river infrastructure

Improvement and mitigation of river transport infrastructure

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Improvement and mitigation of river transport infrastructure

Country
Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Infrastructure
Sub Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Infrastructure
Indicative Return
Describes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
10% - 15% (in IRR)
Investment Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Long Term (10+ years)
Market Size
Describes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
The Paraguay Paraná Waterway measures a total of 3,442 km
Direct Impact
Describes the primary SDG(s) the IOA addresses.
No Poverty (SDG 1) Industry, Innovation and Infrastructure (SDG 9) Sustainable Cities and Communities (SDG 11)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
Decent Work and Economic Growth (SDG 8) Reduced Inequalities (SDG 10) Climate Action (SDG 13)

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

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Country
Region
  • Paraguay: Rio Paraguay
  • Paraguay: Rio Paraná
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Sector Classification

Situate the investment opportunity within sustainability focused sector, subsector and industry classifications.
Sector

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).

Sub Sector

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

Discover the investment opportunity and its corresponding business model.
Investment Opportunity Area

Improvement and mitigation of river transport infrastructure

Business Model

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

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Market Size and Environment

Market Size (USD)
Describes the value in USD of a potential addressable market of the IOA.

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

IRR
Describes an expected annual rate of growth of the IOA investment.

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

Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.

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

High investment requirements

Impact Case

Read about impact metrics and social and environmental risks of the investment opportunity.

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

No Poverty (SDG 1)
1 - No Poverty

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

Industry, Innovation and Infrastructure (SDG 9)
9 - Industry, Innovation and Infrastructure

9.1.2 Passenger and freight volumes, by mode of transport

Sustainable Cities and Communities (SDG 11)
11 - Sustainable Cities and Communities

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

Decent Work and Economic Growth (SDG 8)
8 - Decent Work and Economic Growth
Reduced Inequalities (SDG 10)
10 - Reduced Inequalities
Climate Action (SDG 13)
13 - Climate Action

Directly impacted stakeholders

People

Population related to companies that use waterways.

Gender inequality and/or marginalization

People whose main mode of transport is waterways.

Corporates

Companies that mainly use river means of transport, workers and people whose only means of transport are boats and waterway systems.

Indirectly impacted stakeholders

Public sector

Public infrastructure system.

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

B—Benefit Stakeholders

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

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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

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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

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country static map
semi-urban

Paraguay: Rio Paraguay

The main objectives of the Transport Master Plan of the Ministry of Public Works and Communications in the fluvial transport subsector: Improve the structures of the ports near the Paraná River and improve the navigability conditions in the Paraguay and Paraná rivers (1).
semi-urban

Paraguay: Rio Paraná

The main objectives of the Transport Master Plan of the Ministry of Public Works and Communications in the fluvial transport subsector: Improve the structures of the ports near the Paraná River and improve the navigability conditions in the Paraguay and Paraná rivers (1).

References

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