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Photo credit: Train by Andre Chinn

Last Tuesday, House of Representatives approved a bill to amend the Law for Railroad Service in order to open competition, and to keep up with the upcoming train projects in Mexico.

According to the Minutes of the House, Mexico is tenth place worldwide in railroad infrastructure with 0.0065 miles per square mile of territory. Since 2006, railroad was 26% of transport of goods. From 2005 to 2011, Mexico grew only 0.02% in railways. On the other side, the tariffs increased 61.6% during last twelve years (with accumulated inflation).

In terms of public policy and government check-and-balances, these numbers are not good. However, in business terms this means that everything is about to be done.

The main highlights of the minutes are the following:

1. Interested parties may request Ministry of Communications (SCT) to call for a concession auction. If such call is not issued in 180 days, the concession will receive automatic approval.

2. Concessionaires and permit holders are now forced to interconnect and agree drag, charge and right of way among each other. SCT has authority to resolve disputes, with the twist that even users can request a starting a proceeding for reviewing conditions on tariffs.

3. Non-operators may obtain permits for construction and leasing railways infrastructure.

4. Concessions and permits can be revoked in the event of charging unregistered tariffs, preventing interconnection or not maintaining the infrastructure.

This Bill is being delivered to the Senate for discussion. Considering that SCT may call for the Trans-peninsular Train for Yucatán-Punta Venado/Cancún (TT) in April, the amend could be in effects before that.

This Bill is not getting the press of other reforms like telecommunications or energy, but will bring a lot of business, as automotive and tourism industries are ready to increase railway transport.


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