Tren Macho modernization: how will you ensure user fees are maintained?

The Agency for the Promotion of Private Investment (Proinversión) reported that the execution of the modernization project of the Huancayo-Huancavelica Railway (Macho Train) will be an engine of socioeconomic development for the regions of Junín and Huancavelica; since it will energize the tourist and agricultural potential of the area and will facilitate the population’s access to health, education, labor and commercial centers.

With the aim of summoning a greater number of bidders to the bidding process, Proinversión organized the second market survey of the ‘Comprehensive Rehabilitation of the Huancayo-Huancavelica Railway’ project, aimed at private investors, bank representatives and interested consultants.

At this event, Proinversión presented the following: the progress of the bidding process, an additional mechanism to mitigate the project’s geological risk, the concessionaire’s obligations related to the simultaneous construction of the sections; and, finally, the update of the investment cost called Capex —which includes civil works, mechanical equipment, rolling stock and initial maintenance— which now amounts to approximately US$340 million (without IGV).

This increase in Capex is due, among other reasons, to the incorporation of initial maintenance activities to stabilize some slopes of the road that, in the previous process, had not been foreseen. In addition, the prices of the basic engineering of the project that was elaborated in 2014 and that, due to the inflation suffered by the country and the world, have been updated, have increased. In that sense, now this work is much more attractive to investors.

Bidders interested in the public tender have until October 31, 2023 to submit their prequalification documents.. For its part, the award of the project is scheduled for December 2023, according to the director of the Proinversión project, Gian Carlos Silva. Added to this, he added that those who wish to apply have until September 14 to present their suggestions for the third version of the concession contract.

How will you ensure user fees are maintained?

To ensure that the current social tariffs are maintained, the Ministry of Transport and Communications (MTC) will be in charge of fixing it; thus, more users will be allowed to benefit from modern transport. In addition, new travel itineraries will be added in order to meet user demand during the concession term.

What does the modernization of the Tren Macho consist of?

The Huancayo-Huancavelica Railway has been in operation since October 1926. It has a 128.7 km route, 7 stations, 20 bus stops, 15 bridges and 38 tunnels, which will be modernized.

With the execution of the project, the male train It will have a renewed infrastructure, with new rolling stock and a signaling and control system, which will guarantee a safe, efficient and comfortable transport system for users, with seven daily circulations in each direction. In addition, a new repair and maintenance workshop and a drainage system will be built; the slopes will also be protected and stabilized. However, more importantly, the superstructure of the railway will be renewed.

The project, promoted by Proinversion on behalf of the MTC, will be concessioned for 30 years to provide transportation service to the populationcomplying with international quality standards for the benefit of more than 1.2 million people from both departments.

The concession scheme through a public-private association (PPP) allows the State to build, finance, maintain and renew the infrastructure during a determined period, and the private sector to incorporate knowledge, technology and equipment. In railway projects, this mechanism improves connectivity and safety; at the same time, it reduces travel times and the number of accidents, according to the entity.