Argentina Infrastructure Report Q3 2009

Argentina Infrastructure Report Q3 2009

BMI estimates that Argentina’s construction industry grew at just under 11.11% in real terms in 2008.
However, we have further downgraded our forecasts in 2009, and now expect a 3.38% deceleration in real
construction growth in 2009. BMI forecasts that the market will not return to real growth until 2011, with
the market eventually reaching a value of US$21.7bn by 2013. Indeed, construction data indicates that
President Kirchner’s huge infrastructure spending plan has yet to have an impact on the sector. For
example, construction permits were down 41% in Buenos Aires in the first three months of year,
according to research company Abeceb.com (as reported by Bloomberg). On a positive note, there are
some signs that the market is beginning to recover. Cement sales, for instance, grew by 11% month-onmonth
(m-o-m) in March 2009. Overall, we expect the construction sector to expand by a Compound
Annual Growth Rate (CAGR) of 3.14% between 2008 and 2013 in local currency terms.
Still, Argentina has witnessed the sharpest drop in home sales in Buenos Aires since 2002. According to
the Association of Public Notaries of Buenos Aires, home sales dropped 54% in February from a year ago
– the sharpest decline since the 2002 economic crisis. Fausto Spotorno, an economist at Buenos Airesbased
research company, Orlando Ferreres & Asociados, stated that declining real estate sales data is
signalling that construction will continue to fall. Retail sales are down, consumer confidence is down and
private sector credit growth has slowed to a standstill. The news supports BMI’s view that the Argentine
economy is likely to suffer substantially in 2009. We have revised down our real GDP growth forecast to
-1%.
In the energy sector there is positive news, according to the minister of Federal Planning, Julio De Vido,
with the construction of a fourth nuclear power plant (NPP) in progress. The announcement is in line with
the country's strategy to further develop its nuclear power sector. The national news agency of Argentina,
Télam, states that the new power plant is part of the government's key strategy to develop the nuclear
power sector. Further details of the planned project have not yet been released.
Meanwhile, in April 2009, Chile's public works minister, Sergio Bitar, stated that the Argentine firm,
Corporación América (CASA), has presented due diligence studies for the Trasandino Central rail
tunnel project to Chile's public works ministry (MoP) and to the Argentine government (reported by
Business News Americas). According to the feasibility study, the first stage of the project includes
construction of a tunnel with a 10 million tonnes per year (Mt/y) capacity. In the second and third stage of
the project, the tunnel will be expanded to a 20Mt/y and 70Mt/y. The total project is expected to cost
US$3-4bn.

Executive Summary ...5
Market Overview..6
Argentina . 6
Global Overview ..8
Governments to the Rescue: The Global Surge In Infrastructure Spending.. 8
Table: Infrastructure Stimulus Plans List ... 9
SWOT Analysis..15
Argentina Infrastructure SWOT.. 15
Argentina Political SWOT ... 16
Argentina Economic SWOT . 17
Argentina Business Environment SWOT... 18
Major Infrastructure Developments and Key Projects ..19
Transport Infrastructure Overview.. 19
New And Ongoing Projects.. 20
Airports.... 20
Ports . 21
Road Networks 22
Rail Networks . 24
Energy and Utilities Infrastructure Overview 25
New and Ongoing Projects .. 27
Power Plants and Transmission Grids...... 27
Pipelines .. 29
Water 30
Construction Overview ...... 32
New And Ongoing Projects.. 32
Residential Construction...... 32
Commercial Construction.... 33
Tourism Construction ... 35
Major Projects....36
Table: Argentina – Major Infrastructure Projects . 36
Industry Forecast Scenario ....39
Argentina’s Infrastructure Industry Forecast .. 39
Business Environment ...41
Regional Overview – Latin America 41
Table: Americas Regional Infrastructure Business Environment Ratings... 44
Limits of Potential Returns .. 44
Risk to Realisation of Returns..... 45
Project Finance Ratings: Outlook for the Americas .... 46
Table: Design And Construction Rating ... 48
Table: Commissioning and Operating Rating.. 50
Table: Overall Project Finance Rating..... 52
Foreign Direct Investment . 53
Labour Force 54
Legal Framework. 54
Tax Regime ... 55
Macroeconomic Outlook .56
Table: Argentina – Economic Activity ...... 58
Political Outlook59
Domestic Politics . 59
Table: Argentina Political Overview . 61
Company Monitor.....62
Skanska Latin America . 62
Roggio ..... 64
Techint ..... 65
BMI Forecast Modelling..67
How We Generate Our Industry Forecasts .... 67
Construction Industry ... 68
Sources .... 68
Business Environment Ratings.... 69
Ratings Overview... 69
Table: Infrastructure Business Environment Indicators 70
Project Finance Ratings Methodology.... 71
Design & Construction Phase..... 72
Historical Data & Forecasts 73
Commissioning and Operating Phase- Commercial Construction...... 74
Commissioning and Operating Phase - Energy and Utilities 75
Commissioning and Operating Phase –Transport .. 77