Improvement and mitigation of river transport infrastructure
Business Model Description
Invest in infrastructure to improve the main river routes, sensitive to droughts, through dredging and maintenance of natural navigation channels through public-private partnerships.
Expected Impact
Increase waterway mobility benefiting the economy as a whole and reducing competitivity lags.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Paraguay: Rio Paraguay
- Paraguay: Rio Paraná
Sector Classification
Infrastructure
Development need
Needs persist in sanitation, housing, waste management and transport infrastructure. Improved sanitation reaches 50% of homes and the case of improved water to 79%. The housing deficit affects a significant swath of the population, as there is a current deficit of 800,000 homes. In terms of solid waste, most of the waste generated at the national level is not managed (I).
Policy priority
Infrastructure is one of the most important aspects of development policies, and Paraguay demonstrates this through the following policies: the Institutional Strategic Plan of the Ministry of Public Works and Communications (II), and the Master Plan of Transport 2013 (III).
Gender inequalities and marginalization issues
gender inequality in access to infrastructure is notable, especially in rural areas. Women face significantly lower rates of economic activity and labor market participation compared to men. In addition, women in rural areas live in vulnerable working conditions and without access to social security (IV).
Investment opportunities introduction
the main areas of investment opportunities were identified to address gaps in the sector, including: solid waste management, affordable housing, road and river infrastructure, and wastewater management (V).
Key bottlenecks introduction
due to the current infrastructure deficit, Paraguay presents High investment requirements on infrastructure deployment, approximately US$2.8 billion annually (VI).
Infrastructure
Development need
Needs persist in sanitation, housing, waste management and transport infrastructure. Improved sanitation reaches 50% of homes and the case of improved water to 79%. The housing deficit affects a significant swath of the population, as there is a current deficit of 800,000 homes. In terms of solid waste, most of the waste generated at the national level is not managed (I).
Policy priority
Infrastructure is one of the most important aspects of development policies, and Paraguay demonstrates this through the following policies: the Institutional Strategic Plan of the Ministry of Public Works and Communications (II), and the Master Plan of Transport 2013 (III).
Gender inequalities and marginalization issues
gender inequality in access to infrastructure is notable, especially in rural areas. Women face significantly lower rates of economic activity and labor market participation compared to men. In addition, women in rural areas live in vulnerable working conditions and without access to social security (IV).
Investment opportunities introduction
the housing deficit affects a significant swath of the population, with the supply of social housing being insufficient, as there is a current deficit of 800,000 homes (VIII).
Key bottlenecks introduction
due to the current infrastructure deficit, Paraguay presents High investment requirements on infrastructure deployment, approximately US$2.8 billion annually (VI).
Pipeline Opportunity
Improvement and mitigation of river transport infrastructure
Invest in infrastructure to improve the main river routes, sensitive to droughts, through dredging and maintenance of natural navigation channels through public-private partnerships.
Business Case
Market Size and Environment
The Paraguay Paraná Waterway measures a total of 3,442 km
The Paraguay Paraná Waterway measures a total of 3,442 km, of which 557 km cross Paraguayan territory, 375 km Paraguay-Argentina territory, and 332 km Brazil-Paraguay. Paraguay presents 75% of the navigability problems in its territory (2).
Indicative Return
10% - 15%
In a study carried out in 2010 for the concession to improve navigation conditions on the Paraguay River (Pilcomayo Section in Formosa), the IRR varies between 7% and 26% as a long-term investment. (between 20 - 30 years old) (3).
Investment Timeframe
Long Term (10+ years)
An analysis of the cash flow associated with the duration of a concession for the improvement of navigation conditions on the Paraguay River (Section Pilcomayo to Formosa) showed a period of 20 years - 30 years (3).
Market Risks & Scale Obstacles
Capital - CapEx Intensive
Impact Case
Sustainable Development Need
The historic drought of the Paraguay River in 2020 had boats unable to navigate and threatened the country's economy (4).
