Kansas City Southern Receives Concession Extension

Kansas City Southern (KSC), a major developer of railroad infrastructure in the North American region announced that the Ministry of Infrastructure, Communications and Transportation (SICT) granted an exclusive concession extension that both parties agreed upon in exchange for the development of railroad infrastructure in Guanajuato.

In the Federation Official Gazette (DOF), SICT posted the modification of a concession granted to KCS, which will expand its exclusive use of railroads for another 10 years. In 1996, Mexico’s government gave the company the concession to operate the cargo service with a validity of 50 years, of which 30 years would be for exclusive use. This exclusive use would be finished by 2027, nevertheless, the company could extend the concession’s validity once after it expires. Now, 10 years have been added to the original 30 years of exclusive use.

According to the agreement, the company will develop the Celaya bypass, which requires an extension of 20km. On June 2, 2022, KCS announced that it agreed to invest up to US$198.5 million for the project. The figure includes the payment for the Right of Way. The company stated that this project was of its interest because it would allow it to improve its operations. 

According to what SICT posted in the DOF, the company is willing to finance and carry out the construction. Both SICT and KCS agreed to develop additional works aiming to expand the company’s capacity and improve its service’s quality, as well as enhancing the transportation of goods while removing obstructions for the local population.

Although the Celaya bypass is a strategic project, it has been put off for years. The bypass intersects with the NB Line located at the Acambaro-Escobedo section of the Mexico-Lazaro Cardenas corridor that belongs to KCS. It also crosses Line A, located in the Mariscala-Irapuato section of Mexico-Ciudad Juarez corridor, part of a Ferromex concession, as well as Ferromex’s cargo operation yard. According to SICT, train traffic between KCS and Ferromex carried out at the cargo operation yard of Celaya blocks the urban population from accessing important roads toward the city.

In June 2022, KCS confirmed an investment of US$120 million in a Mexican project portfolio, which included the Celaya bypass project. The company expected that the project would start by the end of 2022. The project is also part of SICT’s National Railway Program 2022, which consists of 15 railway projects in the country, requiring a public-private investment of US$33 billion.