Railway Privatisation in Argentina
Encyclopedia
Following a prolonged period of hyperinflation in the 1980s, accompanied by a steep increase in fiscal deficit and a sharp fall in reserves, the Argentine government, under the presidency of Carlos Menem
from 1989, initiated a series of neoliberal reforms which included the privatisation of public utility companies (telephones, gas, electricity and water) together with the entire railway network. Since railway nationalisation in 1948, during the presidency of Peron
, the network had been operated by the state-owned company Ferrocarriles Argentinos
(FA) which comprised the six relatively independent divisions, Sarmiento
, Mitre
, Urquiza
, San Martín
, Belgrano
and Roca
. Before privatisation began in 1990 FA ran a national network of about 35,000 km, employed 92,000 people and was losing more than US$1.0 billion a year with much of the track and many of the locomotives and rolling stock in poor condition.
The plan was to break up the network into segments and to grant concessions to private companies for their operation through competitive bidding. Freight and passenger services were separated and, since most of the intercity passenger services were not commercially attractive to the private sector, the government offered these to the provinces. The remaining passenger services in the city of Buenos Aires, including the five lines of the Metro
, were potentially more viable and were treated separately.
.
Initially no bids were received for the Belgrano line, and in October 1993 the government created a new state-owned corporation to continue its operation and to undertake improvements likely to make it a more attractive commercial proposition for a private buyer. Privatisation followed six years later.
Whilst the freight concessionaires were expected to make a profit, it was recognized that the operation of these services would require public subsidy. Concessions were granted to the bidder who would require the lowest subsidy. Four companies bid successfully for the seven lines originally operated by the six divisions of FA, together with the Metro, as shown in Table 2.
In spite of these companies receiving large government subsidies, the services operated by Metropolitano deteriorated to a point where the concession for the operation of Línea San Martín was revoked in 2004 and concessions for the operation of the other two lines by the company were revoked in 2007. All three lines are currently operated by the consortium UGOFE
which Ferrovías joined in 2004.
The concessions were mainly for 10 years, with an optional 10 year extension, except for the Metro and the Línea Urquiza which were for an initial term of 20 years. As in the case of the freight concessions, the government maintained ownership of the assets, whilst the concessionaires undertook to operate their services as described in their original bid. Maximum fares were set by the government but were subject to automatic increases according to service quality and the prevailing rate of inflation. Financial penalties would be levied if agreed levels of service were not achieved.
, would be discontinued on 1 January 1993, unless provincial authorities either agreed to assume responsibility for them or selected a private concessionaire to operate them on their behalf. The services that survived in this way, together with several that were discontinued and later resuscitated, are listed in Table 3.
Carlos Menem
Carlos Saúl Menem is an Argentine politician who was President of Argentina from 1989 to 1999. He is currently an Argentine National Senator for La Rioja Province.-Early life:...
from 1989, initiated a series of neoliberal reforms which included the privatisation of public utility companies (telephones, gas, electricity and water) together with the entire railway network. Since railway nationalisation in 1948, during the presidency of Peron
Juan Perón
Juan Domingo Perón was an Argentine military officer, and politician. Perón was three times elected as President of Argentina though he only managed to serve one full term, after serving in several government positions, including the Secretary of Labor and the Vice Presidency...
, the network had been operated by the state-owned company Ferrocarriles Argentinos
Ferrocarriles Argentinos
Ferrocarriles Argentinos was a public company that managed the entire Argentine railway system for nearly 45 years. It was formed in 1948 when all the private railway companies were nationalised during Perón's first presidential term, and transformed into the Empresa de Ferrocarriles del Estado...
(FA) which comprised the six relatively independent divisions, Sarmiento
Ferrocarril Domingo Faustino Sarmiento
The Ferrocarril Domingo Faustino Sarmiento , named after the former Argentine president, statesman, educator, and author Domingo Faustino Sarmiento, was one of the six state-owned Argentine railway companies formed after President Juan Perón's nationalisation of the Argentine railway network in 1948...
, Mitre
Ferrocarril General Bartolomé Mitre
Ferrocarril General Bartolomé Mitre , named after the former Argentine president Bartolomé Mitre, was one of the six state-owned Argentine railway companies formed after President Juan Perón's nationalisation of the railway network in 1948...
, Urquiza
Ferrocarril General Urquiza
Ferrocarril General Urquiza , named after the Argentine general and politician Justo José de Urquiza, was one of the six state-owned Argentine railway companies formed after President Juan Perón's nationalisation of the railway network in 1948...
, San Martín
Ferrocarril General San Martín
Ferrocarril General San Martín , named after the former Argentine general José de San Martín, was one of the six state-owned Argentine railway companies formed after President Juan Perón's nationalisation of the railway network in 1948...
