Rail technology is a great long-term option to transport resources and products in countries like Argentina, Brazil and Chile, General Electric (NYSE: GE) vice president John Rice told BNamericas.
"If you have a country that covers a lot of space and has a lot of natural resources that need to be moved, then rail is a very cost-effective option," said Rice.
Rice said GE sees potential to expand its business in the rail sector in countries that fit this description.
Rail systems are not inexpensive to build, but their long-term, cost-benefit relation is good. "There is a substantial capital investment but [railways] last for centuries in some cases," he added.
Also, the payback over time from using rail transport is "terrific," Rice said, arguing that the relation between cargo handling capacity and operating costs - including fuel - is extremely competitive.
Of the three countries mentioned by Rice, Brazil has the most developed cargo handling rail infrastructure network.
Chile's main rail network is currently operated by state-owned firm EFE, with some private firms operating lines to transport resources, such as minerals, to ports as well as to other areas like the Andean region.
Currently, Chilean authorities are considering concessioning part of the main rail network to private firms in an effort to boost their competitiveness.
In Argentina, on the other hand, since the administration of former President Néstor Kirchner, government officials have threatened to nationalize cargo handling rail systems.
TRASANDINO CENTRAL
Chile and Argentina are currently analyzing a rail concession project consisting of the construction of a US$2.5bn-3bn low-altitude rail tunnel to connect central Chile to Argentina in the Los Libertadores Area.
Argentine firm CASA and Brazilian company Camargo Corrêa submitted the project as a private initiative and are carrying out feasibility studies.
One of the concerns among private players is the uncertainty regarding the future of private investments in Argentina. The country has already nationalized a number of concessions and has installed obstacles that have discouraged investment.
ADDITIONAL PROJECTS
Other countries looking to improve their rail networks with the support of private capitals include Uruguay, Paraguay, Peru and Colombia, which have all met with investors and rail specialists to analyze and promote development initiatives.
Government officials from these countries have also met with multilateral financial entities seeking financial support for these initiatives.
GE's infrastructure division manufactures signaling and communications systems for the rail industry, as well as freight and passenger locomotives, and locomotive parts. The firm also provides locomotive services.
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