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SPEECH DIRECTORY: Background on RDC USA Argentina Guatemala Peru Estonia Malawi / Mozambique Investment Parameters The Case for Privatization in Africa Case Study: Financing the Nacala Corridor Structural Trends in African Privatizations Conclusions Q & A Session |
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First I will provide some background on our company and our investment
parameters, since this is an investment-oriented conference; discuss the
case for privatization in Africa; discuss a specific project we are
involved in, which is the Nacala Corridor in Mozambique and Malawi;
discuss some of the structural trends in terms of how things have gone
around the continent; and make some conclusions. Background on RDC RDC is a private company based in Pittsburgh that invests in and manages railways. We describe our business as “Emerging Corridors in Emerging Markets,” which means in some cases not just railways, but also railways and ports; railways and fiber optics; and generally anything we can do to maximize the value of railways in developing countries. I would also like to emphasize that everything we do is based on joint ventures. None of what we do is the “RDC show”; everything we do is with partners. |
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USA Our core investment in
the USA — and our only investment — is the Iowa
Interstate Railroad. In some respects this railroad has a
little bit to do with Africa in that it was abandoned in 1980 when the
Rock Island Railroad liquidated. This
railroad actually was taken from abandonment and put back in service and
now serves as one of the four main lines from Chicago to Omaha in the
USA. This is a joint
venture with the shipper group Heartland Rail Corporation that bought
the track basically for scrap in 1984.Shown is a local train as much of our business is single wagonload, siding-to-siding business — as compared to unit trains. |
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Argentina We have been involved in the first country to privatize its railways outside of the USA. Since 1991 we have been involved in Argentina and in fact we have been involved in Argentina so long that the company has been recapitalized and we have new partners. These are the railways that run from Buenos Aires to Chile (ALL-Central) and Buenos Aires to Brazil (ALL-Mesopotámica). |
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Guatemala Our most challenging project has been the restoration of Guatemala’s abandoned railway, Ferrovias Guatemala. Because the railway was abandoned, we were able to negotiate the rights for fiber optics, etc., which have the effect of cross-subsidizing a railway which had zero revenue at the start. In this particular case, we were able to raise financing on the local stock exchange. We have approximately 50 local partners, who are small investors, so we have a definite local component as a result of this. We
have not been able to finance reopening of the system to Mexico or to
the Pacific. This is
something we have been struggling with for a long time and continue to
struggle with. |
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Peru We are also partners in the World’s Highest Railroad — the Central of Peru (Ferrocarril Central Andino). Among our partners is CDC of the UK, who is represented at this conference. |
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Estonia Most recently we became involved in Estonian Railways, which is the first of the former Soviet Railways to be privatized. This is part of a massive railway system with enormous traffic volume. The tonnage that we haul on Estonian Railways on our 700-kilometer railway is approximately 20% of the entire freight tonnage of Spoornet. This is very high traffic density. In this particular case, in addition to Estonian investors and Rail World Inc. (USA) we have a UK Partner, which is Jarvis; their main business is infrastructure maintenance on the UK railways. |
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| Malawi / Mozambique Now let’s talk about Africa. In 1999 we were able to participate in the privatization of Malawi Railways, now known as Central East African Railways. This is a joint venture with CFM, the National Railways of Mozambique; ERL, who is represented at this conference by Jack Edlow and Russell Neely; MANICA, a Mozambican freight forwarder — some of you have had the chance to meet Fernando Couto; and local investors. This investment has been very important for the country because it was privatized before the recent famine occurred and the railway has been more able to deal with the famine as a result of it being in private hands. This railway only connects with the northern railway of Mozambique. It’s very much like Uganda and Kenya; Malawi Railways does not go to any place other than to Nacala. What we are working to accomplish this year is privatization and concessioning of the Nacala Corridor to create the first integrated port/railway system for general cargo in the world, to our knowledge. We expect to complete this transaction later this year. |
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© 2003 Railroad Development Corporation
All photographs are the property of RDC. Unauthorized duplication is
prohibited.
