Regulation: Contrasting rail reform visions in Argentina

Privatisation of freight railways and slashing passenger service costs are at the heart of the Argentine government’s transport policy, but much uncertainty remains about how far its rail reform agenda can be delivered.

On March 1, Argentinian President Javier Milei delivered a polarising opening speech at the 144th session of the National Congress, marking what he described as a turning point for the nation. Two years into his mandate, Milei claimed to have averted a potentially terminal crisis, citing the first deficit-free budget in a century and a significant reduction in inflation from over 200% in 2023 to roughly 30% by the end of 2025.

Milei’s administration has been defined by a relentless reform agenda, including the Labour Modernisation Law and the Incentive Regime for Large Investments, which has already attracted US$25bn in approved projects. Central to this economic revival is the total overhaul of the nation’s infrastructure. During his speech, Milei made his intentions for the rail sector very clear. ‘And all of this would be accompanied by the privatisation of our freight railway system. In one year, we will have the entire network undergoing its largest modernisation in more than a century’, the president said.

Yet despite these triumphs, the political arena remains a battlefield. While the economy has grown by approximately 10% in the last two years, it has been accompanied by severe socioeconomic impacts, with the national poverty rate reaching around 57% before reportedly falling to 30%. Milei, however, continues to maintain broad public support reflecting an underlying acceptance of the need for reform, albeit this view is not shared across the political spectrum.

In this context, the privatisation of the railways — a historic pillar of Argentinian identity — is no longer a theoretical debate but an imminent reality.

Understanding the Argentinian network

Argentina has a network of around 36 000 track-km, one of the largest in Latin America. The network is a patchwork of different gauges, reflecting its development by different private companies in the late 19th and early 20th centuries.

Freight dominates rail activity in Argentina, led by the movement of bulk commodities such as soybeans, maize, wheat, and minerals from inland provinces to export terminals along the Paraná River and the Atlantic coast. Key corridors include the Belgrano (metre gauge), San Martín (1 676 mm gauge), and Urquiza (standard gauge) systems, which together connect northern agricultural areas and industrial centres with export ports.

Belgrano Cargas y Logística, a state-owned company, currently operates the extensive Belgrano network, playing a central role in moving grain from inland provinces such as Salta, Tucumán, Chaco, and Santiago del Estero to the Paraná River ports near Rosario. There has been historic underinvestment in the freight infrastructure resulting in bottlenecks and speed and weight restrictions.

Within Buenos Aires Province, dense suburban rail networks radiate from the city centre providing passenger services, while medium-distance inter-city services link the capital with cities such as Rosario, Córdoba, and Mar del Plata, though at lower frequencies than in the network’s historical peak.

Despite the thinning out of longdistance passenger services, passenger rail remains an essential component of daily mobility in the Buenos Aires metropolitan area. The suburban rail network carries several hundred million passengers annually and forms a key part of the capital’s public transport system alongside the Subte metro and extensive bus network. Lines such as the Roca, Sarmiento, and Mitre corridors connect dense suburban districts with central Buenos Aires and are heavily used by commuters travelling from the surrounding urban belt.

Several lines have undergone modernisation over the past decade, including electrification renewal, new signalling systems, and the introduction of modern rolling stock. This has included remodelling and modernisation of the key hub station at Retiro, including resignalling of the station and its approaches. Nevertheless, reliability and maintenance challenges remain significant, reflecting years of inconsistent investment and operational complexity within the metropolitan network.

A railway in transition

As the Argentinian government moves from rhetoric to implementation, international expertise has become a vital bridge. Vectura Advisory has been a frequent presence in Argentina, conducting several high-level visits to engage with the plans for reform. During our most recent trip, we met with the Sub-Secretary of Railway Transport, Martín Ferreiro, to discuss the strategic decoupling of freight and passenger services, alongside highlevel meetings with the infrastructure manager and other industry parties.

