Guatemala Rail Network

cancelled

The Railroad Development Corporation led the joint-venture that was awarded the 50-year concession of Guatemala's rail network (Ferrovias Guatemala) in June 1997. The assets were turned over in Jul. 1998, when the private sponsors started the rehabilitation works; operations started only in Apr. 1999. The project company investment in the project's first phase is US$ 10 million. The sponsors will transfer 5% of the project's revenues as lease fee to the government during the first five years of the project; in the remaining 45 years, the fee will be 10% of the revenues. The second phase of the project is called the "Pacific Railroad Corridor": the railway will connect Tecun Uman in the border with Mexico to Escuintla and Puerto Quetzal. This second phase envisages an investment of US$ 50 million to convert the rail from narrow over to standard gauge to be compatible with Mexico, the US and Canada. Financing for the Pacific Railroad Corridor was being sought from the World Bank, as of Apr. 2001. In 2007, Railway Development Corporation stopped operating the railway after the government declared the railway to be against the countries interest. The concessionaire alleged that it asked the government to pay its US$3 million contractual obligation and to clear squatters from the most profitable portions of the railway. As of December 2007, the concessionaire had filed the claim against the government with the International Center for the Settlement of Investment Disputes (ICSID) for three separate violations of CAFTA investor-protection clauses. None None