Ferrosur Roca (FR)

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Ferrosur Roca signed an agreement to take over the management of the Roca freight railway under a 30 year concession on March 11, 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. Ferrosur Roca was the only bidder for the Roca line and was awarded the concession on December 3, 1992 and took over in March 1993. Ferrosur Roca comprises Loma Negra (65%), Decavial (5%), Petr. Comodora Rivadavia (10%), Asosiacion de Cooperativas Argentinas (5%), Banco frances del Rio del la Plata (5%), and Acindar (10%). A Canadian company was the initial operator, but FR planned to take over within five years. The consortium pays an annual fee of for the lease, that will sum to about US$15 million for the first 15 years (in order to calculate the real value of the lease fee, a discount rate of 13.37% was used; this government has used this rate in other infrastructure sectors). FR plans investment of US$ 76.9 million during the first 15 years. By the end of 1996 Ferrosur Roca was making a profit on the line. In July 2004, the company renegotiated its contract with the government. Under the agreement, known as an "Acta de Entendimiento," Ferrosur pledged to invest a minimum of 7.5mn pesos/yr (US$2.55mn) or 9.5% of sales. None None