Sistema Ferroviario Central railway project attracts bids from several suitors

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Colombia’s proposed USD 602.6m overhaul of the country’s 1,050km Sistema Ferroviario Central railway line has attracted bids from several players including Spain-based Grupo RENFE and Colombia-based Odinsa, a government source told mergermarket.

According to a spokesperson from INCO, the government entity responsible for the sale, the Colombian government is offering a 30-year operational concession of the railway in exchange for a USD 187.5m capital injection from a private partner.

The spokesperson said the government would invest USD 415m in the two-year infrastructure project that the private partner will be responsible for carrying out.

The spokesperson would not release the names of companies who have expressed interest, but noted that the project has attracted attention from both national, and multinational investors and contractors.

According to the government source, in addition to Odinsa and Grupo RENFE, US-based Translogistics, and local Colombian groups Sociedad Portuaria de Santa Marta, Fidupetrol and Cicon, will all likely be preparing offers.

Interested companies will have until the end of July to present offers, the spokesperson said, anticipating that a final deal would be reached with a future private partner by the end of August.

An analyst attributed the high-level of interest in Sistema Ferroviario Central to the opportunities associated with connecting the country’s natural resource rich Magdalena river valley, with the Caribbean-based ports in the coastal city of Santa Marta.

According to the analyst, the potential amount of cargo for the new rail system is estimated at 2.2m tons annually. The analyst noted that the Colombian government is expecting demand for the rail system to increase by 3.8% annually, for the duration of the 30-year concession. The types of cargo along this railway include coal, cement, iron, steel and cereal.

The analyst said another benefit for a future operator, is that upon completion of the restoration, the Sistema Ferroviario Central will link up with Concesion Ferrea del Atlantico, which operates an existing, and expansive network of railways on the Atlantic coast.

In the analyst’s opinion, the Santa Marta-based Sociedad Portuaria de Santa Marta holding, which runs the Caribbean port, would stand most to benefit from control of the railway. The analyst was, however, doubtful of the group’s ability to lead the restoration process.

Once complete, the Sistema Ferroviario Central will extend from Villavieja, in the area of Huila, to the town of Chiriguana, in the Caribbean region of Cesar.

The Colombian government has been working with advisors from the Colombia-based consultancy group, Concol on the development of the project, the spokesperson added.

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