Throughout these discussions, the government confirmed that its objective is the implementation of an open access model, aimed at fostering competition, increasing usage of the network, and attracting foreign capital. The Minister of Deregulation, Federico Sturzenegger, remains a fervent defender of this system, which allows multiple operators to use the infrastructure upon payment of track access charges. However, the government is still in the delicate process of drafting the tenders. Potential investors are notably cautious; while interest is high from foreign firms, there is a prevailing sentiment that major investment is contingent on Milei’s prospects for a second term, with full privatisation expected to launch during his next tenure.

Belgrano Cargas debate

The privatisation of freight is seen as the engine of the rail reform in Argentina. The current network carries roughly 25 million tonnes annually — a figure that has largely remained stagnant since the 1980s — while trucks dominate land transport, with a modal share of around 90%. Rail is expected to be a driver of the government’s ambition to exploit and develop Argentina’s natural resources, providing a critical link between the inland provinces and the maritime ports. To double grain production to 300 million tonnes, the government views the Belgrano Cargas network as its most vital asset.

Clear frontrunner in the race to take on some or all of the Belgrano Cargas network is Grupo México. The conglomerate led by Germán Larrea has more than 30 years of experience operating the Ferromex-Ferrosur network in its home market, and it is the world’s fifth-largest copper producer. The company is reportedly already in conversations with Belgrano Cargas.

However, the Mexican group has set clear limits for its involvement: the company has refused to accept a passenger railway being bundled in with the concession, nor does the group wish to pursue an open access model, preferring instead for the tendering process to be split by route. It argues that without integrated control of both infrastructure and freight operations, the US$3bn investment required to modernise the railway is not commercially viable.

This creates a direct conflict with the government’s libertarian ideals and the interests of local agro-exporters, and mineral, oil and gas companies, who have made clear that they strongly support the open access approach.

The deficit challenge

While freight offers profit potential, passenger services remain financially fraught. The government has openly acknowledged that passenger trains are deficit-ridden, with the state-run SOFSE business requiring a 92% subsidy to function. Consequently, the government has decided to exclude passenger services from the freight tenders, as no private operator is willing to take on such ‘unprofitable’ public service obligations.

However, that leaves the passenger railway in parlous state, with the government’s political opponents fearing a further collapse in already limited provision. In two years, the Milei administration has significantly reduced long-distance services and cut back many regional trains. Within the urban area around the capital — often known as AMBA — infrastructure and rolling stock maintenance has hit historically low levels, with a severe lack of spare parts for the various fleets. While the government recently signalled plans to invest US$50m in the infrastructure, this represents only a fraction of what is needed.

For now, the state will continue to subsidise passenger transport, while ministers oversee a rigorous fiscal rationalisation of the network, prioritising budget equilibrium through the reduction of lowerdemand passenger services. In the future, a move to a tendered public service obligation concession model is thought to be likely; this is also expected to emerge if Milei secures a second term.

Navigating the Argentinian frontier

The Milei administration’s approach to the railways is one more piece of its broader ‘chainsaw’ strategy: radical deregulation, a search for foreign capital, and a purge of deficit-heavy services.

While the open access dream remains the official policy, the practical demands of giants like Grupo México suggest the design of the tenders that end up being issued will be subject to intense negotiation. In such a volatile environment, the need for specialist guidance is paramount. As with rail reform in other countries, including the UK, it is critical that the Argentinian government gets the right building blocks in place to achieve its objectives both for rail and wider economic policy, to make the network more attractive to users, and create the conditions for private investment in the network.

The government should look at international best practice, particularly from across Europe, to learn from models that have worked and others that have been less successful. Beyond benchmarking, it needs a plan to bring its infrastructure into an attractive state and put in place a regulatory framework including transparent access charging and performance regimes, and clarity on fair access to terminals. Furthermore this all needs to be underpinned by a strong, independent regulator to not only set fair terms but adjudicate if things go wrong.

Everything is uncertain under the Milei administration, but the commitment to reform is absolute. For international investors looking to capitalise on what could be Argentina’s largest railway modernisation in a century, there are definite opportunities but ones which that would be strengthened with greater infrastructure investment and a clear regulatory regime.

This article first appeared in the April 2026 issue of Railway Gazette International