Environmental & Social Review Summary
Project Number
9902
Company Name
GW Servicios, S.A. de C.V.
Date ESRS Disclosed
Feb 5, 2010
Country
Mexico
Region
Latin America and the Caribbean
Last Updated Date
Jan 2, 2017
Environmental Category
B - Limited
Status
Completed
Previous Events
Approved : Mar 31, 2000
Signed : Dec 5, 2000
Invested : Dec 7, 2000
Sector
Rail Transportation
Industry
Infrastructure
Department
Regional Industry INF LAC & EUR
Project Description
Environmental Review Summary (ERS)
Project Name Mexico - FCCM
Region Latin America and the Caribbean
Sector Infrastructure
Project No. 009902
1. Compañía Ferrocarriles Chiapas-Mayab S.A. de C.V. (FCCM) was formed to rehabilitate, modernize and operate the Chiapas and Mayab rail lines in southern Mexico under a 30 year privatization concession won in July 1999. FCCM is a subsidiary of Genesee & Wyoming Inc., (GWI) one of the leading US short-line railroad operators.
2. The FCCM network is located in six states, and consists of 960 route miles of standard gauge track on two lines, the Mayab along the Caribbean coast and the Chiapas on the Pacific coast. The two lines do not directly connect, and FCCM has 130 miles of trackage rights across the isthmus. FCCM took over operations on September 1, 1999. The government continues to own the track infrastructure, while FCCM owns the rolling stock. At takeover rolling stock comprised some 35 locomotives and 444 rail cars.
3. The concession requires FCCM to invest in track infrastructure within the first 12 months of assuming operation. Within five years, FCCM will make capital investments to significantly improve current operational safety and efficiency indicators. Average train speed is expected to approximately double, to about 40 km/hour.
4. FCCM operates passenger service between Tenosique on the Mayab line and Tapachula on the Chiapas line. The government provides the locomotives and passenger cars; FCCM is responsible for train operation, maintenance of the rolling stock, and passenger operations. Each train is about 3 passenger cars, and the agreement allows FCCM to include up to 20 freight cars on each train. Passenger service accounts for about 15% of total train miles.
5. This is a category B project according to IFC’s environmental and social review procedure because specific impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The review of this project consisted of appraising technical, environmental, and social information submitted by the project sponsor, and the technical appraisal and site review completed by IFC’s staff and consultants to IFC. The following potential environmental, social, health, and safety impacts of the project were analyzed:
· environmental management capacity;
· responsibility/indemnity for environmental contamination from past operations;
· environmental compliance of current operations;
· employee training and health and safety programs;
· public safety and emergency response;
· vegetation management on the right-of-way;
· sustainability of wood source for cross ties;
· socioeconomic impact of reduction in the work force;
· management of encroachments on rights-of-way and other railroad property; and
· management of cultural property and protected areas.
The sponsor has presented plans to address these issues and demonstrate that the proposed project will comply with applicable governmental and World Bank requirements. The information provided about how these potential impacts are addressed in the development of the project is summarized in the paragraphs that follow.
6. Environmental management capacity The FCCM management team consists of industry specialists recruited for the project, corporate personnel from GWI who will support the company, and local hires including personnel from the former operator. Under the General Manager there are five main departments for day-to-day operations: transportation operations, mechanical maintenance, right-of-way maintenance, finance/administration, and commercial. The GWI Vice President of Safety will fill the position for overall safety and environmental support on an interim basis, and will work through the various department heads. The department heads are experienced in their respective areas, and demonstrate recognition of what needs to be done to upgrade environmental and social performance of the company’s operations. Training programs, for example, are well underway, even though FCCM has only recently taken over.
7. Responsibility/indemnity for environmental contamination from past operations The concession contract indemnifies FCCM from liability for past contamination. GWI has contracted for an independent environmental audit and is preparing a Corrective Action Plan (CAP) of facilities and properties turned over to FCCM. The CAP will identify the steps to be taken to bring the FCCM’s facilities and properties into compliance with current Mexican laws and regulations and World Bank guidelines. Receipt of a final CAP will be a condition of disbursement of IFC’s loan. In addition to the CAP, FCCM will work with the government to develop a final plan for remediating existing contamination on the property contained in FCCM’s concession.
8. Environmental compliance of current operations During its bid preparation FCCM made an evaluation of which existing maintenance and fueling facilities would be required to support a more streamlined operation. Current condition and cost of modernization of facilities were also considered. As a result, FCCM elected to not acquire some facilities. FCCM plans to minimize the number of fueling stations by operating locomotives 900 km between fueling stops, and thus some existing stations will be decommissioned. Currently the company has shops for major repair of locomotives and freight cars at Merida, running repair shops at Tenosique and Tonala, and fueling stations in Merida, Tenosique, and Tonala.
9. FCCM’s shops and fueling stations appear to have been initially constructed and operated with a reasonable level of environmental protection for the times, although environmental facilities are currently obsolete and in disrepair. FCCM will perform a general upgrade of oil/water separators and effluent treatment plants, facilities for handling and disposal of hazardous materials, solvents, oils, etc. The environmental audit identified certain key action items needed for environmental compliance at each facility. The CAP will provide a comprehensive action plan for bringing the facilities into compliance. FCCM will also need to improve workplace conditions in the shops, such as lighting.