Under the Paraguayan flag, more than 90% of the intra-zone cargo moves through the Hidrovía, that is, the cargo that enters and leaves Paraguay, Bolivia, Argentina, Brazil and Uruguay, with a traffic that exceeds 30 million tons per year (5).
It is necessary to guarantee navigability all year round. There is no dredging plan or a signaling and beaconing plan for the Hidrovía.
Gender & Marginalisation
Paraguayan rural production could be facing productivity lags due to river infrastructure issues (6).
Expected Development Outcome
Reduce the loss of exporting and importing companies caused by drought and low rivers.
Guarantee river logistics transport throughout the year.
Increase stability in the prices of products for the community in general.
Gender & Marginalisation
Improve the accessibility and connectivity of localities that depend exclusively on the waterway to connect with the rest of the country and neighboring countries.
Improve business opportunities of low income population and rural population.
Primary SDGs addressed
1.5.2 Direct economic loss attributed to disasters in relation to global gross domestic product (GDP)
1.5.4 Proportion of local governments that adopt and implement local disaster risk reduction strategies in line with national disaster risk reduction strategies
9.1.2 Passenger and freight volumes, by mode of transport
11.a.1 Number of countries that have national urban policies or regional development plans that (a) respond to population dynamics; (b) ensure balanced territorial development; and (c) increase local fiscal space
11.b.1 Number of countries that adopt and implement national disaster risk reduction strategies in line with the Sendai Framework for Disaster Risk Reduction 2015–2030
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Corporates
Indirectly impacted stakeholders
Public sector
Outcome Risks
Construction in rivers and river roads could alter the aquatic environment, loss of local, regional and global biodiversity (7).
Greater amount of water, soil and air pollution. A significant number of emissions, smog generation, ozone depletion, acidification, eutrophication and energy consumption (7).
Altering the work area of fishermen, with constructions, aquatic life could diminish and disappear, so that fishermen they must fish elsewhere (7).
It could generate an impact due to the emission of noise and vibrations (8).
Increase in the cost of living due to infrastructure improvements (8).
Impact Risks
Execution risks: > The Ministry of Public Works and Communications and the National Administration of Navigation and Ports must approve the works to be carried out in ports and river roads (9).
Stakeholders: > Severe environmental impacts (vegetation, water quality, fish community) (10).
Drop off: > High amount of capital required for investments (10).
Risks External: > Few government incentives can limit investment levels
Unexpected risks: > Specific regulations that limit scalability and lack of agreement between the member countries on access to the Waterway
Impact Classification
What
The outcome is likely to be positive because an improvement in river roads could reduce the sensitivity of logistics, and consequently the national economy, to droughts.
Who
Companies that mainly use river means of transport and people relying on waterways
Risk
Although the model is based on good evidence, external factors such as the disposition of the government can limit the extent of impact
Impact Thesis
Increase waterway mobility benefiting the economy as a whole and reducing competitivity lags.
Enabling Environment
Policy Environment
The National Development Plan 2030 - has as one of the transversal lines of axis III (Insertion of Paraguay in the world) regional economic integration: Its goals include, among others, increasing the efficiency of the port system and road transport (11).
The 2013 Transportation Master Plan - was prepared in order to promote ordering in the short, medium and long term of the development of infrastructure, transportation and logistics services (12).
Ministry of Foreign Affairs -coordinates actions and exchanges information and data to optimize the maintenance dredging tasks of the Paraguay River, as well as to support the operation in the Paraná river (13).
Financial Environment
Financing AFD PROINFRA - Financing for the acquisition of machinery to be used in hydraulic projects for periods of up to 10 years (17).
The IDB credit of $235 million, granted under the global multi-works program modality, has a repayment period of 25 years, a grace period of 7 and a half years, and an interest rate based on Libor (18).
Law 5102/13 provides incentives to private proponents of initiatives: Once the award has been made, reimbursement of accepted costs linked to the previous studies, bonus 3 to 10% of the score obtained with your offer (15).
