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The main objective of the plan is to restore the existing 3,533 km of track for both cargo and passenger travel, which has been out of service since the network ceased to exist in 1992 due to various failures. (Photo: DNP Colombia)
National Railway Map, Colombia (Source: Master Railway Plan/Plan Maestro Ferroviario)
Thursday, January 13, 2022
Perspectives

Colombia Is (Finally) Getting on the Trains Train


If implemented, the rail plan will bring economic growth and additional jobs to Colombia.

BY JOSEPH WEIMAN
AND SERGIO GUZMÁN

Colombia’s Master Railway plan makes it clear that trains will be the primary mode of freight transit in the near future given the economic, environmental, and productivity benefits they would likely add to the country. While the Duque administration has put together a coherent structure, the next administration must decide whether to implement it or not. Clearly, Colombia must leverage international financial markets to pay for these massive infrastructure projects, and the country should leverage the current geopolitical flux in its favor.

Colombia’s Master Railway Plan (PMF) aims to revitalize the country’s downtrodden rail network. President Iván Duque announced the plan with great fanfare on November 23, 2020, although his predecessor, President Juan Manuel Santos, had announced a similar initiative to bring rail back to Colombia in 2012.

The main objective of the PMF is to restore the existing 3,533 km of track for both cargo and passenger travel, which has been out of service since the network ceased to exist in 1992 due to various failures. The PMF also seeks to replace current railway regulations—originally passed in 1920—with new legislation, as well as conduct a market demand study. Increased transit use is already occurring.

The Dorada-Chiriguaná rail corridor was reactivated in 2018. Since then, 65,258 tons of goods were shipped via this route in 2020, up from 21,444 tons in 2018. While coal, historically the rail system’s largest sector, retains its lead in the corridor, other industries have taken advantage of the route As of September 2021, 24 industries use 1,077 km of track along the Dorada-Chiriguaná Corridor. Considering freight train use is on the rise, there is substantial potential for industrial development for other sectors in cities where the planned rail expansion is set to take place.

If implemented, the PMF will bring economic growth, environment protections, and additional jobs to Colombia.

The Plan boasts that by 2030, it will generate efficiencies for business such as reducing shipping costs by 26 percent. Since Colombia is a large exporter of agricultural goods, and many farms are located around 1,000 km from ports, train transit will ensure faster and more efficient means of transportation. According to estimates from the Colombian Council on Competitivity, 80 percent of freight in Colombia moves on trucks, 16 percent on trains, and only 2 percent via waterways. As truck transport decreases, trains and boats will be the future of freight in Colombia.

Trains outcompete trucks in many areas. One train is equivalent to around 67 trucks. This means that during the export process, the train is considered one unit and processed as such, while trucks are processed as 67 individual units. This efficiency advancement guarantees economic gains. Regarding the environment, using trains to transport goods is estimated to decrease fuel consumption by around 90 percent, which also means diesel pollution will plummet. Freight trains are four times more fuel efficient than trucks, according to U.S. freight line CSX. Western Europe is a model in using electric-powered freight trains. It is likely that a country like Colombia with abundant renewable energy resources and many more renewable projects planned or underway could follow this model. One negative environmental factor is that rail lines are subject to weather-related obstructions, such as mud slides. That said, there are more positive environmental benefits than risks. Finally, this plan has the potential to create tens of thousands of jobs all across the country. Workers will be needed to construct and rebuild decrepit tracks. In addition, the economic advancements will likely lead to job creation, as these often go hand-in-hand. The economic, environmental, and productivity benefits of the PMF to Colombia are clear.

BUT, POLITICS

The PMF’s feasibility hinges on the next President of Colombia. Should they prioritize rail infrastructure, they would demonstrate bold leadership as well as the recipe for a strong COVID-19 economic recovery. However, the plan may change significantly depending on who is elected.

Although the candidates have not been specifically probed on railroads and infrastructure, some of the contenders’ backgrounds suggest their potential outlooks. For right-wing candidates, continuity is likely to be the name of the game. Duque’s PMF would likely remain intact, and the new administration would attempt to continue his progress on infrastructure. A centrist candidate would likely make adjustments to guarantee public contracts are free from corruption, which would potentially delay the plan. A left-wing candidate is likely to make significant changes to the plan, introduce a public operator, or impose significant conditions on private sector investment in rail projects.

Like any large-scale rail infrastructure project, implementing the PMF would bring significant benefits to Colombia, namely increasing regional competitiveness and jobs, which are politically appealing. This boost would increase efficiency of exports and imports, which would benefit the country’s economy, regardless of the outcome of the presidential election. Considering the economic downturn caused by the pandemic, this influx of investment and trade improvements would help Colombians nationwide, considering this rail spans a large portion of the country. Moreover, all energy transition initiatives presented by the presidential contenders entail a degree of decarbonization, to which a rail project is likely to contribute in an important way. However, we must not underestimate the political capital of the existing truck freight industry, which has been an obstacle to urban renewal projects and will likely mobilize to impede the PMF’s progress.

WHAT ABOUT THE MONEY?

It is clear that the Colombian government is unable to finance this plan alone. However, the government is likely to leverage the current geopolitical contest to its benefit in order to fund this ambitious project.

In the past decade, only 1.8 percent of Colombia’s total public transit investment went towards the rail network. So far, the United Kingdom has financed the development of a regulatory and operational framework through a memorandum of understanding on September 7, 2021. The U.K. will provide around $533,000 for the project. China has already involved itself in one aspect of the PMF. The Chinese firm Build Your Dreams (BYD) is bidding to design the Regional Caribbean Train, an element of the PMF. This train will connect Santa Marta, Barranquilla, and Cartagena, although the final route has not been finalized. BYD has proposed an elevated train, which would limit pollution but also impede the ability to transport cargo, as elevated trains more easily transport passengers.

There is no evidence to suggest the United States is planning to invest or finance elements of the PMF, though it would clearly align with President Biden’s infrastructure agenda and his well-documented love for trains. Details of the Build Back Better World program are yet to be revealed, but given they suggest competitive financing for infrastructure investments in low- and middle-income countries, it is likely that Colombia will be considered low-hanging fruit and be an early benefactor of the plan.

For China, implementing its Belt and Road Initiative in Latin America is a priority. For the United States, countering China’s influence in Latin America, and in the world, is a priority. The next Colombian president is in a great position to leverage these investment powerhouse nations against each other to ensure the PMF is a success. However, the future president must realize the potential impact of the PMF, ensure they market the idea to the Colombian electorate, and then engage in strategic foreign investment policies in order to make it a reality. Are they up for the challenge?

Sergio Guzmán is the Director of Colombia Risk Analysis, a political risk consulting firm based in Bogotá. Follow him on Twitter @SergioGuzmanE and @ColombiaRisk.

Joseph Weiman is a Researcher at Colombia Risk Analysis and a current graduate student at Columbia University. Follow him on Twitter @jweiman_nyc.

 

This article was originally published by Global Americans. Republished with permission. 

 

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