Ferro Expreso Pampeano S.A. (FEPSA)

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Ferroexpreso Pampeano (FEPSA) took over the management of the 4,853km Rosario-Bahia Blanca freight railway under a 30 year concession on November 1, 1991. 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 Argentinian 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. FEPSA was awarded the concession for the Rosario-Bahia Blanca line on June 13, 1991 and took over in November. FEPSA comprises Techint (58.94%), EACA Empresa Argentina (8.394%), Gesiemes (8.394%), Chase Manhattan Investments Argentina (8.394%), Riobank (8.394%), Sociedad Commercial del Plata (5.484%) - together making the consortium Coinfer, and Iowa Interstate Railroad (2%, Railroad Development Corp.). Argentine Railways retains 16% of FEPSA and employees hold 4%. FEPSA has agreed to pay annual fee for the lease that sums to US$35.5 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). FEPSA will also invest approximately US$195 during the first 15 years. In fiscal year 1992, the IFC provided US$ 11 million as a direct loan, US$ 2 million as quasi-equity, and US$ 16 million as a syndicated loan. In 1993, the IFC approved additiona US$ 2 million in quasi equity and US$ 4 million in syndication. The line experienced severe traffic shortfalls and had not made a profit by the end of 1996. None None