, Belgrano
Ferrocarril General Manuel Belgrano
Ferrocarril General Manuel Belgrano , named after the Argentine politician and military leader Manuel Belgrano, was one of the six state-owned Argentine railway companies formed after President Juan Perón's nationalisation of the railway network in 1948...
and Roca
Ferrocarril General Roca
Ferrocarril General Roca , named after the former Argentine president Julio Argentino Roca, was one of the six state-owned Argentine railway companies formed after President Juan Perón's nationalisation of the railway network in 1948...
. Before privatisation began in 1990 FA ran a national network of about 35,000 km, employed 92,000 people and was losing more than US$1.0 billion a year with much of the track and many of the locomotives and rolling stock in poor condition.
The plan was to break up the network into segments and to grant concessions to private companies for their operation through competitive bidding. Freight and passenger services were separated and, since most of the intercity passenger services were not commercially attractive to the private sector, the government offered these to the provinces. The remaining passenger services in the city of Buenos Aires, including the five lines of the Metro
Buenos Aires Metro
The Buenos Aires Metro , locally known as Subte is a mass-transit system that serves the city of Buenos Aires, Argentina. The first station of this network opened in 1913, the first of its kind in South America, the Southern Hemisphere and the entire Spanish-speaking world...
, were potentially more viable and were treated separately.
Freight Services
Privatisation began with the granting of long-term concessions (30 years with an optional 10 year extension) to six companies for the operation of freight services (see Table 1). These companies were responsible for all operations and maintenance and for the implementation of the investment programme detailed in their bid. The fixed assets remained the property of the state and the operators had to pay for their use and to rent rolling stock. Freight tariffs were deregulated but were subject to state approval. The concessionaires were expected to hire as many FA employees as were required and redundancies were financed by the government with the help of the World BankWorld Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
.
| Concessionaire | FA Division(s) | Gauge | Length, km | Takeover Date |
|---|---|---|---|---|
| Ferroexpreso Pampeano Ferroexpreso Pampeano Ferroexpreso Pampeano S.A. is a private company which, in August 1991, was awarded a concession, granted by the Argentine government, for the operation of freight services over a broad gauge rail network comprising sections which, before nationalisation of the railways in 1948, were operated by... |
Roca, Sarmiento, Mitre | broad | 5094 | 1 Nov. 1991 |
| Nuevo Central Argentino Nuevo Central Argentino Nuevo Central Argentino S. A. is an Argentine company that exploits the operation and infrastructure of the national railway system of the former Ferrocarril General Bartolomé Mitre division of Ferrocarriles Argentinos, by a concession granted on 23 December 1992 as part of railway privatisation... |
Mitre | broad | 4900 | 23 Dec. 1992 |
| Ferrosur Roca Ferrosur Roca Ferrosur Roca S.A. is a private company which, in December1992, was awarded a concession, granted by the Argentine government, for the operation of freight services over part of the broad gauge rail network built by the British-owned company Buenos Aires Great Southern Railway and run by the... |
Roca | broad | 3145 | 11 Mar. 1993 |
| Buenos Aires al Pacifico – San Martín | San Martín | broad | 5690 | 26 Aug. 1993 |
| Mesopotámico General Urquiza | Urquiza | standard | 2704 | 22 Oct. 1993 |
| Belgrano Cargas Belgrano Cargas Belgrano Cargas S.A. is a company which operates a gauge freight rail network in Argentina, built by the state-owned Ferrocarril Central Norte and the French-owned Ferrocarril Provincial de Santa Fe, which became part of Ferrocarril General Manuel Belgrano after railway nationisation in 1948... |
Belgrano | metre | 9860 | 16 Nov. 1999 |
Initially no bids were received for the Belgrano line, and in October 1993 the government created a new state-owned corporation to continue its operation and to undertake improvements likely to make it a more attractive commercial proposition for a private buyer. Privatisation followed six years later.
Passenger Services in Buenos Aires
In March 1991 the government separated the urban passenger rail services and metro operating within the city of Buenos Aires from the rest of the rail network, and to this end created the holding company Ferrocarriles Metropolitanos S.A.FEMESA
Ferrocarriles Metropolitanos S.A. was a company set up by the Argentine government in 1991, during the presidency of Carlos Menem, to oversee the privatisation of commuter rail services within the city of Buenos Aires in Argentina. The company granted concessions to Metropolitano S.A., Ferrovias...
