| Work Detail |
Public works in the times of Javier Milei: a key project to improve the quality of life of 4.5 million people is delayed.
This is the Riachuelo System, managed by AySA; the World Bank has already allocated US$1,227 million to finish it, but delays in payments to contractors affected the work.
The change in management and the order of President Javier Milei to reduce to a minimum – and if possible, eliminate – the funds for public works have already left consequences: they left the “Riachuelo System” on the verge of paralysis, a mega project of AySA that, when put into operation, could improve the quality of life of one and a half million inhabitants of the Buenos Aires metropolitan area, with indirect benefits for another 4.5 million users. With an additional fact: the World Bank transferred funds to Argentina to finish the work, but the contractors are paid in dribs and drabs and may be in a position to terminate the contract, according to what four sources familiar with what has happened during these months confirmed to LA NACION.
All eyes are on the Ministry of Economy, which delayed the payments to complete “lot 2” of the megaproject. It was in arrears on several work certificates, including those for April ($1.7 billion), May ($6 billion) and June ($4.8 billion). Until it unblocked a transfer in mid-September with which it avoided reaching 90 days of non-compliance. Exceeding that deadline would have enabled the contractors to sue the national State in court, although with this partial disbursement the Treasury only gained a few weeks. On the 1st of this month it had to face another deadline, which, when consulted by LA NACION, it stated that it will pay in the next few days.
“The problem is not that the funds [that the World Bank provided] have been diverted, nor is it a problem of AySA or Acumar [by the Matanza Riachuelo Basin Authority], but the limit of the budgetary credit. And that is something that the Ministry of the Economy defines,” indicated a source who knows, from the inside, the development and execution of the megaproject.
From the Treasury Palace they confirmed to LA NACION the delays in payments, but they charged against the previous administration, led by Sergio Massa. “When taking office, the work was stopped due to non-payment since August 2023,” they indicated. In March, a debt of $15,460,957,664.78 was paid,” they specified. And what happened to the pending payments from March onwards? Official response: “The payment of the June certificate that had a payment schedule scheduled for October 1 for $4,820,612,888 is late. The delay was caused by a lack of recognition of the SWIFT number of the house of origin, plus delays in the crediting in the account designated for its disbursement; planning to regularize its disbursement on October 7.”
AYSA, meanwhile, offered a similar but different response: after clarifying that ACUMAR operates as the executing unit that manages the loan and the funds, which AySA then uses to make the payments, they told LA NACION that the certificates that expired in July and August have already been cancelled. Now, they added, they are “waiting for ACUMAR to transfer the funds in the next few weeks to regularize the certificate that expired in September,” and then indicating that “despite these delays, the work continued its execution” and that ACUMAR “is managing with the Ministry of Economy the extensions of the budgetary credit, in order to guarantee the continuity of the project.”
X-ray of public works
The area planned for the “Riachuelo System”
The area planned for the “Riachuelo System”
courtesy of AySA
Conceived during the dawn of Kirchnerism, the “Riachuelo System” is an accurate x-ray of how public works work in Argentina. It began to take shape in 2008 with the promise of finishing it in four years, but it was put out to tender in 2011, signed in 2014, and the inauguration was planned for 2019. It was then postponed to 2022. And in September 2023, the then head of AySA, Malena Galmarini, and her husband, the then minister Massa, celebrated the “start of the implementation process,” in the middle of Massa’s presidential campaign. But the “start” was not such. The “Riachuelo System” remains non-functional today.
Due to its complexity, the megaproject was conceived in three parts or “lots.” Lots 1 and 3 were from the beginning under the control and financing of the World Bank, while “lot 2” was under the funding and control of Néstor Kirchner and Julio De Vido, who handed it over to friendly construction companies. It faced all kinds of ups and downs and today, after handing over control and funding to the World Bank, its execution improved and the latest official data indicate 86% progress, although updated data would reach 92 percent.
Now, those involved say that the works could be completed “in months”, provided there are no delays or unforeseen events. Thus, 2025 could be the inaugural year. But they cannot guarantee it either, since they depend on the funds that must be released by the head of the Treasury, Luis Caputo, who follows the restrictive guidelines of the Casa Rosada.