Regulatory Environment
Law N ° 476- Code of Fluvial and Maritime Navigation, will govern the relations derived from the facts and legal acts referring to commercial, river or maritime navigation, in the administrative order (14).
Law No. 5102 Promotion of investment in public infrastructure and expansion and improvement of goods and services in charge of the state - establishes norms and mechanisms to promote, through public-private participation, investments in infrastructure public and in the provision of the services (15).
Law No. 6438 which establishes that as of February 13, 2020, the River Transportation Agreement for the Paraguay - Paraná Waterway will be in force (16).
Marketplace Participants
Private Sector
Engineering (Paraguay), CSI Ingenieros (Paraguay), T&C Ingeniería (Paraguay)
Government
Ministerio de Obras Públicas y Comunicaciones (MOPC), Ministerio del Ambiente y Desarrollo Sostenible (MADES), Ministerio de Industria y Comercio (MIC)
Multilaterals
BID, Banco de Desarrollo de América Latina (CAF), Banco Mundial (BM)
Non-Profit
Asociación de Centro de Armadores del Paraguay (38 empresas son propietarias de embarcaciones)
Target Locations
Paraguay: Rio Paraguay
Paraguay: Rio Paraná
References
- (I) PNUD. 2023. Asunción Sustentable, un proyecto transformador que mira hacia el futuro. https://www.undp.org/es/paraguay/noticias/asuncion-sustentable-un-proyecto-transformador-que-mira-hacia-el-futuro (II) Ministerio de Obras Públicas y Comunicaciones. 2014. Plan estratégico. https://www.mopc.gob.do/nosotros/plan-estrat%C3%A9gico/ (III) Gobierno Nacional de Paraguay. 2020. Actualización del plan maestro de infraestructura y servicios de transporte del Paraguay 2018 - 2028. https://www.mopc.gov.py/application/files/3816/3302/7534/Actualizacion_del_Plan_Maestro_de_Infraestructura_y_Servicios_de_Transporte_del_Paraguay_2018_-_2028_-_Informe_Final.pdf (IV) ONU Mujeres. s.f. Paraguay. https://lac.unwomen.org/en/donde-estamos/paraguay (V) Infraestructure Interviews. 2021. (VI) Marketdata. 2022. Paraguay debe invertir el 6% del PIB hasta el 2030 para cerrar brecha en infraestructura. https://marketdata.com.py/noticias/paraguay-debe-invertir-el-6-del-pib-hasta-el-2030-para-cerrar-brecha-en-infraestructura-89777/ (VII) MF Paraguay. 2022. Informe inmobiliario: Déficit, oferta, demanda y financiamiento. https://mf.com.py/medios/blog/informe-inmobiliario-deficit-oferta-demanda-y-financiamiento.html (VIII) Gobierno del Paraguay. 2014. Plan Nacional de Desarrollo Paraguay 2030. https://www.stp.gov.py/pnd/wp-content/uploads/2014/12/pnd2030.pdf
- (1) Ministerio de Obras Públicas y Comunicaciones & Banco Interamericano de Desarrollo. 2020. Actualización del Plan Maestro de Infraestructura y Servicios de Transporte del Paraguay. https://www.mopc.gov.py/application/files/3816/3302/7534/Actualizacion_del_Plan_Maestro_de_Infraestructura_y_Servicios_de_Transporte_del_Paraguay_2018_-_2028_-_Informe_Final.pdf
- (2) Gobierno de Argentina. 2020. HIDROVÍA PARANÁ-PARAGUAY. https://www.magyp.gob.ar/sitio/areas/ss_mercados_agropecuarios/infraestructura/_archivos/000071_Hidrov%C3%ADa%20Paraguay-Paran%C3%A1%20(HPP).pdf (Ministerio de Obras Públicas y Comunicaciones & Banco Interamericano de Desarrollo – BID, 2013)
