Colombia: Rebuilding the railways
Despite surging economic growth, Colombia’s poor transportation infrastructure, which is ranked among the worst in the world by the World Economic Forum, continues to act as a barrier to progress. In an effort to address this problem, the Ministry of Transport has devised a new plan to revitalise the country’s ailing rail network, beginning with the Pacific Coast railway and expanding to cover lines throughout the entire country.
In early August, Miguel Peñaloza, the minister of transport, told press that the government planned to set aside more than US$6.5bn for the railroad project. Public-private partnerships will also play an integral role in rebuilding 1672 km of railway. The National Infrastructure Agency (ANI) has already completed studies for 25 concession agreements valued at $22.37m. Bidding for some of these projects is scheduled for as early as the third quarter of 2012.
While promises to rebuild the railroads have served as a common refrain among Colombia’s leadership for decades, President Juan Manuel Santos and his administration appear to be making progress towards accomplishing this goal. On August 2, Santos re-opened the Pacific Railroad, which had been closed since November 2011. The first train left the station in Buenaventura carrying 180 tonnes of aluminium rolls destined for Yumbo, just north of Cali.
The Pacific Railroad is operated by the Colombian-US Railway Development Corporation (RDC) and Mariverdo, a Colombian company funded by Israeli capital. Collectively, the firms have invested some $60m in the project and have announced plans to invest more. Moving forward, the partners will add eight more train cars to the three that are currently in operation. Pacific Railroad will also construct 37 slabs for transporting cargo, as well as invest $400m in expanding the network.
In the first 30 days following the launch, the railway is expected to transport approximately 6000 tonnes of cargo for clients that include Grupo Manuelita, an agricultural firm, and Argos, a cement company. By the end of the year, however, the RDC and Mariverdo consortium hope to see the cargo load grow to 25,000 tonnes per month.
In the near term, concession agreements to rehabilitate the rail connections between La Dorada and Chiriguaná, and Bogota and Belencito will be auctioned off. Luis Fernando Andrade, the president of ANI, told local press that the successful bidders of the concession agreements would be given 12 months to repair the lines, which should be operational by 2013. The ultimate goal of the railway project is to connect Antioquia and coffee-growing regions of the north-east with the Pacific coast and Buenaventura with Valle del Cauca in the interior.
However, despite recent progress, some challenges remain that may continue to haunt Colombia’s railroads. As recently as August, the Revolutionary Armed Forces of Colombia (FARC) attacked a section of rail traveling from Cerrejón to a port in the north. The rebel group robbed several of the railway cars, which were used primarily for transporting coal, while also setting off explosives at several locations along the rail, thus disabling sections of the track. While no one was injured in the attack, it did serve as a reminder that as long as the FARC continues to exist, incidents of this nature cannot be ruled out.
Fenoco, a Colombian rail operator that transports coal, has also had difficulties recently. On July 20, company employees went on strike over salary and working conditions. At the time of writing, the Santos government was acting as an intermediary in the dispute, but a resolution has yet to be reached.
Strikes and FARC attacks make it clear that while building and repairing the proper infrastructure is a necessary first step towards developing a thriving rail transport network, it is certainly not the only one. Concession winners will also have to develop sound business models and address potential security concerns.
Such risks should not, however, discourage leaders in the public and private sector from developing a rail network that could greatly improve the flow of goods within the country, as well as abroad.
Santos recently said that given the current state of Colombia’s railway system, it could potentially be less expensive to send a shipping container from Buenaventura, a port city on Colombia’s Pacific coast, to China, than from Buenaventura to Bogotá. Colombia’s leadership will have to remedy this problem if it hopes to keep the country’s economy steadily moving forward.