Consortium lone bidder for Mexico's North-Pacific Railway
July 01, 1997
by Teresa Acklin
A newly formed consortium in May gained the inside track to acquire 50-year concession rights for the second-largest railroad line in Mexico. The consortium consists of Grupo Mexico, a mining company; Grupo Ingenieros Civiles Asociados, a Mexican construction company; and the Union Pacific Railroad, the largest U.S. hauler of grain by rail.
An official in the Mexican Communications and Transport Ministry said the lone bidder still would need to meet the minimum price set by the government and to fulfill other technical requirements. Bids were scheduled to be submitted by June 19 and opened June 26. Awarding of a 50-year concession was expected several days later.
Transportation industry analysts suggested that the government's minimum price for the North-Pacific line was about U.S.$1 billion. Last year, Kansas City Southern Industries and Transportacion Maritima Mexicana submitted a winning U.S.$1.4-billion bid for Mexico's Northeastern rail line. The Union Pacific, as well as Grupo Mexico, were among unsuccessful bidders on that route, the largest of the five major routes to be privatized by the Mexican government.
It was indicated that Union Pacific's investment in the consortium would be in the range of 10% to 15%.
Union Pacific, whose U.S. routes have served Mexico since 1881, connects with the North-Pacific Railway at Eagle Pass and El Paso, Texas; Nogales, Arizona; and Calexico, California.
In a recent dispatch from the U.S. commercial attache's office in Mexico City, the 6,216-kilometer Northern-Pacific Railway was described as “the second-most lucrative rail line, accounting for almost half of the Mexican National Railway (F.N.M.) system's cargo and one-fifth of its revenue (U.S.$163 million annually).” The railroad's primary track connects Mexico's three largest cities Monterrey, Guadalajara and Mexico City and ports on both coasts Manzanillo and Tampico with the U.S. border. It transports 46% of total Mexican rail cargo and employs 15,000 persons.