- (3) Ministerio de Obras Públicas y Comunicaciones. 2010. Estudios para la Concesión del Mejoramiento de las Condiciones de Navegación en el Río Paraguay Tramo Pilcomayo – Formosa. https://documents1.worldbank.org/curated/en/348461468285001370/pdf/690050pt020and030ESW0P122325000PUBLIC0.pdf
- (4) BBC Mundo. 2020. La histórica sequía del río Paraguay que tiene barcos sin poder navegar y amenaza a la economía del país. https://www.prensalibre.com/internacional/bbc-news-mundo-internacional/la-historica-sequia-del-rio-paraguay-que-tiene-barcos-sin-poder-navegar-y-amenaza-a-la-economia-del-pais/
- (5) Mabel Álvarez. 2019. Hidrovía Paraguay-Paraná, arteria de la economía paraguaya. https://www.clubdeejecutivos.org.py/revista/hidrovia-paraguay-parana-arteria-de-la-economia-paraguaya
- (6) FAO. 2022. Inversión pública productiva en la agricultura en Paraguay. https://www.fao.org/paraguay/noticias/detail-events/en/c/1610739/
- (7) FAO. 2003. Descubrir el Potencial del Agua para la Agricultura. https://www.fao.org/3/Y4525S/y4525s00.htm#Contents
- (8) Fase S.R.L. 2018. RELATORIO DE IMPACTO AMBIENTAL(RIMA). https://www.mades.gov.py/wp-content/uploads/2018/09/7541_christian.bogado.pdf
- (9) Ministerio de Obras Públicas y Comunicaciones. s.f. Marco Estratégico. https://www.mopc.gov.py/index.php/institucion/marco-estrategico
- (10) Wetlands International. 2019. Environmental Impact Assessment on road construction in Almany Mires (Belarus) is flawed. https://europe.wetlands.org/news/environmental-impact-assessment-road-construction-almany-mires-belarus-flawed/
- (11) Gobierno del Paraguay. 2014. Plan Nacional de Desarrollo Paraguay 2030. https://www.stp.gov.py/pnd/wp-content/uploads/2014/12/pnd2030.pdf
- (12) Ministerio de Obras Públicas y Comunicaciones. 2014. Plan estratégico. https://www.mopc.gob.do/nosotros/plan-estrat%C3%A9gico/
- (13) Ministerio de Relaciones Exteriores. 2022. Paraguay y Argentina coordinan obras de dragado del río Paraguay para mejorar navegabilidad de cara al 2023. https://www.mre.gov.py/index.php/noticias-de-embajadas-y-consulados/paraguay-y-argentina-coordinan-obras-de-dragado-del-rio-paraguay-para-mejorar-navegabilidad-de-cara-al-2023
- (14) Congreso de la nación paraguaya. 1957. Ley No. 476. https://www.bacn.gov.py/leyes-paraguayas/985/codigo-de-navegacion-fluvial-y-maritimo
- (15) Congreso de la nación paraguaya. 2013. Ley No. 5102. https://www.bacn.gov.py/leyes-paraguayas/4669/promocion-de-la-inversion-en-infraestructura-publica-y-ampliacion-y-mejoramiento-de-los-bienes-y-servicios-a-cargo-del-estado
- (16) Congreso de la nación paraguaya. 2019. Ley No. 6438. https://www.bacn.gov.py/leyes-paraguayas/9224/ley-n-6438-aprueba-el-acuerdo-de-transporte-fluvial-por-la-hidrovia-paraguay-parana-puerto-de-caceres-puerto-de-nueva-palmira-octavo-protocolo-adicional#:~:text=Ley%20N%C2%BA%206438%20%2F%20APRUEBA%20EL,NUEVA%20PALMIRA)%2C%20OCTAVO%20PROTOCOLO%20ADICIONAL
- (17) Agencia Financiera de Desarrollo. S.F. Acerca de la AFD. https://www.afd.gov.py/que-es-la-afd
- (18) La Nación. 2020. BID concede préstamo de US$ 235 millones para mantener la red vial agroindustrial. https://www.lanacion.com.py/negocios/2020/11/26/bid-concede-prestamo-de-us-235-millones-para-mantener-la-red-vial-agroindustrial/