Issue 18 - November 2007

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China – Mongolia – Russia rail connection

On 10 November 2007 China began construction of the new 487-km Fuxin – Bayanula railway to connect northeast China to eastern Mongolia. The US$790 million project is the first section of the future international link between China, Mongolia and Russia, the People’s Daily agency reported. The railway is expected to be completed in 2010 and to reach an annual handling capacity of 12 million tonnes within three to five years of operation.

(Source: People’s Daily, http://english.people.com.cn/)

Concession in Brazil

The mining giant Companhia Vale do Rio Doce (CVRD) has been awarded a 30-year concession to operate the 720-km North South Railway (FNS) in Brazil. Under the terms of the Reais 1.478 million (US$810 million) contract, CVRD will maintain, operate, and develop the railway line by investing Reais 66 million (US$36 million) in infrastructure and rolling stock facilities, over the next three years.

CVRD is the second largest mining company in the world, operating in more than 30 countries on five continents. It is also the largest logistics operator in Brazil, running three railways: Estrada de Ferro Vitória a Minas (EFVM), Ferrovia Centro Atlântica (FCA) and Estrada de Ferro Carajás (EFC).

Recently, Brazilian’s regulatory authority for overland transport, Agência Nacional de Transportes Terrestres (ANTT), reported that country’s private railways would invest up to Reais 3.7 billion (US$1.99 billion) in 2007, an increase of 48% from the sum put in the previous year.

(Sources: Companhia Vale do Rio Doce, http://www.cvrd.com.br/; Agência Nacional de Transportes Terrestres, http://www.antt.gov.br/)

Tender for Georgian rail

Georgia’s economy ministry has recently issued a tender for privatisation of the state-run Georgian Railway Ltd. Interested companies are invited to express their interest by January 25, 2008 and to put forward their plans for development of the railway network, as well as volume and timetable of proposed investments, the Civil Georgia information service reported. It is not clear whether the government wants full privatisation of the railway or just a concession for a limited number of years.

On 24 October 2007, ministry officials confirmed that the previous deal with Parkfield Investment Ltd, an investment vehicle set up by a group of individual investors whose identities remained unknown, had failed.

(Source: Civil Georgia, http://www.civil.ge/)

CTL Logistics sold to private equity firm

The European private equity firm Bridgepoint acquired, for an undisclosed sum, CTL Logistics, the largest privately-owned logistics company in Poland, with operations in Central and Eastern Europe. Mr Jaroslaw Pawluk, the founder of CTL Logistics, remains a significant minority shareholder and will join the company’s supervisory board. CTL was established in 1992 and operates mainly in Poland and Germany in rail transportation, freight forwarding, siding management and waste disposal. In 2006, the company had 2500 employees and reported €285 million revenues.

With a capital of €8 billion raised to date, Bridgepoint is focusing on acquiring companies valued up to €1 billion and with attractive growth rates.

(Source: CTL Logistics, http://www.ctl.pl/)

Rescue funds for Amtrak

The US Senate approved a funding package for money-losing Amtrak, the national passenger operator in the USA. The provision from the 1977 Congress law requiring Amtrak to work towards fiscal self-sufficiency has been also removed, according to The New York Times. If the bill is approved by the House of Representatives, Amtrak will receive US$11.4 billion, but will be required to cut its costs by 40 per cent over the next six years.

Amtrak (also known as the National Railroad Passenger Corporation) was created in 1970 as a public-private company to provide passenger services on the tracks used by the private freight railroad companies. Last year Amtrak carried nearly 26 million passengers, but reported a US$1 billion deficit.

(Source: The New York Times, http://www.nytimes.com/)

Drastic reforms planned for Nigerian railways

The federal government of Nigeria has unveiled new plans to revive the rail system, troubled by poor funding, inefficient management and increased competition from road transport. AllAfrica Global Media cited a press release from the minister of transport Mrs Diezani Alison-Madueke who has promised drastic reforms in the Nigerian Railway Corporation (NRC), to make it a “more enterprising and result-oriented organisation that would command national pride and trust.”

Following the audit of the properties owned by NRC, the minister expressed her wish that funds would enable the government to settle its debts towards railway pensioners.

NRC’s statistical figures showed a sharp decline in performance, from 11,288,000 passengers and 2,960,000 tonnes carried in 1964 to 1.6 million passengers and less than 10,000 tonnes carried in 2003.

