Deme Group files new proposal to dredge Parana River

By Leila Miller

BUENOS AIRES, June 12 (Reuters) - In a last-ditch attempt to avoid the loss of a major river dredging contract, the Deme Group, whose consortium includes U.S.-based investment firm KKR & Co, on Thursday filed a new proposal with Argentina's government to dredge the Parana River, according to a document viewed by Reuters.

On June 4, Argentina announced it had recommended awarding a 25-year contract to dredge and operate the Parana River, a vital waterway for most of the country’s agricultural exports, to Belgian dredging company Jan De Nul and its local partner Servimagnus. Officials estimate the project will reach $10 billion in investment.

Jan De Nul has managed the Parana waterway for decades. Back in May, U.S. House Foreign Affairs Committee Chairman Rep. Brian Mast ​warned about "Chinese malign influence" in Jan De Nul’s bid. Jan De Nul and Servimagnus called the claims of ties between the companies and Chinese capital during the bidding process "absolutely false and malicious.”

The Deme Group’s new proposal, filed with the Economy Ministry, uses a legal mechanism known as the “private initiative,” where private companies can submit proposals to develop public works projects that may then result in a bid. This differs from traditional bids where the government is the party to propose the project.

The new submission from the Deme Group proposes significantly lower tariffs, according to a letter the consortium sent this week to Argentine business chambers.

In a statement, Wim Bosteels, the CEO of Jan De Nul in Argentina, said that the Deme Group last year had endorsed the bidding process as transparent and that its claims that it can reduce the fare cost are “based on serious errors that underestimate and misrepresent the analysis of tax costs.”

A spokesperson for the Economy Ministry said to direct questions to Argentina’s National Ports and Navigation Agency, which did not respond to a request for comment.

A spokesperson for the Deme Group said the company wouldn't be providing additional comments and referred to the letter submitted this week.

After Argentina announced its recommendation earlier this month, a seven-day window for formal challenges to the recommendation was opened before a final award.

(Reporting by Leila Miller; Editing by Chizu Nomiyama)