KCSM Concession Exclusivity Extended Until 2037; Bypass Under Way (UPDATED)

The Mexican Ministry of Infrastructure, Communications and Transportation (SICT) has agreed to extend exclusivity rights granted to Kansas City Southern de México, S.A. de C.V. (KCSM), a Kansas City Southern (KCS) affiliate, until 2037, in exchange for new investment in the Celaya-NBA Line Railway Bypass and other infrastructure, KCS and KCSM reported on July 20.

KCS and KCSM said that SICT has agreed to amend KCSM’s Concession Title effective July 14, 2022, extending exclusivity rights by 10 years; the infrastructure investment is not to exceed $4 billion pesos ($195 million).

“We are pleased to announce an agreement with the SICT to make critical rail infrastructure investments in the Celaya Bypass and other infrastructure, and extend KCSM’s exclusivity rights under the Concession Title by 10 years,” said Oscar Augusto Del Cueto Cuevas, President, General Manager and Executive Representative of KCSM, which serves northeastern and central Mexico and the port cities of Lázaro Cárdenas, Tampico and Veracruz. “This agreement and amendment reinforce our strong partnership with the Mexican government, and our long-standing commitment to support Mexico’s railway network, which plays an essential role in promoting the country’s economic growth.”

The Celaya Bypass project, also known as Ferroférico, will comprise two routes around Celaya city in Guanajuato State and replace the ones that intersect the urban area, eliminating 15 grade crossings and saving 80 minutes of transit time. Construction is expected to begin by the end of this year.

Canadian Pacific—whose application to merge with KCS and create North American’s first transnational freight railroad is now under Surface Transportation Board (STB) review—released a statement on July 20 saying it “applauded the announcement. …”

In related developments, the government of Mexico, through the Ministries of Energy, Finance and the Tax Administration Service (SAT), in June made public a list of active and suspended taxpayers on its Importers’ Registry, indicating that the suspensions were made due to several taxpayers apparently not being in full compliance with requirements under its Foreign Trade Rules. Among them were KCSM and Grupo Mexico’s Ferrosur rail freight subsidiary.