IDB Invest, member of the Inter-American Development Bank (IDB) Group, approved a financial package of approximately US$500 million for the construction, rehabilitation and maintenance of 273 km of rail lines between the cities of Montevideo and Paso de Los Toros, in Uruguay. The project will be executed through a public-private participation contract between the Ministry of Transport and Public Works of Uruguay and a special purpose company created with this purpose: Grupo Vía Central S.A.
This railway project aims to improve the connectivity and integration of the interior regions of Uruguay with its capital, Montevideo. The objective is to generate a positive impact on the productivity of the Uruguayan export companies, given that the main traffic of the railroad will come from the transport of cargo from the interior of the country to the port of Montevideo, for its export. It would also serve as a means of transport for the UPM pulp mill, should this investment be carried out. In this sense, it is expected that this new infrastructure will contribute to mobilize this and other new investments of the productive private sector, which are currently evaluating investing in the country.
The financial package approved by IDB Invest has a term of up to 17 years and consists of a senior loan of up to US$440 million and a subordinated loan of up to US$60 million, financed by IDB Invest and a group of commercial banks and international investors.
The use of the funds will allow the construction of the road itself, as well as the installation of a comprehensive signaling system with the latest technology, the construction of 66 new bridges, two overpasses with trenches, sewers and other drainage structures. It also includes the construction and equipping of 264 level crossings, which will improve road safety, especially in suburban and urban areas. In addition, it will provide interconnection for three additional existing rail lines.
The implementation of the Central Railroad line is part of the infrastructure plan of the government of Uruguay, which includes Public-Private Partnership initiatives in transport and education. The government's objective is to consolidate the promotion of the freight railroad.
