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Vázquez loses patience

28 Mar 2008

URUGUAY: Since March 10 state railway AFE has had a new board (p258), the previous incumbents having been suddenly removed by President Tabaré Vázquez. It appears that his administration had lost patience with the slow pace of reform at AFE, where projects to involve the private sector in restoring the national network and reviving rail freight have not moved as rapidly as the government would have liked.

Speaking on Radio El Espectador on March 13, Minister of Transport & Public Works Víctor Rossi explained that Vázquez had acted 'because unfortunately we did not manage to all agree on a common strategy, and for a team to perform we all have to be aiming for the same goal'. He may have had in mind ousted AFE Vice-President Luis Pérez Melón who had criticised the railway's dysfunctional administration.

The new team may have similar problems on its hands. Incoming Director Juan Silveira holds a top post at a railway trade union that has been highly critical of plans to involve the private sector, pointing to an internal AFE study that concluded that work to upgrade 720 km of infrastructure could be undertaken for US$60m rather than the US$170m appar­ently being quoted by bidders for the infra­structure PPP.

Of the five bids to upgrade the 962 km core of the AFE network, Rossi said two were 'worthy of consideration and we are going to start negotiations to see if we can fix the prices as much as possible'. The outcome would determine the precise amount of track that the government could afford to renew, he added.

Meanwhile, a data room was due to be opened last month for the four prequalified bidders for a 51% stake in a joint venture with AFE to operate freight trains on the national network. Once again, it appears that much of the detail, including the length of the concession, is to be thrashed out through negotiation, but Rossi was clear that the private sector would be expected to invest in new traction and rolling stock.