Metrovias

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Metrovias SA signed a concession contract to operate the Urquiza line of the Buenos Aires Metropolitan Railway and the Buenos Aires Metro system in November 1993, and took over operations in January 1994. To prevent further deterioration of the Buenos Aires metropolitan railway network, the President had created a new state-owned corporation, FEMESA, in March 1990. It was soon prepared for privatization (via lease/concession contracts). FEMESA divided the network into 7 lines: Mitre, Sarmiento, Urquiza, Roca, San Martin, Belgrano North, and Belgrano South. The government called for bids under a 2-stage bidding process. Bids were decided on the basis of lowest subsidy required, and pre-awarded for all 7 lines in January 1993. Each mainline concession contract is for 10 years with optional 10 year extensions. The metro concession contract is for 20 years. The Metrovias consortium won the contract to operate the Urquiza line, along with a contract to operate the Buenos Aires Metro system (Subterraneos de Buenos Aires - SUBTE). Metrovias initially comprised: Benito Roggio SA, Cometrans, Morrison Knudsen Co., and Burlington Northern Railroad Co. In 1994 Morrison Knudsen sold its stake in Metrovias to Roggio - giving Roggio a 72% stake. Metrovias payed a US$101.7 million lease fee for the Urquiza line, and received a subsidy of US$ 130 million for the first year investment in both lines (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). Total investment committed for the two lines during the concession was approximately US$561 million (Metrovias intends to finance the project with internal funds and supplier credits). The Urquiza line is 25.6km long, and SUBTE 44.1km long. The IBRD provided the Argentinean government with a US$ 200 million loan to finance the Buenos Aires Urban Transport (1997); of this amount, US$ 143 million will be directed to Metrovias. As of Apr. 2001, the government and Metrovias are renegotiating the contract, which will lead to changes in the tariff, in the amount to be invested, in the level of subsidies and in the length of the concession contract. In April 2013, the government and Metrovias agreed on a two-year extension of the concession contract which differs from the initial contract signed by Metrovias. In the new contract, the private sponsor became responsible only for the operation and maintenance of the railways, in exchange for the payment of an yearly management fee to be paid by the government (US$ 133.8 million or Pesos 690 million per year).