10. Employee training and health and safety programs Training of operating personnel on FCCM’s new operating rules was undertaken from October through December 1999. Other training programs are planned throughout the year 2000 in such areas as air brake and train handling classes, apprentice locomotive engineer training, managerial training for supervisors, and training regarding derailment cause finding. A safety enhancement plan is also being implemented, to include safety inspections of installations and equipment, formation of safety committees, safety incentive programs, provision of personal protective equipment, work area upgrades, and improved reporting.
11. Public safety and emergency response FCCM has been operating the system since September 1999, and has been evaluating existing policies and procedures during this time. The system experiences numerous minor derailments, and FCCM has taken immediate actions to reduce derailments. FCCM expects that its trackbed improvement and employee training programs will reduce incidents significantly when they are fully implemented in about two years. Currently, main tracks are inspected at least once a week with principal routes inspected at least twice a week. Secondary tracks are inspected twice a year. A special inspection is conducted of track that has suffered damage by a flood, fire, heavy storm, or any event that may have been capable of causing structural damage.
12. Freight cargos include cement, fuel oil, gasoline and diesel fuel, corn, silica sand, propane, agricultural products, and other cargo. Intermodal shipments of containers and trailers will be a sizeable business segment. FCCM is reviewing the existing safety and other procedures for handling these cargos and is making any necessary revisions. Handling procedures for cargos currently shipped by FCCM are well established in the industry.
13. Vegetation management on the right-of-way Vegetation control programs have been inactive for an extended period and the right-of-way is heavily overgrown. Train movement serves to control growth in the immediate track area. Right-of-way management procedures are being established by the engineering department, and will be adapted to requirements of each state in which the railroad operates and specific needs of right-of-way abutters such as banana plantations. Specific herbicides that will be used have not been determined, as agreements have not been reached with state authorities. FCCM’s plan for herbicide use will be a condition of disbursement of IFC’s loan.
14. Sustainability of wood source for cross ties FCCM’s concession requires upgrading of the track during the first year of private operation. Contractors who are refurbishing FCCM’s track are expected to need about 120,000 cross ties for this work. FCCM expects to acquire about 40,000 ties annually for its own account, for routine track maintenance. FCCM has mostly wood ties on its system, although there are three track segments near Escarcega with concrete ties. For cost and availability reasons the company plans to buy primarily wood ties in the future. Ties will be purchased from commercial suppliers, and are expected to be both hardwood and pine species from natural growth forests and managed plantations. All cutting of timber in Mexico, both public and private land, is controlled by the federal government, and FCCM buys only from approved suppliers.
15. In southern Mexico several campesino organizations (Ejidos), many of which are Indian groups, supply wood to be treated for railroad ties and other purposes. The Ejidos are well organized, have been in the forestry business for some time, and are knowledgeable about market conditions. Advance payments serve as a guarantee and finance some of the production costs. The commercial relation between wood treating companies and the Ejidos is mutually beneficial.
16. Socioeconomic impact of reduction in the work force The national rail union represents the majority of FCCM employees, including train and engine crews and track and rolling stock maintenance workers. Approximately 1,000 union employees were laid off by the former operator prior to FCCM’s startup. Some early reductions also occurred within the two years prior to privatization. Under its concession, FCCM has no liabilities related to these workforce reductions.
17. FCCM reached a new labor agreement with the union on November 1, 1999 that encompasses new work rules and represents Mexico’s first compensatory severance, scholarship, and social adjustment package. One of the most important work rules is a reduction in train crew size from six staff to as few as two on some routes, which allowed FCCM to further reduce its workforce. The new contract includes severance payments to 55 employees laid off as a result of the new work rules as well as other payments to the 1,000 staff previously let go. No additional layoffs are planned. Some of the personnel let go have been re-employed in railroad-related positions. Approximately 38 brakemen are now working as in-car service crew on passenger trains. And the contracted security force of 85 to 100 personnel includes many former railroad security persons. FCCM currently employs approximately 435 total personnel, 103 non-union and 332 union.
18. Management of encroachments on rights-of-way and other railroad property FCCM’s concession includes little property that is not directly related to its railroad operations. The engineering department is responsible for maintaining the right-of-way and other railroad property free from encroachments that limit train operations. There is currently only limited encroachment of housing on active track and yards although there is minor encroachment on old sidings, etc. Various agricultural operations have expanded into the 35-meter right-of-way. Neither of these impedes day-to-day rail operations and the company does not expect to displace existing encroachers, either economically or physically, in the near future. Train and track maintenance crews are instructed to maintain an awareness of existing encroachments and to report new activities so that they can be dealt with.
19. Management of cultural property and protected areas FCCM’s current rights-of-way do not traverse or abut designated environmentally or culturally sensitive areas, and no significant route realignments are expected as part of the trackbed upgrade program. The main rail passenger station in Merida is a historic property; FCCM’s responsibilities lie only with the rail track into the station and train operations. The company will manage all of its operations with due regard for cultural property.
20. Based on its review of available information regarding potential environmental and social impacts and proposed mitigation measures, IFC concludes that, with the implementation of the CAP, the proposed project is being designed to meet Government of Mexico requirements, and World Bank policies, and environmental, social, health and safety guidelines.
21. IFC will monitor the progress of implementing the CAP and other mitigation as well as ongoing compliance with World Bank policies and guidelines during the life of the project by evaluating monitoring reports submitted annually to IFC by the sponsor and by conducting periodic site reviews during project supervision.
Environmental and Social Mitigation Measures
Broad Community Support
Related SII
