Buenos Aires Al Pacifico (BAP)

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Buenos Aires Al Pacifico (BAP) took over the management of the San Martin freight railway under a 30-year concession on August 26, 1993. The vertically integrated company took over freight marketing, train operations, equipment and track maintenance and rehabilitation. The concession contract gives the company an exclusive right to the rail infrastructure. The Argentinean government started restructuring the rail sector in the fall of 1990, and decided to concession the six freight lines first. Companies bid for the concessions under a two stage bidding process, and awards were made on the basis of 10 differently-weighted criteria. Contracts were awarded for 30 years with an optional 10-year extension. At the end of 1997, private companies operated and managed five of the six freight lines. BAP was awarded the third concession for the San Martin line on December 29, 1992 and took over in August 1993. BAP comprises Industries Metalurgicas Pescarmona (Impsa - 67.5%), Roman Maritima (25%, but then sold 20% to Impsa), Hugo/Gervasio Bunge (6.25%), and Transapelt (1.25%). The operator is Railroad Development Corp. of the US. BAP pays an annual fee for the lease that sums to US$ 68 million for the first 15 years (in order to calculate the real value of the lease fee, a discount rate of 13.37% was used; this government has used this rate in other infrastructure sectors). BAP plans US$349 million of investment during the first 15 years with US$150 million in the first five years. BAP increased freight carried to 2.47 million tonnes in 1994 from 1.92 million tonnes in 1991. In 1999, Impsa sold its stake in the project to the Brazilian company America Latina Logistica, which operates the Ferrovia Sul Atlantico railway in Brazil. America Latina Logistica is a joint venture of Ralph Partners (45%), Judori (18%), Brazil Private Equity Fund (13%), Varbra (7%), RailTex International of the US (6%), and Interferrea (7%), among others. By the end of 1995 BAP was making a profit on the line (US$1.5 million in 1995). None