CAF and Universidad ORT – Uruguay organized conference to analyze transportation infrastructure in Uruguay

(Montevideo, September 24, 2013). In the framework of the agreement between CAF, Development Bank of Latin America, and the  Universidad ORT de Uruguay, a conference was held at the Pocitos headquarters of the ORT, regarding Transportation Infrastructure.         

The event started with the presentation of a diagnostic report of the sector requested by CAF, entitled Uruguay: Analysis of the Transportation Sector, with comments from specialists on the subject. The objective of the meeting was to evaluate the current situation of the sector in Uruguay, and the prospects for the future, identifying opportunities and obstacles for its development.  

CAF's Director Representative in Uruguay, Gladis Genua, pointed out that this cycle of conferences "allows for the discussion of essential elements for the country's strategic sectors and, in this specific case, of transportation infrastructure, one of the central subject matters that CAF has been intensely working in Latin America for over ten years".  

At the same time, Gaston J. Labadie, ORT's Dean of the Management and Social Studies Faculty, highlighted the role of these types of conferences "thinking about the needs and prospects of critical sectors linked to the development of Uruguay". 

Diagnosis and prospects 

Carlos Garramon, presenting the main report, stated that Uruguay's road network is the densest in the region, with 2 km/ inhabitant and 38 km x km2, reproducing the "prairie-port" vision with a network that converges to the port of Montevideo, with the only exception of Route 1, the Interbalnearia (Inter-coastal), and Route 9, that enable the interconnection with Argentina and Brazil. 

At the same time, the railroad network is 1,600 km long and in operating conditions, but transports only 5 percent of the cargo. The report also points out that the port network is saturated, and the lack of flights limits air connectivity, which mobilizes around 30 thousand annual tons of cargo.  

With respect to highway transportation, Garraon explained that "the demand for the use of the highway network increases close to a cumulative 10 percent annually, to a great extent as a result of forestry and grain production", and in this respect, the report concludes that to maintain a highway network operation under efficiency conditions, 0.7 percent of GDP should be invested annually, implying an investment of USD 950 million toward 2025 for maintenance and renewal of the highway network. However, the current investment reaches close to 0.5 percent of GDP, generating an annual gap of close to USD 260 million toward 2025.     

Pablo Gutierrez, Vice-President of the Corporación Nacional para el Desarrollo (CND) (National Development Corporation), who was the first commentator of the report, pointed out that the CND, through the Corporación Vial del Uruguay (CVU) Highway Corporation of Uruguay) "has invested USD 164 million between August 2011 and 2013, of which USD 101 million are for maintenance contracts and the rest for route rehabilitation, bridges, lighting, and security".  In this respect, he highlighted that with the support of CAF and FONPLATA, a consultancy is being carried out "to travel through 2,500 Km of highways to clearly evaluate the state of conservation and short and medium term investments needs".  

Gutierrez explained that, in addition to the traditional public works concessions made by national and departmental governments, there is now a scheme of public-private participation which "in the future, we expect will play an important role", just as the "infrastructure co-financing schemes with the private sector", and explained the example of the case of the Claldy diary company and the Intendant's Office of Rio Negro where, "in the framework of the public-private trust, managed by the CNF, resources are being channeled for the conservation of rural roads".  

At the same time, Mario Baubeta, President of the Centro de Navegacion (Navigation Center), stated that  "the best thing a country can have are state policies and, if possible, achieved by national agreement", explaining that "a state policy for the port and logistic fluvial-maritime sector is essential to support a country's international trade". In this respect, he underlined the importance of the ports law and the law on free trade zones as state policies, but explicitly stated the lack of "promotion for a national merchant navy" stating that "if we want to be an option in the region, we have to prepare ourselves, it is a long term task that requires a large investment".  

The meeting closed with the participation of CAF's senior Transportation specialist,  Jorge Kogan, who underlined that the report indicates that "Uruguay has the highest highway transportation costs in the region", and this is due to the fact that "Uruguay has the highest oil prices in all of Ibero-America, and the motorization indices are high, traffic is growing, motorcycle motorization in notably increasing, and this worsens road accidents, which are also a part of the infrastructure because they generate costs for the economy, which could be invested in infrastructure if they were saved".  

Finally, Kogan stated that "investment in infrastructure in Uruguay with respect to GDP is the lowest in Ibero-America, close to 1.5 percent, or 1.8 percent of GDP, compared with the average of 3 percent in Latin America. However, to cover the region's gap regarding infrastructure, to be able to address its needs, at least 5 percent of GDP should be invested, implying double of what the region currently invests, and four times Uruguay's current investment." To reach these objectives, it is necessary that "Uruguay as a society becomes aware of this situation, and that the interests of the different sectors converge to find an adequate response to the opportunities offered in the present."  

This conference is part of the Public Policy Discussion Cycle organized by CAF, Development Bank of Latin America jointly with the Universidad ORT-Uruguay. These are academic sessions whose objective is to analyze the current situation in Uruguay with respect to specific subjects, and to evaluate its development prospects. The first conference dealt with the energy sector, the second on logistics, and the next, which will be held in November, will present a debate regarding the management of natural resources and the country's productive matrix. 

In the following link you may access the complete video of the conference, while by clicking here you may access the summary document of the conference.