Mexico's rail sector eyes promising year due to higher investment

By
Thursday, February 16, 2017

Mexico's largest rail operators, Ferromex, Ferrosur and Kansas City Southern de México (KCSM), are set to invest a combined US$410mn to maintain and upgrade the country's railway infrastructure, reports local daily El Financiero.

Ferromex and Ferrosur, both owned by Grupo México, are planning to invest US$250mn this year, 45% of which will be used to maintain and rehabilitate railroad tracks, bridges and tunnels, according to the paper.

Start your 15 day free trial now!

cta-arrow

Already a subscriber? Please, login

In turn, KCSM will invest US$150mn to improve railway infrastructure and some of its existing locomotive fleet.

Private investment in the Mexican railway sector has grown 50% during the past three years, helping the government achieve its goal of turning Mexico into a global logistics platform, according to federal transport minister Gerardo Ruiz Esparza.

Speaking to reporters at the opening of a rail expo, Ruiz Esparza said that, to date, the Mexican government has awarded 20 freight and passenger rail concessions. Of these, 10 of them went to private companies, nine were awarded to state governments and one to state-owned company Ferrocarril del Istmo de Tehuantepec.

"Mexico's railway network has become a concession-based system, which has been proven to be productive, efficient and competitive," Ruiz Esparza said.

According to the minister, the productivity of the Mexican rail sector has increased six-fold. He added that the rail system offers the lowest rates in Latin America and its freight capacity ranks 11th in the world.

At the same event, Lorenzo Reyes Retana, head of the Mexican railway association (AMF), praised the role that the private sector has played in the growth of the country's rail sector. According to Reyes, the rail sector accounts for 25% of domestic ground transport, moving over 83mn tons of cargo a year, according to government data.

ANOTHER RAIL LINE TO BE TENDERED THIS YEAR

The Mexican government is planning to launch a tender for the concession of the Chiapas-Mayab rail line in May or June of this year, reports local daily La Jornada.

The announcement was made by transport undersecretary Yuriria Mascott, who said that the communications and transport ministry (SCT) is in the process of registering the project with the finance ministry (SHCP) in order to obtain the relevant authorization before launching the tender.

According to Mascott, the government is planning to merge the Chiapas-Mayab line with a concession currently operated by the Istmo de Tehuantepec trust, so that both can be put out to tender as a single line.

This new line will serve to connect the country's special economic zones (ZEE) that are currently being developed in the country's southern region and which are expected to start operating next year.

"The current government has invested 3bn pesos (US$148mn) in this line, and we are planning to invest an additional 1bn pesos this year," added Mascott.

The 50-year concession to operate the Chiapas-Mayab rail line was awarded to company FCCM in 1999, but the government decided to cancel it in August last year in what it called a 'salvage' operation.

The current government has decided to revive passenger rail projects with the construction of the 44bn-peso Mexico City-Toluca interurban train and line 3 of Guadalajara's light rail system.

The Mexican railway system was privatized in 1995 and the first concessions were awarded a year later to KCSM and Ferrovalle for a 50-year term.

PICTURED: Mexico's transport minister Gerardo Ruiz Esparza speaking at the opening event of Expo Rail 2017.