Infrastructure in Argentina Customer Challenges and Pains Analysis¶
Challenges and Pains faced by Customers¶
The final customers in the Argentine infrastructure value chain, comprising both Business-to-Business (B2B) entities (businesses, institutions, government users) and Business-to-Consumer (B2C) individuals and households, face significant challenges and pains. These are primarily indirect consequences of the severe bottlenecks and operational difficulties within the infrastructure value chain itself, particularly the drastic reduction in activity and investment in 2024 and 2025.
The main challenges and pains experienced by these final customers can be summarized as:
- Reduced Access to New or Improved Infrastructure: The severe decline in public investment (a 73.4% real drop in national government investment in provincial infrastructure in 2024, reaching a 20-year low) [Value Chain Analysis] and significant financing constraints [Value Chain Analysis] have led to widespread suspension and cancellation of infrastructure projects across all segments (vial, energy, water, transport, edification, mining, communications). [Value Chain Analysis] This means that businesses requiring expanded transport links for logistics, new energy capacity for operations, or improved water/sanitation services for facilities, and individuals needing better roads, public transport, or utility connections, are facing a standstill or significant delays in accessing necessary infrastructure upgrades or new developments.
- Deteriorating Quality and Reliability of Existing Infrastructure: While the reports primarily focus on the challenges in developing new infrastructure, the economic instability, financing constraints, and potential payment delays also impact the Operation & Maintenance stage. Insufficient funding or delayed payments for maintenance activities can lead to a decline in the quality, safety, and reliability of existing infrastructure assets over time. This translates into pains for B2B users through increased operational costs (e.g., higher vehicle maintenance on poor roads, production losses due to unreliable energy supply) and for B2C users through service disruptions, reduced safety (e.g., on poorly maintained roads or railways), and a lower quality of essential services like water and energy.
- Potential for Increased Costs or Tariffs for Infrastructure Services: Pervasive economic instability, including high inflation and currency devaluation, significantly increases the costs for infrastructure operators (both public and private) for inputs like maintenance materials, imported equipment, and energy. [Value Chain Analysis] These increased operating costs can lead to pressure to raise tariffs or fees for the final customers (e.g., transport fares, utility bills) to maintain financial viability, imposing a direct financial pain on businesses and households.
- Delays in the Completion of Needed Projects: Payment delays in public works, coupled with regulatory and bureaucratic hurdles and overall political uncertainty, cause significant delays in projects that are still underway or planned. [Value Chain Analysis] This directly impacts customers who were anticipating the benefits of these projects, whether it's a business waiting for a new highway to improve supply chain efficiency or a community waiting for a new water treatment plant to improve health and living conditions.
- Uncertainty Regarding Future Infrastructure Development: The high degree of political risk and policy instability creates uncertainty about future government priorities and the viability of long-term infrastructure plans, including concession models. [Value Chain Analysis] This makes it difficult for businesses to plan future investments that rely on infrastructure availability and for individuals to anticipate improvements in their access to essential services.
These challenges represent a significant pain point for the Argentine economy and its citizens, hindering productivity, increasing costs, and impacting the overall quality of life.
Here is a prioritized table of the main challenges and pains faced by final customers:
| Priority | Challenge/Pain for Final Customers | Severity |
|---|---|---|
| 1 | Reduced access to new or improved infrastructure due to lack of investment and project halts. | High |
| 2 | Deteriorating quality and reliability of existing infrastructure due to under-maintenance. | High |
| 3 | Potential for increased costs or tariffs for infrastructure services due to economic instability. | High |
| 4 | Delays in the completion of anticipated infrastructure projects. | Medium/High |
| 5 | Uncertainty regarding future infrastructure availability and quality. | Medium |
Correlation with Value Chain¶
The challenges and pains faced by the final customers are directly correlated with the bottlenecks and dysfunctions identified within the infrastructure value chain stages:
- Planning and Design: The collapse in public investment and financing constraints mean fewer projects even enter or successfully complete this stage. This directly limits the pipeline of future infrastructure assets that would serve final customers.
- Financing and Procurement: Difficulties in securing funding due to economic instability and sovereign risk prevent projects from moving forward, denying customers the benefits of new infrastructure. The halt of procurement processes for public works directly cuts off the potential for new construction that would serve customer needs.
- Material and Equipment Supply: While not a direct customer pain in terms of material sourcing (that falls on contractors), the reduced demand from the Construction & Execution stage due to project halts leads to decreased activity for suppliers, impacting the overall ecosystem and potentially affecting the availability or cost of materials when activity resumes. Supply chain vulnerabilities for imported items also contribute to project cost and delay risks, which can be passed on to customers.
- Construction and Execution: This stage is where the impact of upstream bottlenecks (lack of financing, project cancellations, payment delays) is most visible in terms of activity decline (21.7% drop in ISAC index, over 120,000 job losses). [Value Chain Analysis] For final customers, this stage's paralysis directly translates to the non-delivery or delayed delivery of the physical infrastructure assets they need and would use.
- Operation and Maintenance: While this stage directly interacts with final customers, its effectiveness is hampered by the outcomes of previous stages. If infrastructure is not built or is built with delays, there is less to operate and maintain. Furthermore, the economic challenges and potential underfunding can directly impact the quality and frequency of maintenance activities, leading to the deterioration of assets that customers rely on daily (e.g., road conditions, utility service interruptions). The business models in this stage, particularly concessions, are also vulnerable to political and policy instability, which can impact service quality and tariffs for customers.
- Support Activities: While not directly impacting final customers, inefficiencies or constraints in support activities (like regulatory processes or project management) contribute to overall project delays and increased costs within the value chain, indirectly affecting the timeliness and cost-effectiveness of infrastructure delivery to customers.
In essence, the severe contraction and challenges within the infrastructure value chain, driven by macroeconomic instability and public policy decisions, create a ripple effect that culminates in the final customers experiencing a lack of adequate, reliable, and potentially affordable infrastructure services. The pains felt by customers are a downstream consequence of the paralysis upstream in the planning, financing, and execution of infrastructure projects.
References¶
- Construmis - Desafíos para el 2025 en el sector de la construcción: 120 mil empleos perdidos y una lenta recuperación en marcha. (https://www.construmis.com.ar/desafios-para-el-2025-en-el-sector-de-la-construccion-120-mil-empleos-perdidos-y-una-lenta-recuperacion-en-marcha/)
- BNamericas - Los proyectos de infraestructura detenidos en Argentina. (https://www.bnamericas.com/es/noticias/proyectos/los-proyectos-de-infraestructura-detenidos-en-argentina/)
- El Economista - Rocca elogió los progresos de Milei, pero advirtió: "Hoy Argentina tiene entre 10 y 20 veces la conflictividad de otros países". (https://eleconomista.com.ar/2024-09-paolo-rocca-logro-progresos-milei-advirtio-argentina-tiene-10-20-veces-conflictividad-otros-paises/)
- BBVA Research - Argentina: financiando la brecha de infraestructura. (https://www.bbvaresearch.com/publicaciones/argentina-financiando-la-brecha-de-infraestructura/)
- Fundación de Investigaciones Económicas Latinoamericanas - ARGENTINA: INFRAESTRUCTURA, CICLO Y CRECIMIENTO. (https://www.fiel.org.ar/publicaciones/informe-de-infraestructura-fiel-argentina-junio-2023/)