(Bloomberg) — A long-awaited tender to upgrade a major waterway that ships crops worth tens of billions of dollars a year to global markets is coming under fierce criticism, including from two suitors that accuse Argentina’s government of favoring the current contractor.
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President Javier Milei’s administration started a tender process in November for a 30-year contract to keep bulk carriers sailing up and down the Parana River. Dredging companies have been waiting to bid on a new contract after the last one expired in 2021. They have until Feb. 12 to apply.
DEME of Belgium Rohde Nielsen A/S from Denmark allege that the terms of the auction suit rival Jan de Nul NV to such an extent that it’s almost impossible for anyone else to compete. The bidding process is also being criticized by Argentine congressmen and shipping and port authorities.
Milei’s office didn’t immediately respond to a request for comment, nor did a spokesman for the National Agency of Ports and Waterways.
Jan de Nul, also based in Belgium, declined to comment on the allegations through an outsourced PR representative, saying only that it is preparing a competitive bid and highlighting the work it has done since the 1990s dredging the Parana River to spur Argentine exports.
The international tender for a new 30-year license includes a key provision to deepen the Parana’s navigation channel by 3 feet (0.9 meters). While that extra depth would allow Argentina to send bigger cargoes of soy and corn from its export hub around the riverside city of Rosario, export and maritime groups want it dug even deeper in order to fully load Panamax ships with soy meal and allow passage of larger vessels.
Argentina is the world’s largest supplier of soy meal for livestock feed and soy oil for food and biofuel. A bigger channel is crucial for the nation to stop losing ground to neighboring Brazil’s agricultural boom, especially since river levels have been ebbing because of a lack of rain, causing ships to run aground.
DEME petitioned a federal judge earlier this month to suspend the tender, accusing the government of drawing up a series of conditions that only Jan de Nul can meet.
The government has overseen maintenance of the river channel since 2021, outsourcing the dredging work to Jan de Nul. One particular grievance of DEME and Rohde Nielsen is a condition that applicants should have experience in dredging stretches of river of more than 250 kilometers (155 miles). They say only Jan de Nul fits the criteria.
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“There’s no doubt that this requirement constitutes an illegitimate barrier to competition,” lawyers for DEME wrote.
A judge denied DEME’s petition for an injunction Wednesday after hearing from the government, saying the issue needs more thorough scrutiny. DEME said it would appeal.
‘Made-to-Fit’
In a separate complaint addressed to Milei and cabinet officials, DEME also wrote that “it is clear and evident that what we have before us is a made-to-fit tender,” and that Jan de Nul’s victory “will be a mere formality.”
Nielsen, in its own request to the government to nullify the auctioning of the contract, said the terms are “irrational and go against egalitarian principles of a public tender” by “restricting competition between eventual bidders to benefit just one.”
Congressmen have echoed the dredgers’ accusations and asked a public prosecutor to investigate.
There are also question marks over a clause that prohibits bids from state-controlled companies. That bars involvement by China’s CCCC Shanghai Dredging Co., which has previously expressed an interest in dredging the Parana.
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