Congress Passes New Railway Bill

After a speedy legislative process, and with the support of the main political forces, the Federal Congress passed a legislative bill submitted some weeks ago by the Executive Branch (“FEB”) which declares the policy of recovering passenger and cargo railways, in addition to the renewal and improvement of rail infrastructure, to be of public interest and a high-priority federal objective (hereinafter, the "Bill").

The Bill was passed by the Chamber of Deputies on April 8, 2015, and only a week later, on April 15, 2015, the Senate did the same. The Bill was has been sent to the FEB for enactment and publication in the Official Gazette, which is expected to take place within the next few days.

1. Main Provisions

In addition to the declaration of public interest of the policy of renewing passenger and freight railways, the main provisions of the Bill are as follows:

1. It establishes a series of guiding principles on railway policy, including the administration of railway infrastructure by the FEB, and public and private participation in the provision and operation of public rail transport services.
2. The power to renegotiate concession contracts executed with certain concessionaries, in order to “resume the full administration of railway infrastructure” and the “management of the systems of control of train circulation” is delegated –among other powers– to the FEB.
3. It opens up access to the national railway infrastructure in the operation of freight and passenger transport services. To this end, it provides for the creation of a Registry of Freight and Passenger Operators.
4. It creates a new state-owned company called Ferrocarriles Argentinos Sociedad del Estado which will have as its main goal the integration and articulation of State companies which already intervene in the sector.
5. The FEB’s current shareholdings in the following companies are transferred to Ferrocarriles Argentinos Sociedad del Estado: i) Administración de Infraestructuras Ferroviarias Sociedad del Estado, ii) Operadora Ferroviaria Sociedad del Estado, iii) Belgrano Cargas y Logística Sociedad Anónima, and iv) various cargo transport concessionaries.

2. Objectives and Context

The Bill aims to reinforce the railway reorganization process driven by the Federal Government’s Ministry of the Interior and Transport.

Lately, the Federal Government has terminated concession contracts with private operators and has reassumed control over a significant part of the services.

However, the Bill would seem to focus mainly on the State administration of the railway infrastructure, allowing the provision of services by private parties.

3. Final Comments and Perspective

Since the majority of the Bill’s provisions require further implementation, its ultimate regulatory impact will be determined by the regulations and orders which the FEB will issue to implement the powers granted by Congress.

For this reason, it will be very important to follow the application of the Bill closely once it is enacted as a law and officially published.