PROJECT

Projects

Summary of Proposed Investment

Project Number

9129

Company Name

Panama Canal Railway Company

Date SPI Disclosed

Dec 29, 1998

Country

Panama

Industry

Infrastructure

Status

Completed

Sector

Rail Transportation

Department

Gbl Infrastructure & Natural Resources

Environmental Category

B - Limited

Previous Events

Approved : Jun 25, 1999
Signed : Nov 12, 1999
Invested : Dec 20, 1999

Project Description

Summary Of Project Information (SPI)

Project NamePanama – Panama Canal Railway Company (PCRC)
Rehabilitation and Modernization of the PCRC network.
RegionLatin America and Caribbean

SectorInfrastructure
Project No009129
Projected Board DateJanuary 30, 1999
Company NamePanama Canal Railway Company
Technical Partner and/or Major Shareholders

The Project’s sponsors are Kansas City Southern Industries, Inc. (“KCSI”) and Lanco International, Inc. (“Lanco”), which each own 50% of the joint venture company respectively. Kansas City Southern Industries, Inc. is the parent company of Kansas City Southern Railroad Company (“KCSR”), which is one of North America’s major (Class I) railroads. Lanco International, Inc. is the parent company of Mi-Jack Products, Inc. (“Mi-Jack”), the largest independent intermodal terminal operator in North America. The Kansas City Southern railroad system comprises about 6000 miles of rail line. Mi-Jack handles approximately 4 million intermodal moves per year at over 50 locations.

Project Cost Including proposed IFC investment

Project cost is estimated at US$75 million for the 2-year period 1998-2000. IFC''s proposed investment in PCRC consist of an equity/quasi-equity investment of up to US$6 million, an IFC loan of up to US$12 million, and up to US$35 million in loans from participants.

Location of project and Description of site

The PCRC network is located between the city of Colon on the Atlantic Ocean and Panama City on the Pacific side.

Description of Company and Purpose of Project

The project initially consists of completely renovating the entire 47-mile rail network; the construction of intermodal terminals next to the ports on both coasts and the purchase or lease of rolling stock and terminal equipment. PCRC will receive containers from the port operators on both the Atlantic and Pacific coasts, load at the near-dock railroad intermodal terminal, transport via rail service across the isthmus to the other near dock terminal, unload and connect with a vessel. For domestic delivery, and delivery to the Colón Free Trade zone, containers will be loaded onto trucks at both intermodal terminals for delivery to the final destination. The proposed investment is expected to be carried out over a 2-year period beginning in 1998. The initial annual volume is estimated at 75,000 containers, increasing to an estimated 177,900 containers annually by 2005. Although not part of this project, PCRC envisages the provision of a passenger service on its track by a third party that would furnish and maintain the equipment for the passenger service.

Environmental Category and Issues

This is an environmental and social review category B project. Key issues reviewed included PCRC’s implementation of an environmental management program for system renovation and operation; displacement of small businesses, residents and transients for railroad facilities; labor issues; protection of natural areas and cultural property; liability for site contamination from past railway operations and on newly-acquired properties; public safety and emergency response programs; employee training and health and safety programs; and public consultation and disclosure.

An Environmental Impact Assessment (EIA) for the initial phase of construction and operation of the railroad was prepared (in both Spanish and English) in May 1998. PCRC has prepared and will implement a Resettlement Plan in accordance with IFC policies. Staff employed by the former railroad operator were terminated in accordance with a government-approved retrenchment package that had been developed for other privatizations in Panama. PCRC has since rehired selected personnel for its current operations, and will rehire others with preference to qualified former employees and Panamanian citizens. As required by the concession PCRC and ARI, the Canal Zone redevelopment authority, will establish a plan for completing any required site remediation at the government’s cost.

PCRC and its consultants have conducted extensive consultation with government agencies and other interested groups during both the concession process and preparation of the EIA. The Resettlement Plan, together with an Environmental Review Summary prepared by IFC, are being publicly disclosed at the World Bank’s InfoShop and in-country.

The Environmental Review Summary is expected to be available on or about December 29, 1998 from the Public Information Center.
Date SPI sent to PIC December 29, 1998
    “
This Summary of Project Information is prepared and distributed to the public in advance of consideration of the proposed transaction by the Corporation’s Board of Directors. It is provided for the purpose of enhancing the transparency of IFC’s activities and should not be construed as presuming the outcome of IFC Board consideration.”

For Additional Information contact: Corporate Relations Unit -
telephone: (202) 473-7711
facsimile: (202) 974-4384
Environmental documents for this project are available at http://www.ifc.org and from the World Bank InfoShop (http://www.worldbank.org/html/pic/aboutinfo.html).

Sponsor / Cost / Location