Overview
Uruguay offers a favorable landscape for strategic investors seeking promising opportunities in infrastructure development. Uruguay’s proactive approach to supporting foreign investment, investment grade institutions, and transparent business environment make Uruguay an enticing market for U.S. companies. Uruguay is actively investing in modern infrastructure, with a strong emphasis on energy (solar and hydrogen), transportation upgrades, and incentives for construction. These projects are designed to enhance economic resilience, sustainability, and regional leadership in clean energy, setting a robust foundation for the country’s future development.
In terms of infrastructure financing, multilateral development banks such as the Interamerican Development Bank (IDB), the World Bank, and Development Bank of Latin America and the Caribbean (CAF) are active in supporting Uruguay’s infrastructure development. Uruguay became the second Latin American country to join the Asian Infrastructure Investment Bank (AIIB) and has joined the New Development Bank established by BRICS. For information on infrastructure projects please contact: Office.Montevideo@trade.gov.
Leading Sub-Sectors
Ports
The Uruguayan government extended the concession for operation of the sea container terminal, Cuenca del Plata, in the Port of Montevideo until 2080 to Belgian company, Katoen Natie. Katoen Natie, an 80% majority shareholder of the terminal, later announced a $460 million investment in the expansion and modernization of the terminal which will increase its footprint and improve IT, security, and infrastructure. With these improvements, Montevideo is on track to becoming the first sustainable port terminal in South America, delivering electricity from renewable sources to all docked ships.
The government of Uruguay is evaluating a $1 billion private initiative for the development of a passenger port terminal at the Port of Montevideo. The intent is to separate the passenger terminal from cargo activity also taking place in the port. The first stage includes plans to build a ferry terminal, to be followed by the construction of a cruise ship terminal in the second phase of this 30-year concession. The Government plans to hold an international tender as part of the process.
In 2022, the only floating repair dock operating in the Port of Montevideo collapsed, and the company managing it ceased operations permanently in 2024. In response, Uruguay’s National Port Administration (ANP) is advancing plans to install a new floating dock as part of a broader strategy to modernize and expand port infrastructure. The new facility is intended to restore the port’s capacity to support essential maritime services, particularly ship maintenance.
The absence of a functioning repair dock has weakened the competitiveness of Montevideo compared to regional ports such as Buenos Aires and Rio Grande (Brazil), causing Spanish, Chinese, and Korean fishing fleets to seek maintenance services elsewhere. The development of a new dock is a strategic national interest, vital to retaining maritime business and employment. Uruguay has a long-standing tradition in ship repair, dating back to 1925, and future concession processes will be critical in determining the future of the country’s naval services sector.
Hydroelectric Facilities
In May 2019, Uruguay announced a plan to modernize and renovate the binational Salto Grande Dam, shared between Uruguay and Argentina. This three-stage project will be developed over the next 30 years. In addition to the Salto Grande renovation project, state-owned enterprise UTE launched a modernization project for the Baygorria Dam. The Baygorria Dam was built in 1960 and will need an estimated investment of $50 million to complete the renovation work.
Water Treatment
The Government of Uruguay announced a $500 million investment for the design and development of a nation-wide sanitation project, to be completed over a period of four years. The project will be financed through user connection fees. This project includes: the design and construction of 54 new water treatment plants; improvement of 40 existing water treatment plants; the installation of 3,472 km of sewage infrastructure; and the construction of 246,973 new home connections.
To supply drinking water to Montevideo, the government awarded a project presented by a local consortium for a $289 million new water treatment plant to use the RÃo de la Plata as a water intake source. This project would offer a second source of water to supply Montevideo, Canelones, and San Jose Departments and provide redundancy to the system. The plan includes a water treatment plant and 80 kilometers of pipeline that will connect the Montevideo system to this second source of water.
Potable water resource management is an emerging issue. In 2013 and again in early 2015, isolated incidents of cyanobacteria-tainted water underscored the urgent need for government investments in upgrading and monitoring water quality. The widespread appearance of cyanobacteria subsequently negatively affected Uruguay’s 2018-19 tourist season. From October 2022 to August 2023, Uruguay experienced the biggest drought in its history. It is estimated to have caused $1 billion in production losses and disrupted access to clean drinking water in the Montevideo metropolitan area.
In 2025, Minister of Environment Edgardo Ortuño affirmed Uruguay’s commitment to resuming the Casupá Dam. This initiative, managed by state-owned water utility OSE, aims to construct a dam on the Casupá stream to strengthen Montevideo’s potable water supply. Despite securing an $80 million loan from CAF in 2019, the project faced delays, with previous administrations renewing interest annually without utilizing the funds. The new government now seeks to advance construction, emphasizing its importance for ensuring long-term water security for 60 percent of Uruguay’s population.
Construction and Urban Development Incentives
Uruguay has tax incentives for large construction and urban development projects. The scheme, established by the decree No. 138/020 offers up to 40 percent income tax exemptions, as well as full exemptions to property transfer tax and value added tax, encouraging investment in infrastructure and supporting continued economic activity. The application period for these incentives now runs until December 31, 2025, with project completion deadlines extended to September 2028, under the decree No. 085/25.
Uruguay’s Promoted Housing Law (Law No. 18.795 of 2011) encourages private investment in residential construction and renovation by offering significant tax incentives. Eligible projects – typically aimed at increasing affordable housing in designated urban areas – benefit from exemptions on income tax, wealth tax, VAT on inputs, and property transfer tax. Rental income from promoted units may also be tax-exempt. The regime is open to both local and foreign investors, provided the projects meet criteria set by the Ministry of Housing. In 2020, the law was updated to expand its benefits: price caps on sales were eliminated nationwide, tax exemptions on rental income were increased – reaching up to 100 percent in some areas of Montevideo and the interior – and greater flexibility was granted to developers, allowing a broader mix of unit sizes, including studios and 1-to-3-bedroom apartments.
Railway
Uruguay’s railway sector is undergoing a gradual revitalization, presenting both opportunities and challenges for investment and development. The recent entry of Grupo RAS as a new railway operator marks a significant step toward diversifying and modernizing freight logistics in the country. This move follows substantial infrastructure upgrades, including revitalizing Uruguay’s Central Railway, which connects Montevideo’s port with the country’s interior through a reliable rail network. Opportunities lie in expanding multimodal transport solutions, improving cargo competitiveness, and reducing road congestion and emissions. However, challenges persist, such as limited network coverage, aging infrastructure in certain regions, and the need for consistent regulatory and institutional support. Continued public-private collaboration will be key to unlocking the sector’s full potential and integrating Uruguay more effectively into regional supply chains.
Uruguay is advancing several passenger rail initiatives to modernize its transport system, reduce emissions, and improve urban mobility. Key efforts include a French-funded feasibility study for hydrogen-powered trains on the Montevideo–25 de Agosto route, two proposed suburban rail lines with projected daily ridership of up to 37,700 passengers, and the Montevideo light rail project—a 35 km tram-train line connecting the city center to El Pinar, backed by a US$500 million public-private partnership