Processes, information, and accounting gaps in the regulation of Argentina's private railways

Processes, information, and accounting gaps in the regulation of Argentina's private railways

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    NTL-RAIL TRANSPORTATION-Rail Planning and Policy ; NTL-RAIL TRANSPORTATION-Rail Economics and Finance ;
  • Abstract:
    Almost a decade after Argentina began privatizing its railways, resolution of the conflicts between regulators, users, and operators continues to take longer, and to be more difficult, than expected. This paper argues that many of these conflicts are the result of a failure to create a set of rules of interactions between the key stakeholders - government, regulators, users, unions and the media. Most concession contracts proved to be incomplete in terms of the information requirements needed to anticipate pricing and investment related problems. Moreover, the necessary autonomous but accountable regulatory capacity has never been fully developed for this sector in Argentina. In particular, as the level of private participation increases in the sector, Argentina's problem was every regulator's problem: how to regulate monopolies when the actual cost and production information is directly controlled by these monopolies. To be effective, any regulatory agency has to be granted access to a minimum level of consistent information. It must also be given instructions on the mechanisms it needs to follow to use this information and how to tailor them to the regulatory commitments. After an introductory section, the second section discusses in some detail the main regulatory functions and information needs in contexts where concession contracts are in use, adapting general well-known principles to the Argentine railways case. Section 3 identifies efficiency measurement as one of those particular needs in the Argentine case and provides elements for regulatory accounting on this issue. Section 4 analyzes access prices as a second example of what regulatory accounting can and cannot do. Finally, Section 5 deals with two other important issues for Argentina's railways: pricing and information for renegotiation, two critically relevant issues at the moment. Section 6 concludes identifying the main weaknesses and strengths of the current practices and provides some practical recommendations for its improvement. References. (45 p; 171 kb)
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