| MEXICO CITY
MEXICO CITY Feb 25 U.S. and Chinese rail
companies have expressed interest in the Mexican rail freight
market if a bill that seeks to open up the sector to more
companies is approved, the head of the lower house of Congress'
transport commission said on Tuesday.
Earlier this month, Mexico's lower chamber overwhelmingly
approved a reform of the rail freight law which would open up a
sector controlled almost entirely by two concession-holders:
Grupo Mexico's Ferromex and Ferrosur railroads,
and Kansas City Southern de Mexico.
Under the terms of the bill, which still has to be approved
by the Senate, these concession-holders would be forced to share
their lines or risk losing them. They would also have to publish
prices they charge customers for interconnections with routes
owned by other companies.
"What's this proposal aiming to do? Bring new players into
the market," lawmaker Juan Carlos Munoz, a member of the
opposition National Action Party, told Reuters.
"There's an interest in China to enter Mexico's rail market,
the United States and China," he added.
Munoz declined to name the companies that had expressed
interest, but said any potential newcomers would benefit from a
recently approved overhaul of Mexico's long-shuttered energy
sector, which aims to lure foreign investment.
Rail freight is crucial for Mexico's fast-growing auto
production and manufacturing sectors, which are key to economic
growth, and the energy reform is also expected to boost sales.
However, some customers, like steel producers, say the lack
of competition makes for exorbitant freight prices.
U.S. railroad companies already have investments in Mexico.
Kansas City Southern de Mexico is owned by U.S. firm Kansas City
Southern while U.S. rail firm Union Pacific Corp
owns about a quarter of Ferromex.
Munoz said the bill could allow these companies to set up
their own businesses, without local partners.
"Union Pacific ... has a great opportunity to separate
itself," he added. "To become a new concession-holder without
being involved with Ferromex. It opens an impressive opportunity
Union Pacific did not immediately respond to requests for
comment. A spokeswoman for BNSF Railway Co, one of the
largest U.S. railroads, also declined to comment on the bill.
Munoz said that if the bill is approved, big industrial
players, like cement producer Cemex, could build their own
lines, use their own cars and locomotives and pay the current
concession-holders if they needed to use their lines.
Both Ferromex and Kansas City Southern de Mexico have
already said they are mulling legal challenges to the bill,
which they say ignores a concession granting exclusivity for
another 14 years.
In 2013, Grupo Mexico's transport unit, which commands the
lion's share of the rail freight market, generated record sales
of $1.86 billion.
Munoz said he expected the Senate to make certain changes to
counter the argument made by the current concession-holders that
the proposed bill sets a worrying precedent as Mexico tries to
lure new investors into its oil and gas sector.
"(We're) certainly looking to give legal certainty in all
international areas," he said. "We don't want to generate a bad