MercoPress. South Atlantic News Agency

Argentina seizes Brazilian cargo railway concession arguing non compliance with contract conditions

If the government has to take over more railways we are willing to do so, said minister Randazzo

Argentina expropriated a cargo railway concession from Brazil’s All America Latina Logistica, ALL, and a tourist train concession, citing non-compliance with contractual agreements. ALL operated the railways between Mendoza province and the Rosario port as well as the railway between Misiones province and the Buenos Aires port since 1999.

Freight company ALL, based in Curitiba, Brazil, incurred “grave” contract violations by failing to invest and accumulating fines worth 30% of the concession, Interior and Transport Minister Florencio Randazzo said in Buenos Aires on announcing the government’s decision.

Argentine President Cristina Fernandez has nationalized the country’s largest oil company, an airline and 24 billion of private pension funds during her six years in power.

Argentina won’t hesitate to nationalize other railway concessions if companies don’t improve services, Randazzo said, adding the government won’t pay for the rail concessions.

“If the government has to take over more railways we are willing to do so,” Randazzo said. “We want and must to reduce our freight costs.”

ALL said in a regulatory filing after the announcement that it hasn’t been notified of the revoked licenses. Its Argentine operations made up 6.5% of net revenue and didn’t contribute to earnings before Ebitda, interest, taxes, depreciation and amortization.

“Argentina’s ALL unit has lost representation in the company’s consolidated earnings while demanding disproportionate attention from its administration,” the Brazil company said in a note to Sao Paulo’s stock exchange.

The other seizure involved the tourist train north of Buenos Aires known as “Tren de la Costa”, which was under control of Argentina’s Sociedad Comercial del Plata SA, along with an amusement park in Tigre, north of the capital.

Argentine railways, originally in British hands, were first nationalized during the first Juan Domingo Peron administration in the late 1940s. President Carlos Saul Menem granted the concessions in the 1990s.

On 22 February last year, 51 people were killed and more than 500 injured when a packed commuter train slammed into the buffers and safety barriers at one of Buenos Aires’ busiest railway stations in the Once neighbourhood. The concession was owned by closely held Trenes de Buenos Aires SA. The government ended the concession.

The Once crash was the second-worst in Argentina’s history after the 1970 railway crash when two trains collided near Benavidez, 48 kilometres from Buenos Aires, killing more than 200 people.