The guidelines set by Milei are clear. “Public works are coming to an end. In other words, we have no money. We have to cut back, because the fiscal deficit is very high,” he said at the end of November, already as president-elect. And Caputo acted accordingly: he reduced the flow of funds to a minimum, with the consequent slowdown or paralysis of public works in different parts of the country.
The “Riachuelo System” is, however, different. Because its financing does not come from the national State coffers, but from the World Bank, which has already allocated the funds to complete the works, to which it assigns priority, due to the years of delay and the amount. It is close to US$1,227 million, its largest financing in all of Latin America and the Caribbean.
For the executives of the World Bank, meanwhile, the megaproject brings challenges and recurring headaches. They must deal with the Argentine reality and with the questions coming from Washington, where they demand answers and results. But they prefer to keep their eyes on the goal: “The project is still being executed, there was some delay given the change of administration, but the work continues and we hope it will be inaugurated in 2025,” they indicated in response to a query from LA NACION.
The results in recent years, however, are far from what was expected, as stated in the reports issued by the General Audit Office of the Nation (AGN) and the General Comptrollers Office of the Nation (Sigen) in 2018 and 2021.
The Sigen report exposed, among other shortcomings, the “poor level of planning and programming of tasks” of the Riachuelo System, the “successive modifications” that the mega-project suffered, its “significant delays,” “the price redeterminations generated as a result” during the presidencies of Cristina Kirchner, Mauricio Macri and Alberto Fernández, and even a direct contract for 14 million euros.
The three sections or “lots” registered problems, but with obvious differences in progress and transparency, in addition to periodic modifications of deadlines and costs:
Lot 1: controlled and financed by the World Bank, it included the excavation of a tunnel between 12 and 24 meters deep, along 30 kilometers of the so-called Left Bank Collector and Baja Costanera Collector Diversion, plus complementary works. It will transport the effluents from the left bank of the Riachuelo and the city of Buenos Aires, plus an extension of the Baja Costanera system, to Dock Sud. Winning consortium: the Italian Ghella and the Argentine IECSA, the construction company that belonged to Angelo Calcaterra, later prosecuted in the local section of Lava Jato and the Cuadernos case, in which he has just benefited. The contract began to be executed in 2015 and had to be completed in 48 months, a period that was extended. The work was completed in December 2022.
Lot 2: controlled and financed by the national State and, after years and marches and countermarches, by the World Bank. It includes the construction of a pumping station for the inflow of effluents that reach Dock Sud through the Lot 1 tunnel, plus a Riachuelo Pretreatment Plant and a pumping station for the outflow of these effluents. All on land reclaimed from the Río de la Plata. The winning consortium? Esuco, JCR, CPC and C&E – all close to Kirchnerism. During the Macri era, Ghella was called in and CPC, Cristóbal Lópezs construction company, was replaced by Impregilo, the Italian group partner of Sideco, the Macri familys holding company, in the Yacylec firm. The contract began to be executed in 2015 and was due to be completed in 48 months. Progress of the work: 92%.
Lot 3: controlled and financed by the World Bank, it included the construction of the Riachuelo Outfall that will transport the pre-treated effluents from the Lot 2 works in Dock Sud along 12 kilometers of subfluvial outfall until they are distributed into the waters of the Río de la Plata. Winning consortium: Impregilo SpA, Chediak –whose owner, José Chediak, was later prosecuted in the Cuadernos case– and Healy Company. The contract began to be executed in 2015 and was to be completed in 48 months, a period that was extended. The work was completed in March 2023.
Today, with the works completed, “lots” 1 and 3 face other challenges: they have expired original warranty periods and have been extended for the second time, awaiting completion of the works on “lot” 2, which in turn is about to begin final tests with sewage liquids. But the halt in construction and delays in payment of certificates threaten to postpone the end once again.
An example? According to sources familiar with the negotiations, the contractor consortium warned that if the June certificates were not paid by September 16, the 90 days of non-compliance would be up and it would initiate contractual termination actions, attributable to the client. That is, to the national State.
The problem is that money for public works is not abundant during the first months of Mileis administration. And this brings with it the dilemma of the short blanket. And this is how the Ministry of Economy cuts back on funds and Acumar turned over the few funds it had available to meet deadlines for the works on the Liquid Effluent Treatment Plant (Pteli). As of December 31, this project registered 79% progress, according to Acumars PISA monitor.
Hugo Alconada Mon
Source: https://www.lanacion.com.ar/ |
