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Copyright by Franco P. Di Biase 2016 The Thesis Committee for Franco P. Di Biase Certifies that this is the approved version of the following thesis: A Strategic Approach to Improving Argentina’s Roadway Infrastructure Financing APPROVED BY SUPERVISING COMMITTEE: Supervisor: Charles Michael Walton Randy Machemehl A Strategic Approach to Improving Argentina’s Roadway Infrastructure Financing by Franco P. Di Biase, B.E. Thesis Presented to the Faculty of the Graduate School of The University of Texas at Austin in Partial Fulfillment of the Requirements for the Degree of Master of Science in Engineering The University of Texas at Austin May 2016 Dedication A la mamma e al babbo, che mi hanno insegnato che nella vita tutto è possibile se si fa con amore e dedizione; a mio fratello e alle mie sorelle che sono sempre nei miei pensieri e sono i responsabili di volermi superare e dare sempre il meglio di me; alla nonna Lucia, al nonno Giovanni, a la abuela Mary, al abuelo José, alle nipotine, cugini, parenti e famiglia acquisita, perché la famiglia è tutto nella vita; a mis amigos, que son la familia que uno elige; alla famiglia di Austin, Texas; to all the amazing people that I met these past years and to those that I will meet in the years to come. Acknowledgements I would like to thank my academic advisor Dr. C. Michael Walton for all the guidance and support during my time at The University of Texas at Austin [UT Austin]. This thesis would not exist if it was not for his “Transportation Systems Management” course. It inspired me to concentrate on the transportation policy and financing issues in my home country, Argentina. I would also like to thank Dr. Jorge Prozzi for offering me this opportunity to pursue my Master’s degree here at UT Austin, and for allowing me to join his research group, which gave me first-hand exposure to USDOT and TxDOT projects. I would like to extend my appreciation to Dr. Randy Machemehl for agreeing to be my thesis reader, as well as all my UT Austin professors, and Transportation Engineering program faculty for sharing their knowledge with me. I would also like to extend my gratitude to BEC.AR and UT Austin: without your scholarship programs this experience abroad wouldn’t have been possible for me. It was an honor to be awarded with The Argentine Presidential Fellowship in Science & Technology, which, as part of the BEC.AR program, is funded by Argentina’s Presidential Cabinet and administered by Argentina’s Fulbright Commission. I would also like to thank the International Road Federation for their financial support and for selecting me a member of the prestigious IRF Fellowship Class of 2015. The IRF Road Scholar Program was a once in a lifetime experience I will never forget. To Marcelo E. Lascano Kežic, Arturo Papazian, and Diego Roisinblit, I truly appreciate the time you took to write recommendation letters for me. Thank you for believing in me, and helping me make my dream of studying abroad come true. v I would like to thank the engineering firms I worked with these past years, especially Halcrow, a CH2M Hill Company, who gave me the opportunity to work globally. It was a pleasure to learn from the most insightful professionals from all over the world and work on such challenging projects. I will be eternally grateful to the whole CH2M family. I extend my appreciation to the School of Engineering at the University of Buenos Aires, more specifically all the Transportation Department professors, for providing me with the best possible education during my Bachelor’s degree studies. Last, but not least, I would like to thank all those who encouraged me in this adventure abroad, giving me endless confidence and support, both when making this decision and during my two amazing years at UT Austin. vi Abstract A Strategic Approach to Improving Argentina’s Roadway Infrastructure Financing Franco P. Di Biase, M.S.E. The University of Texas at Austin, 2016 Supervisor: Charles Michael Walton The cyclic economic crises in Argentina have not allowed continuous funding policies for the development, operation, and maintenance of the ground based transportation system. In addition, the inadequate financing system and imbalances introduced gradually in the last 12 years, have set the transportation network into a crisis. The assigned resources are insufficient to maintain and develop the transportation system as required for the country’s growth. In order to improve this situation, a long term funding policy should be established as well as conditions to increase public transportation and toll fares, which will encourage private participation and efficiency in the service operation. The purpose of this thesis is to first examine the organization required for financing, promoting, regulating and delivering transportation programs and services in Argentina, and then propose measures to set a long term funding policy for the national roadway system. vii Table of Contents List of Tables ......................................................................................................... xi List of Figures ...................................................................................................... xiv 1. INTRODUCTION 1 2. ORGANIZATIONAL STRUCTURE 7 2.1 Introduction ............................................................................................7 2.2 Federal Government...............................................................................7 2.2.1 Historical background .................................................................12 2.3 Provincial Government ........................................................................21 2.4 Local Government ...............................................................................21 2.5 United States Organizational Structure ................................................21 2.6 Conclusions ..........................................................................................24 3. GROUND BASED TRANSPORTATION INFRASTRUCTURE IN ARGENTINA 25 3.1 Introduction ..........................................................................................25 3.2 Roadway System ..................................................................................25 3.2.1 Network configuration ................................................................25 3.2.2 Network under concession ..........................................................37 3.2.2.1 Highway Concessions 1990 – 2003 ..............................38 3.2.2.2 Highway Concessions 2003 – 2010 ..............................40 3.2.2.3 Highway Concessions 2010 – 2016 ..............................41 3.2.3 Roadway Indicators ....................................................................44 3.3 Public Transportation ...........................................................................46 3.3.1 Railway System ..........................................................................46 3.3.2 Bus System..................................................................................52 3.3.3 Other Systems .............................................................................53 viii 4. GOVERNMENT REVENUE 55 4.1 Introduction ..........................................................................................55 4.2 Revenue streams for National Administration .....................................56 4.3 Tax Revenue at federal and provincial level ........................................67 4.3.1 Shared (Co-Participated) Taxes ..................................................67 4.3.2 Non-Shared Taxes .......................................................................70 4.3.3 Specifically assigned Taxes ........................................................70 4.3.3.1 Liquid Fuel and Natural Gas Tax (Fuel Tax) ................74 4.3.3.2 Gasoil and LNG for automotive use tax (Gasoil Tax) ..76 4.3.3.3 .. Transferal or import of gasoline and natural gas for CNG production Tax (FIH Tax) ..................................................77 4.4 Conclusions ..........................................................................................77 5. FUNDING GROUND BASED TRANSPORTATION 79 5.1 Introduction ..........................................................................................79 5.2 Funding System ...................................................................................79 5.2.1 SIT Resources .............................................................................82 5.2.2 Subsidies .....................................................................................89 5.2.3 DNV Resources ..........................................................................91 5.2.4 Investment in Roadway Infrastructure ........................................93 5.2.5 Historical background (2001-2014) ............................................94 5.3 Conclusions ........................................................................................108 6. HOW TO IMPROVE ARGENTINA’S ROADWAY FUNDING 109 6.1 Introduction ........................................................................................109 6.2 Recommendations ..............................................................................110 6.2.1 Fare updates ..............................................................................111 6.2.2 Subsidy reductions ....................................................................112 6.2.3 Specific taxes ............................................................................113 ix 6.3 Conclusions ........................................................................................114