Milei’s infrastructure plans for Vaca Muerta: freight train and aqueduct

The future infrastructure minister said they will seek private financing in an ‘open access’ scheme to prioritize railway cargo transport over trucks in the shale oil reserve

Guillermo Ferraro, president-elect Javier Milei’s pick for infrastructure minister, described Vaca Muerta as the “core” to plan freight transport in Argentina and announced two developments the La Libertad Avanza (LLA) administration is interested in pursuing: the North-Patagonian train and an aqueduct. While these projects have long been discussed in the sector, the difference now lies in the logic behind it: financing will be private. 

In a TV interview, Ferraro laid out his vision for financing infrastructure during Milei’s upcoming administration. 

“Everything the private sector can do, the private sector will do,” he said. “Wherever there’s demand, there is an investment opportunity.” 

According to Ferraro, who led the Argentine branch of the multinational consulting firm KPMG, the role of the state is to “organize” between the private sector and public interest projects. Freight trains will be one of their infrastructure priorities, and he used the Vaca Muerta shale oil field as an example. 

“We need to use the train as a cargo transfer instrument. For example, if I were the one who designed the infrastructure for a British company at the beginning of the last century, I would say that today the cargo core is Vaca Muerta, a key stop for millions of tons of sand, but also metal-mechanical elements to supply the gas and oil fracking industry, which today is done by trucks. You need a train to go in and out,” he stated.

When asked about how to finance such an initiative, he said that funding should be private and that the industry is similar to the oil industry, which generates “millions of dollars.” Regarding the origin of the funds, he mentioned a mechanism known as “open access.” 

“Freight trains in the world are profitable, we are thinking about Open Access, the possibility of differentiating the tracks’ infrastructure from what goes above them — that is, to be able to freely contract the cargo train tracks,” said Ferraro.

He also claimed to have participated in these types of projects: “Railway lines integrate us with the region. There are projects with Chile through the railway line and integration with Brazil. I experienced it as a private party with Paraguay, a train that moves the soybeans out of Chaco and connects with the north of the country. The Formosa part is still due. Since there is valuable cargo, an opportunity arises for the private sector, naturally. Because for a public official, it is easier to fight to obtain an allocation from the national budget.”   

In fact, he said, it was precisely in a project of this type where he met the future president and his future chief of staff, Nicolás Posse, back when both worked at the América Corporation.

 “With Milei, we worked on a US$5 billion freight train project, a binational private initiative with Chile.” According to Ferraro, a country like Argentina needs about 15 points of GDP in infrastructure investment. “Here, public works are 1.5% of GDP. No budget can sustain it, you’ll need to turn to multilateral organisms, the World Bank and sectorial chambers,” he said.

On the other hand, regarding Vaca Muerta, he also mentioned the need for an aqueduct, “so as to not carry water in trucks.”

However, he said that the logic is different in the case of passenger trains, as they may involve state intervention. 

“Passenger transport in the world is subsidized. If the repayment price does not fully cover the investment and the state considers it to be of public interest, it will subsidize it, but it will be a welfare policy, not public works, subsidizing demand and not supply.”

Originally published in / Translated by Agustín Mango


All Right Reserved.  Buenos Aires Herald