Processes, Information, and Accounting Gaps in the Regulation of Argentina's Private Railways

Abstract

Almost a decade after Argentina began privatizing its railways, resolution of conflicts between regulators, users, and operators continues to take longer, and to be more difficult, than expected. The authors contend that many of these conflicts arose because there are no rules for interactions between the key stakeholders: government, regulators, users, unions, and the media. One result of inexperience in setting up concession agreement has been that the agreements did not clearly define the information needed for oversight and regulation. Argentine rail concession contracts were supposed to be specific about the way tariffs, quality, investment, exclusivity, and so on, would change over time. And the newly created regulatory bodies were given some discretion about adjusting the contracts in the face of unforeseen developments. However, initial privatization were carried out in such a way that there was no time to refine terms, so many loopholes remained. Those unforeseen events have happened, and the regulatory agency, the National Commission for Transport Regulation (CNRT), has had to adapt its procedures and decisions to available information. In some cases, alleged modifications of the operating environment have led to renegotiations. Changes have been introduced in the approach to furnishing information to the government for oversight and regulatory accounting. The changes center on clearer definitions in connection with four major issues: a) The measurement of efficiency; b) access prices; and c) the financial model. Circumstances in the Argentine rail industry early in 2001 did not favor dramatic changes, but current renegotiations could be used to adjust information requirements to reflect what has been learned through six years of experience.