Summary of Proposed Investment
Project Number
9902
Company Name
GW Servicios, S.A. de C.V.
Date SPI Disclosed
Feb 15, 2000
Country
Mexico
Industry
Infrastructure
Status
Completed
Sector
Rail Transportation
Department
Regional Industry INF LAC & EUR
Environmental Category
B - Limited
Previous Events
Approved : Mar 31, 2000
Signed : Dec 5, 2000
Invested : Dec 7, 2000
Project Description
A Mexican railroad operating company, Compañía Ferrocarriles Chiapas-Mayab S.A. de C.V. (FCCM), is 100% owned by Genesee & Wyoming Inc. (GWI), which is also the primary sponsor of the project. GWI is a publicly traded U.S. company whose subsidiaries own and operate short line and regional freight railroads and provide related rail services over approximately 4,700 miles of track in the United States, Australia, Canada and Mexico. In 1998, GWI''s sales were $147 million and its net income totaled $11.4 million.
- Project Cost Including proposed IFC investment
Project cost is estimated at $48.0 million equivalent. IFC''s proposed investment in FCCM consist of an A loan of up to $12 million and equity of up to $2 million.
- Location of project and Description of site
FCCM''s network consists of the Chiapas and Mayab rail lines. The Chiapas line is situated in the states of Oaxaca and Chiapas. The Mayab line is situated in the states of Campeche, Yucatan, Veracruz and Tabasco.
- Description of Company and Purpose of Project
FCCM was formed in July 1999 to rehabilitate and modernize the FCCM''s railway network, including an upgrade of infrastructure, a rehabilitation of rolling stock, an upgrade of the communication system and an improvement of railway security. This project, through the provision of more efficient transportation services to the industrial and agriculture companies in the region, is expected to foster increased economic growth and thus help to remove obstacles to sustainable growth in the region. Removal of these obstacles is also expected to contribute to political and economic stability in the region.
- Environmental Category and Issues
This is a category B project according to IFC’s environmental and social review procedure. FCCM’s environmental management capacity is ensured through recruitment of an experienced management team and the assignment of GWI’s senior safety officer to oversee overall safety and environmental activities. Training of operating personnel on FCCM’s new operating rules was undertaken from October through December 1999, and other training programs are planned throughout the year 2000. FCCM expects that its trackbed improvement and employee training programs will reduce derailments and other safety incidents significantly when they are fully implemented in about two years. Handling procedures for cargos currently shipped by FCCM are well established in the industry.
The national rail union represents the majority of FCCM employees. 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. 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 1,000 staff previously let go at FCCM’s startup. No additional layoffs are planned. Some of the personnel let go have been re-employed in railroad-related positions such as in-car service crew on passenger trains and the contracted security force.
The concession contract indemnifies FCCM from liability for past contamination. FCCM has contracted for an independent environmental audit and is preparing a Corrective Action Plan (CAP) of facilities and properties turned over to FCCM. The environmental audit is completed and the CAP will identify key action items needed for environmental compliance at each facility. Receipt of a final CAP will be a condition of disbursement of IFC’s loan.
FCCM’s rights-of-way do not traverse or abut designated environmentally or culturally sensitive areas, and no significant route realignments are expected. Vegetation management procedures will be adapted to requirements of each state in which the railroad operates and specific needs of right-of-way abutters. Specific herbicides that will be used have not been determined, and FCCM’s plan for herbicide use will be a condition of disbursement of IFC’s loan. FCCM’s concession includes little property that is not directly related to its railroad operations. There is currently only limited encroachment on active track and yards; this does not impede day-to-day rail operations and the company does not expect to displace existing encroachers, either economically or physically, in the near future.
FCCM has mostly wood ties on its system, and 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.
The is available from the InfoShop.
Date SPI sent to InfoShop February 15, 2000
“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
Fax: (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).
- Project Cost Including proposed IFC investment
Project cost is estimated at $48.0 million equivalent. IFC''s proposed investment in FCCM consist of an A loan of up to $12 million and equity of up to $2 million.
- Location of project and Description of site
FCCM''s network consists of the Chiapas and Mayab rail lines. The Chiapas line is situated in the states of Oaxaca and Chiapas. The Mayab line is situated in the states of Campeche, Yucatan, Veracruz and Tabasco.
- Description of Company and Purpose of Project
FCCM was formed in July 1999 to rehabilitate and modernize the FCCM''s railway network, including an upgrade of infrastructure, a rehabilitation of rolling stock, an upgrade of the communication system and an improvement of railway security. This project, through the provision of more efficient transportation services to the industrial and agriculture companies in the region, is expected to foster increased economic growth and thus help to remove obstacles to sustainable growth in the region. Removal of these obstacles is also expected to contribute to political and economic stability in the region.
- Environmental Category and Issues
This is a category B project according to IFC’s environmental and social review procedure. FCCM’s environmental management capacity is ensured through recruitment of an experienced management team and the assignment of GWI’s senior safety officer to oversee overall safety and environmental activities. Training of operating personnel on FCCM’s new operating rules was undertaken from October through December 1999, and other training programs are planned throughout the year 2000. FCCM expects that its trackbed improvement and employee training programs will reduce derailments and other safety incidents significantly when they are fully implemented in about two years. Handling procedures for cargos currently shipped by FCCM are well established in the industry.
The national rail union represents the majority of FCCM employees. 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. 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 1,000 staff previously let go at FCCM’s startup. No additional layoffs are planned. Some of the personnel let go have been re-employed in railroad-related positions such as in-car service crew on passenger trains and the contracted security force.
The concession contract indemnifies FCCM from liability for past contamination. FCCM has contracted for an independent environmental audit and is preparing a Corrective Action Plan (CAP) of facilities and properties turned over to FCCM. The environmental audit is completed and the CAP will identify key action items needed for environmental compliance at each facility. Receipt of a final CAP will be a condition of disbursement of IFC’s loan.
FCCM’s rights-of-way do not traverse or abut designated environmentally or culturally sensitive areas, and no significant route realignments are expected. Vegetation management procedures will be adapted to requirements of each state in which the railroad operates and specific needs of right-of-way abutters. Specific herbicides that will be used have not been determined, and FCCM’s plan for herbicide use will be a condition of disbursement of IFC’s loan. FCCM’s concession includes little property that is not directly related to its railroad operations. There is currently only limited encroachment on active track and yards; this does not impede day-to-day rail operations and the company does not expect to displace existing encroachers, either economically or physically, in the near future.
FCCM has mostly wood ties on its system, and 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.
The is available from the InfoShop.
| Host country location of environmental documents | The ERS will be placed at the train stations in Tonala (Chiapas state), Campeche (Campeche state), Merida (Yucatan state), Ixtepec (Oaxaca state), Tenosique (Tabasco state) and Coatzacoalcos (Veracruz state). |
Date SPI sent to InfoShop February 15, 2000
“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
Fax: (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
Related ESRS/ERS
