Issue 2 - July 2006

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China offers to pay for Uganda-Sudan railway

China has promised to finance a new railway line linking Uganda and Sudan, the Ugandan government announced following a visit from Chinese Prime Minister, Wen Jiabao.

Ugandan Minister Okello Oryem was quoted by Agence France Presse as saying that China will finance a line linking Pakwach and Juba, and would consider funding one of their companies to construct it. The declaration came at the end of Jiabao’s seven nation economic and diplomatic African tour.

UK newspaper The Guardian described the tour as being part of what Beijing foreign policy officials have dubbed ‘the year of Africa’, a drive for access to the continent’s natural resources - especially oil - to fuel China’s booming economy.

The Financial Times reported scepticism in Zimbabwe that promised investment would ever arrive, based on previous experience. The paper asked how a deal under which Zimbabwe would supply chrome in return for transmission equipment to allow all citizens to receive state run radio and television would work, noting that “Zimbabwe, which has no spare transport capacity because most of the locomotives operated by the state-owned railways are off the rails, will be able to export thousands of tonnes of bulky low-value chrome ore is unclear”.

Sources:
The New Vision (Uganda) - quoting AFP, www.newvision.co.ug;
The Guardian, www.guardian.co.uk/china/story/0,,1802847,00.html?gusrc=rss; Financial Times, www.ft.com/home/europe

Asian development Bank warns on rail privatization risk

A senior officer of the Asian Development Bank (ADB) has warned that full railway privatization may be a step too far. Speaking at a workshop in Manila on private sector involvement in Asian railways, C Lawrence Greenwood, ADB Vice-President, Operations, said: “Full divestiture of railway assets may not be feasible or desirable, given railway's role as a public good. Even mature economies such as the United Kingdom have found full divestiture to have substantial risks and unintended negative consequences.”

“There will continue to be an important role for the public side of the public-private partnership in national railway systems,” he added.

However, new methods of funding are necessary, he believes, since “publicly-owned railways in most countries are in deep financial trouble. Inefficient, deficit-ridden, under-funded and plagued by low productivity, these vital transport links are struggling to meet growing demand, keep up with technological change, and compete for finance with other important public priorities”.

Suggesting other models for rail reform, he recommended that Asian governments study the experiences of Estonia, where the government maintained a minority share in a new railway company while retaining arms-length regulatory oversight for safety and monopolistic abuse, and China, where divestiture is being accomplished through public listing of shares on the stock exchange. Concessioning, where the public sector retains ownership and oversight of infrastructure, but transfers operating responsibility to the private sector, is another possibility, he stated.

Source:
ADB, www.adb.org/Documents/Speeches/2006/ms2006050.asp

Port suitors spurn Deutsche Bahn’s advances

International Transport Journal reports that Deutsche Bahn’s “intense” efforts to acquire a majority stake in several ports have met with fierce resistance in the transport world. DB has said that, like other service providers, it needs access to the ports to complete the transport chain. All approaches have so far been rejected by ports who ask why the rail company insists on a majority stake.

Source:
International Transport Journal,
www.transportjournal.com/e/itz/itz/artikel.php?id=11382

Indonesian Rail management and unions blame government for accidents

Management and unions are blaming government underfunding for the loss of life on the state rail network, according to the Jakarta Post.

Indonesian Railways President Director Roni Wahyudi is quoted as saying that the government has failed to honor a pledge to provide cheap and safe public transport. Hanafi Rustandi, representing the ITF, said it would go bankrupt or more accidents would occur unless the government took measures to settle its finances. There were 20 fatalities between January and April this year, and 64 in 2005.

Source:
The Jakarta Post, www.thejakartapost.com

Acquisition creates South American giant

America Latina Logistica (ALL) has become South America’s largest logistic company following its purchase of ailing rail company Brasil Ferrovias for 1.4 Brazilian reals ($682 million).

ALL will now operate 20,000 locomotives and rail cars on almost 20,500km of rail in Brazil and Argentina following the purchase. Debt-ridden Brasil Ferrovias was saved from bankruptcy last year by an injection of government funds, but possesses infrastructure in the expanding soya producing area of Brazil.

Sources:
Dow Jones newswires, www.djnewswires.com;
Business News Americas, http://bnamericas.com

Valencia metro crash kills 41

Forty one people were killed when a four car underground train crashed in Valencia, Spain, on 3 July. Terrorism was quickly discounted as a cause and tunnel collapse or a broken wheel suggested as possible causes. However, the train’s recovered black box recorder logs it as travelling at twice the permitted speed, for unknown reasons. Trade unions have said that it is too early to speculate on the cause of the crash, which happened on the same line where three trains collided last year. A five minute silence was observed as part of nationwide mourning for Spain’s worst ever underground crash.

Sources:
BBC News, http://news.bbc.co.uk/1/hi/world/europe/5147022.stm;
Europa Press, www.europapress.es/europa2003/noticia.aspx?cod=20060704101920&tabID=1&ch=73

New route links Mexican ports to US cities

Kansas City Southern is initiating a daily train service linking three southwest Mexican ports with southern US markets, notably Atlanta. Containers landed at the port of Lazaro Cardenas by operators such as Maersk, CP Ships and NYK will form a large part of the freight carried. The company says that it plans to expand the service to Houston and Kansas City.

Sources:
Kansas City Southern press release,
http://notes.kcsi.com/WebApps/kcspress.nsf/
626e6035eadbb4cd85256499006b15a6/
64b84b9e05d184f286257186004a07e8?OpenDocument

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

Related documents:
Railway News-Issue 2 - July 2006 (30kb PDF)

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