Investment in rail transportation in El Salvador will be more than $1.8 billion

The first investment significant  investment in rail transportation in El Salvador since the 1980s

The Government of El Salvador has committed itself to investing more than $1.8 billion in railway infrastructure in the next decade as part of the Regional Mobility and Logistics Master Plan 2035. This plan was recently launched by the Ministry of Public Works (MOP) and the Secretariat of Central American Economic Integration (Sieca).

This plan contemplates a total investment of $52 billion in the region’s six countries, of which $10.7 billion corresponds to El Salvador.

Romeo Rodríguez, Minister of Public Works for El Salvador, explained that $1.827 billion of this portfolio is allocated only for rail transportation in El Salvador. This service has been paralyzed since the Salvadoran civil war of the 1980s.

It plans to establish a road connecting Central America with Mexico within the sector. “It includes a railway network that should be established between the different countries in the region to improve mobility and logistics. It will comprise a network in El Salvador and Guatemala, which connects with Mexico,” said the official.

In this regard, the Salvadoran Government contemplates the Pacific Train and a monorail in the Metropolitan Area of San Salvador (AMSS). Last July, the Ministry of Economy (Minec) submitted a request to the European Bank for $450 million to begin executing both projects.

El Salvador’s project portfolio also includes $5.8 billion for road infrastructure, $632 million for improving port transportation, and $2.113 million for airport services. In addition, $35 million will be used to improve border infrastructure, and $88 million will be invested in bettering urban logistics.

Rodríguez assured that with the interventions in road infrastructure, the average cost to move a ton of cargo would be reduced from $0.17 per kilometer (km) to $0.05, as well as an improvement in travel time from 16 km/h to 60 km/h.

“This would lead to a reduction in the cost of goods and then, to a reduction in time and cost of the products that are marketed regionally,” he stated.

Follow-up

The development of the document was carried out by five Japanese companies and was approved by 18 state portfolios. The Japan International Cooperation Agency (JICA) granted the financing and will send a regional advisor to follow up on the plan, revealed the JICA representative in El Salvador, Masaru Kozono.

Sieca ‘s strategy is to guarantee the coordination and socialization of the master plan for improving rail transportation in El Salvador through disseminating social networks, workshops, and seminars,” he added.

Also, the institution will train 42 technicians from the region in Japan between 2023 and 2025, providing financial support along with other entities.

Financing and projects for infrastructure

Meanwhile, Rodríguez pointed out that the World Bank (WB), Inter-American Development Bank (IDB), and Central American Economic Integration Bank (CABEI) have joined in collaborating with the strategy. “The World Bank has already approved the first financing of $150 million for one of the projects: the Apopa bypass, ” he revealed.

In addition, he recalled that the plan highlights works that are already being carried out or planned in El Salvador, such as the expansion of the Los Chorros highway, a bridge on the La Hachadura border crossing, the expansion of the Litoral highway, the ferry between El Salvador and Costa Rica, as well as a border facility in El Amatillo. Also included in the plans are roads to improve connectivity with the Las Chinamas and Anguiatu borders and the Pacific Airport.

What will El Salvador invest in?

The Mobility and Logistics Master Plan 2035 will be implemented in 11 corridors and 398 projects from Guatemala to Panama. El Salvador appears in five corridors.

1.- Road infrastructure

El Salvador will allocate $5.8 billion for road infrastructure and land transportation improvement. This represents 58% of the funds contemplated in the plan.

2.- Aeronautical infrastructure

This includes a portfolio of $2.1 billion in the airport aeronautical sector, which includes the Pacific Airport.

3.- Maritime port infrastructure

A total of $632 million will be allocated for this sector. Currently, the central platform is the Port of Acajutla.

4.- Urban logistics

Services and products to improve urban logistics represent $88 million in the Master Plan.

5.- Customs

Border management, which, according to Rodríguez, includes specific actions to improve mobility, has the lowest investment, with $35 million.

Investing in infrastructure is key to economic development

Investing in rail transportation and other infrastructure in El Salvador is paramount for the country’s economic development and overall well-being. A robust infrastructure is the backbone of any thriving economy, facilitating trade, enhancing connectivity, and fostering social progress.

In El Salvador, strategic transportation, energy, and technology investments can significantly reduce logistical bottlenecks, spur economic growth, and attract foreign investments. Improved roads and transportation networks will connect remote areas and streamline the movement of goods and people, stimulating commerce and tourism. Furthermore, investing in energy infrastructure, such as renewable sources, can bolster energy security, mitigate environmental concerns, and promote sustainable development. Upgrading technological and border infrastructure will empower the workforce, foster innovation, and enhance competitiveness on the global stage. Beyond economic benefits, a well-developed infrastructure can also contribute to social inclusivity by providing better access to education, healthcare, and essential services. Therefore, committing to substantial investments in infrastructure is a forward-looking strategy for El Salvador, laying the groundwork for a more resilient, connected, and prosperous future.