Whilst the freight concessionaires were expected to make a profit, it was recognized that the operation of these services would require public subsidy. Concessions were granted to the bidder who would require the lowest subsidy. Four companies bid successfully for the seven lines originally operated by the six divisions of FA, together with the Metro, as shown in Table 2.
| Concessionaire | Line | Gauge | Length, km | Takeover Date |
|---|---|---|---|---|
| Metrovías Metrovías Metrovías S.A. is a privately owned company which, on 1 January 1994, took over the concession, granted by the Argentine government as part of railway privatisation during the presidency of Carlos Menem, for the operation of the standard gauge Urquiza Line commuter rail service in Buenos Aires,... |
Línea Urquiza Línea Urquiza (Buenos Aires) The Urquiza Line is a suburban electric commuter line operated by the subway operator Metrovías, in Buenos Aires, Argentina. It runs from the Federico Lacroze terminus in the barrio of Chacarita, to General Lemos terminus, Campo de Mayo in Greater Buenos Aires, a total journey time of 46 min... |
standard | 26 | 1 Jan.1994 |
| Metropolitano Metropolitano Metropolitano S.A. was a privately owned consortium formed in 1994 to take over concessions granted by the Argentine government, through the state-owned company FEMESA as part of railway privatisation during the presidency of Carlos Menem for the operation of commuter rail services in Buenos Aires... |
Línea San Martín Línea San Martín (Buenos Aires) The San Martín line is a 55 Kilometre,19 station commuter rail service in the metropolitan area of Buenos Aires, Argentina run by the private company Transportes Metropolitanos General San Martín S.A. , a subsidiary of Metropolitano, between 1 April 1994 and 7 January 2005... |
broad | 55 | 1 Apr.1994 |
| Ferrovías Ferrovías Ferrovías S.A.C. is a privately owned company which, on 1 April 1994, took over the concession, granted by the Argentine government as part of railway privatisation during the presidency of Carlos Menem, for the operation of the 1,000 mm metre gauge Belgrano Norte Line commuter rail service in... |
Línea Belgrano Norte Línea Belgrano Norte (Buenos Aires) The Belgrano Norte line is a commuter rail service in Buenos Aires, Argentina run by the private company Ferrovías since 1 April 1994. This service had previously been run by the state-owned Ferrocarril General Manuel Belgrano since nationalisation of the railways in 1948... |
metre | 52 | 1 Apr.1994 |
| Metropolitano | Línea Belgrano Sur Línea Belgrano Sur (Buenos Aires) The Belgrano Sur line is a commuter rail service in the city of Buenos Aires, Argentina run by the private company Transportes Metropolitanos Belgrano Sur S.A. , a subsidiary of Metropolitano, between 1 May 1994 and 22 May 2007... |
metre | 58 | 1 May 1994 |
| Metrovías | Metro | standard | 44 | 1994 |
| Trenes de Buenos Aires Trenes de Buenos Aires Trenes de Buenos Aires is a privately-owned company which, on 27 May 1995, took over the concession, granted by the Argentine government as part of railway privatisation during the presidency of Carlos Menem, for the operation of commuter rail services in Buenos Aires, Argentina over the broad... |
Línea Mitre Línea Mitre (Buenos Aires) The Mitre line is a commuter rail service in Buenos Aires, Argentina run by the private company Trenes de Buenos Aires since 27 May 1995. This service had previously been run by the state-owned Ferrocarril General Bartolomé Mitre since nationalisation of the railways in 1948. TBA forms part of... |
broad | 182 | 27 May 1995 |
| Trenes de Buenos Aires | Línea Sarmiento Línea Sarmiento (Buenos Aires) The Sarmiento line is a commuter rail service in Buenos Aires, Argentina run by the private company Trenes de Buenos Aires since 27 May 1995. This service had previously been run by the state-owned Ferrocarril Domingo Faustino Sarmiento since nationalisation of the railways in 1948. TBA forms part... |
broad | 167 | 27 May 1995 |
| Metropolitano | Línea Roca Línea Roca (Buenos Aires) The Roca line is a commuter rail service in the city of Buenos Aires, Argentina, run by the private company Transportes Metropolitanos General General Roca S.A. , a subsidiary of Metropolitano, between 1 January 1995 and 22 May 2007... |
broad | 252 | 1 Jan.1995 |
In spite of these companies receiving large government subsidies, the services operated by Metropolitano deteriorated to a point where the concession for the operation of Línea San Martín was revoked in 2004 and concessions for the operation of the other two lines by the company were revoked in 2007. All three lines are currently operated by the consortium UGOFE
Unidad de Gestión Operativa Ferroviaria de Emergencia
Unidad de Gestión Operativa Ferroviaria de Emergencia is a temporary consortium of Argentine companies formed on 7 January 2005 by Ferrovías, Metrovías and Trenes de Buenos Aires to take over the running of commuter railway services in Buenos Aires after concessions granted to Metropolitano in...
which Ferrovías joined in 2004.
The concessions were mainly for 10 years, with an optional 10 year extension, except for the Metro and the Línea Urquiza which were for an initial term of 20 years. As in the case of the freight concessions, the government maintained ownership of the assets, whilst the concessionaires undertook to operate their services as described in their original bid. Maximum fares were set by the government but were subject to automatic increases according to service quality and the prevailing rate of inflation. Financial penalties would be levied if agreed levels of service were not achieved.
