challenges A head ...................................................... 48 Chapter 5: Reform Options for Provincial Roads .................................................... 50 What is the Demand for Road Services in the Provinces? .............. ............... 50 What is the State of the Provincial Supply of Road Services? . ...... I 52 How Relevant is the National Experience for the Provinces? ............... A Strategy for the Reform of Provincial Road Management . ........................57 Tables 2.1 Summary Features of the Freight Railway Concessions 2.2 Bidding Criteria Used in the Railway Freight Concessions 2.3 Winning Bids for the Railway Freight Concessions 2.4 Summary Features of the Metropolitan Railway Concessions 2.5 Winning Bids for the Metropolitan Railway Concessions 2.6 Projected vs. Actual Railway Freight Volumes 2.7 Metropolitan Railway Performance Shortly After Privatization 2.8 Most Recent Performance of Metropolitan Railway Concessions 3.1 Summary Features of the Original Intercity Road Concessions 3.2 Intercity Road Concessions 3.3 Summary Features of the Buenos Aires Access Road Concessions 3.4 Buenos Aires Access Road Concessions 3.5 Aggregate Traffic Flows for the Intercity Road Concessions 3.6 Toll Revenue in the Intercity Road Concessions 3.7 Final Price Evolution of Gasoline and Diesel Fuels 4.1 Summary Features of the Port Terminal Concessions of Puerto Nuevo, Buenos Aires 4.2 Buenos Aires Port Terminals Concessions 4.3 Perfornance Indicators of Labor Productivity in the Port Sub-Sector 4.4