Ferrocarril Mesopotamico (FMGU)

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Ferrocarril Mesopotamico (FMGU) took over the management of the Urquiza freight railway under a 30 year concession on October 22, 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. Ferrocarril Mesopotamico was awarded the concession for the Urquiza line on January 15, 1993 and took over in October. FMGU comprises Impsa (70% - member of Buenos Aires al Pacifico), Alesia, Petersen, Thiele y Cruz, and Railroad Development Corp. The operator is Railroad Development Corp. The consortium pays an annual fee of about US$ 0.1 million for the lease, a total of US$ 2.2 million during 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). It plans investment of US$ 62.6 million during the first 15 years. FMGU increased freight carried from 0.79 million tonnes in 1991 to 1.17 million tonnes in 1994. 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. None None