Other Passenger Services
On 20 May 1992 the government announced that all inter-city passenger services, other than Buenos Aires to Mar del PlataMar del Plata
Mar del Plata is an Argentine city located on the coast of the Atlantic Ocean, south of Buenos Aires. Mar del Plata is the second largest city of Buenos Aires Province. The name "Mar del Plata" had apparently the sense of "sea of the Río de la Plata region" or "adjoining sea to the Río de la Plata"...
, would be discontinued on 1 January 1993, unless provincial authorities either agreed to assume responsibility for them or selected a private concessionaire to operate them on their behalf. The services that survived in this way, together with several that were discontinued and later resuscitated, are listed in Table 3.
| Concessionaire | FA Division(s) | Gauge | Length, km | Takeover Date |
|---|---|---|---|---|
| Servicios Ferroviarios del Chaco Servicios Ferroviarios del Chaco Servicios Ferroviarios del Chaco, S.A. is a company which operates passenger rail services in the Chaco Province of Argentina which were previously run by the state-owned company Ferrocarril General Manuel Belgrano since railway nationalization in 1948.As part of railway privatization, carried... |
Belgrano | metre | ? | ? |
| Ferrobaires Ferrobaires Ferrobaires S.A. is the commercial name of a public railway company which operates extensive long-distance passenger trains throughout Buenos Aires Province in Argentina. Its official corporate name is Unidad Ejecutora del Plan Ferroviario Provincial , or Executing Unit of the Provincial Railway... |
Roca | broad | ? | 2001 |
| Ferrocentral Ferrocentral Ferrocentral is a private railway company in Argentina, its name being a combination of the Spanish words for "Central Rail." It operates long-distance passenger trains from its base at Retiro Station in Buenos Aires to several locations in northern Argentina... |
Mitre | broad | ? | 2005 |
| Ferrocarriles Mediterráneos Ferrocarriles Mediterráneos Ferrocarriles Mediterráneos S.A. is a company in Argentina which operates a broad gauge railway line between Córdoba and Villa Maria built by the British-owned Central Argentine Railway, which became part of Ferrocarril General Bartolomé Mitre after railway nationisation in 1948.As part of a... |
Mitre | broad | ? | 1992 |
| Servicios Ferroviarios Patagónico Servicios Ferroviarios Patagónico Servicios Ferroviarios Patagónico is a public company owned by the Argentine Province of Rio Negro which operates a 826 km broad gauge railway line between Viedma and San Carlos de Bariloche built by Ferrocarriles Patagónicos, which became the Roca division of Ferrocarriles Argentinos after... |
Roca | broad | 826 | ? |
| Trenes Especiales Argentinos Trenes Especiales Argentinos Trenes Especiales Argentinos is a private railway company in Argentina set up during railway privatisation from 1991.From its base at Federico Lacroze Station in Buenos Aires, TEA operates long-distance passenger rail services into northern Argentina to the city of Posadas in Misiones Province on... |
Urquiza | standard | ? | ? |
| Tren de la Costa Tren de la Costa Tren de la Costa is a suburban , 11-station light rail line in Greater Buenos Aires, between Maipú Avenue station in the northern suburb of Olivos and Delta station in Tigre, on the Río de la Plata... |
Mitre | standard | 15.5 | April 1995 |
| Austral Fuegino | ? | 0.5m | ? | ? |
| Viejo Expreso Patagónico La Trochita La Trochita, , in English known as the Old Patagonian Express, is a narrow gauge railway in Patagonia, Argentina using steam locomotives. The nickname La Trochita means literally "The Little Narrow Gauge" in Spanish... |
Roca | 0.75m | ? | ? |
| Ferrocarril Córdoba Central Ferrocarril Córdoba Central Ferrocarriles Córdoba Central S.A. is a company in Argentina which operates a 150 km metre gauge railway line between Rodriguez del Busto station in the centre of the city of Córdoba and Capilla del Monte. The line was built by the state-owned Ferrocarril Central Norte, which became part of... |
Belgrano | metre | ? | 14 January 1995 |
| Trenes y Turismo Tren de las Nubes The Tren a las Nubes or Tren de las Nubes is a train service in Salta Province, Argentina, that connects the Argentine Northwest with the Chilean border in the Andes mountain range, over above mean sea level, the third highest railway in the world. Originally built for economic and social... |
Belgrano | metre | ? | ? |
| Tucumán Ferrocarriles Tucumán Ferrocarriles Tucumán Ferrocarriles S.A. is a company in Argentina which operates a railway line between Buenos Aires and Tucumán in Argentina built by the state-owned Ferrocarril Central Norte, which became part of Ferrocarril General Manuel Belgrano after railway nationisation in 1948.As part of a national... |
Mitre | broad | ? | October 1997 |