(Source: AllAfrica Global Media, http://allafrica.com/)

Estonia to split railways

The Estonian government has endorsed another strategy to restructure Estonian Railways (ER) into a holding company with separate infrastructure and operating companies, according to International Railway Journal. Infrastructure will benefit from investments of €375 million in the next 10 years.

Estonian Railways have been recently re-nationalised after five years of dispute with Baltic Rail Services, the private consortium that owned 66 per cent of ER.

(Source: International Railway Journal, http://www.railjournal.com/)

High speed in Morocco

Morocco's transport minister Mr Karim Ghellab and Mr Mohamed Khlie, general manager of the state railway of Morocco (Office National des Chemins de Fer - ONCF), have announced plans for 1500 km high speed rail network at a cost of €9.1 billion. French companies Alstom (makers of the HGV trains), national rail operator SNCF and network manager RFF will foot half of the bill, while the European Union, the Arab Fund for Economic and Social Development, the World Bank and the African Development Bank are expected to partly finance the high-speed railway line between Tangiers and Agadir, expected to be completed by 2030.

Alstom has already been awarded a contract to design, manufacture, operate and maintain the new 421 km high-speed Tangier - Casablanca railway. Reuters UK quoted minister Ghellab saying that "the project cost is estimated at €1.8 billion and will cut the journey between the two cities to two hours and 10 minutes". The new line, due to open in 2013, will carry 8 million passengers annually.

(Source: Reuters UK, http://uk.reuters.com/; ONCF, http://www.oncf.ma/)

Deutsche Bahn acquired EWS

The European Commission has approved the proposed acquisition of English Welsh & Scottish Railway Holdings Limited (EWS) by German state-owned railway operator Deutsche Bahn (DB). Under the terms of the decision, DB is expected to continue its expansion into the French market and to give access to EWS driver training schools in France for third-party rail operators, except SNCF.

Established in 1996, EWS is the largest rail freight operator in Great Britain, employing 5,000 staff. It also provides freight services in France and through the Channel Tunnel. DB is running rail passenger and freight transport (through its unit Railion) in Germany, Italy, The Netherlands and Denmark, as well as in freight forwarding and logistics worldwide (through its Schenker unit).

(Source: EWS, http://www.ews-railway.co.uk/)

China Railway looking for overseas markets

China Railway Construction Corporation (CRCC), China’s largest construction company, is looking overseas, including to Africa and South America, for growth opportunities, according to the Business Daily newspaper in Nairobi. “I expect we will have rapid overseas development in the coming few years,” Chairman Shi Dahua said. Within five years, the company aims to increase its revenue from overseas markets up to 20% from the current level of under 5%.

CRCC provided labour and professional services in Korea, Kuwait, Japan, Singapore, Pakistan, Thailand and Botswana. The state-run firm, in which Beijing’s new China Investment Corp sovereign wealth fund will reportedly buy US$100 million worth of shares, is raising up to US$3 billion in its plans to list in Shanghai and Hong Kong stock exchanges.

(Sources: China Railway Construction Corporation, http://www.chinarailway.com.hk/en/;
Business Daily, http://www.bdafrica.com/)

Lease in Sierra Leone

London Mining plc signed a memorandum of understanding with the government of Sierra Leone regarding the proposed lease of the 80-km railway line from the Marampa iron ore mine to the port of Freetown. London Mining will cover the costs of repairing the existing railway and the Pepel port facilities. The Sierra Leone government transferred railway and port assets to the concessionaire which is granted exclusive access for a minimum of 3 million tonnes per year.

London Mining Plc is a UK-based iron ore mining company with assets in Brazil, Sierra Leone, Greenland and Mexico.

(Source: London Mining Plc, http://www.londonmining.co.uk)

Rail crash in Poland

Two people died after a passenger train rammed into a loaded truck at a non-secured level crossing near Bydgoszcz, on 15 November 2007. The fast train was travelling from Gdynia on the Baltic Coast to southwest of Poland. The train driver and a female passenger died in the crash, and the injured were rushed to hospitals, said police spokeswoman Katarzyna Witkowska, quoted by Pravda newspaper. Television footage showed the locomotive and four cars rolled onto their sides after derailing.

(Source: Pravda, http://english.pravda.ru/news/)

If you have any feedback, please contact Gabriel Craciun, ITF Senior Researcher (railinfo@itf.org.uk)

Related documents:
Railway News Issue 18 - November 2007 (39kb PDF)

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