ONCE AGAIN, Argentine politicians have scored an own goal in their attempts to deal with the reletting of operating concessions on the suburban railways serving Buenos Aires. The issue of being allowed to charge higher fares to pay for badly-needed investment lies at the core of the problem as the government fears that increased ticket prices will damage its popularity.
During the last few months of the previous government, decisions were taken to stop paying subsidies to the suburban operators, although new contracts were agreed for Metrovías, TBA and Ferrovías. The opposition Alianza group complained about the arrangements because it feared that agreement to charge higher fares would have an adverse impact on its popularity if it succeeded in winning the election last October. In the event, only the Metrovías contract had been approved by all the parties by the time that voting took place. This was because Alianza, as the party holding the reins of power in the capital, understood that the Buenos Aires subway really did need investment.
What Alianza failed to understand was that voters also make considerable use of the city’s suburban railways. So when it won the election and took office, it imposed a 120-day moratorium on implementing the contracts (RG 3.00 p141), at the same time finding that it was caught in its own trap. It has never made up the subsidies unpaid by the previous government, and now needs around US$200m to bridge a gap that is steadily widening.
The 120-day moratorium ended in June with nothing resolved. Legally, this means that the contracts renewed by the last government are still in force, and the concessionaires have the right to raise fares and so fund the investment. But the concessionaires are unwilling to anger the government for fear of reducing their chances of receiving subsidy, the result being stalemate.
This is bad news for Buenos Aires commuters, and ultimately for the Argentine government. Money to keep the trains moving is running out, and at one moment in July Ferrovías only had sufficient fuel left for its locos to keep them intraffic for 48h. Maintenance problems look inevitable, and this is bound to have an effect on quality of service.
The freight concessionaires are watching this farce while they wait their turn to renegotiate their contracts. So far they have been waiting for two years. So the success story of privatisation in Argentina may be about to end - unless the government has the courage to tackle the problem now rather than leave it to get worse.
